Drivers of Digital Transformation and their Effect on Policy Making: A Case Study of the Fintech in Kenya
Loading...
Date
2023-10
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
One of the most significant transformational changes to the economy from the beginning of the twenty-first century has occurred in the digital space. Infrastructure, enabling platforms and services, policy and regulation, human capacity, governance, and business and innovation have been identified to be drivers of digital transformation. Building strong foundations in crucial policy areas including digital networks, online services, digital facilitators, and digital protections is necessary to develop a thriving digital economy. Kenya boasts to be among one of the world's most rapidly developing digital economies. The digital revolution of financial services is gaining traction as a result of the growing adoption and use of technology-enabled innovative digital financial services. Regulatory bodies have described the difficulties they are encountering in the digital economy. These include keeping up with the rapidly changing environment, dealing with financial restrictions, lack of knowledge, and handling pressure from traditional institutions to lobby on their behalf. Studies have shown the drivers of digital transformation globally and the role of government and organizations in driving digital transformation. Some of the studies have focused on the need for policy change that is driven by digital transformation. The study looked at digital transformation drivers and their effect on policy making in Kenya. The study intended to determine how development in ICT infrastructure, change in human capital needs brought about by digital transformation, increased competition from new digital products and services, and progress in technologies in the digital economy influence policy change in Kenya. The study was guided by the Digital Transformation Ecosystem Model, the Digital Transformation Model, and the Digital Economy Ecosystem model. The research was undertaken using the descriptive research design and a case study approach was used. The population of the study was the 65 registered members of the Association of Fintechs in Kenya. A total of 10 startup founders who are members of the association and two management members took part in the study. Data was collected through carrying out of interviews with the founders of the 10 startup fintech companies. The study results indicated that ICT infrastructure and progress in technologies have had a significant influence on policy making and development in Kenya. ICT infrastructure especially the use of mobile services and digital payments provides opportunities for the development of new products and services which have required new regulation. These new products have also increased competition with legacy products that have dominated that market over the years. There is not enough information, however, on whether this competition has led to changes in competition policy. Human capital needs, have also significantly changed with the demand for digital skills rising for both service providers and users. Emerging technologies have led to new trends in services which have necessitated new skills development and retraining of employees. The study however noted that there is little information on the macro policy changes for skills development in the country. It was noted, however, that human resource policies within organizations were changing to accommodate these new skill requirements. Among digital service providers, the adoption of accessible new technologies like online platforms such as App marketplaces is popular. The usage of these new technologies has expanded significantly but has not been accompanied by adequate regulations to control their use. The government was noted to have made some effort in driving policy change, but a lot was still required to be done especially to support technology entrepreneurs. The study recommends that the government puts more effort into including relevant stakeholders in policy change for the digital economy to allow for digital economy policymaking. Clear guidelines on institutions responsible for industry-specific policies need to be clear in order to properly guide technology entrepreneurs.
Description
A Research Project Submitted to the School of Law, Arts and Social Sciences in Partial Fulfillment of the Requirements for the Award of Master of Arts Degree in Public Policy and Administration Kenyatta University, October 2023.
Supervisor
John M. Kandiri