What to expect in 2023 in the Kenyan Tech Space

There are already a lot of policy changes that will directly affect our lives in 2023. And in this article, I will try to breakdown the different things you can expect to happen in the tech space in Kenya.

With the beginning of each new year, we find that our brains try to find ways to understand what sort of changes, resolutions and much more we will be experiencing or chasing. This is the sort of traditional prediction article I write at the end/beginning of each year. Once the year is done, we will check if what was predicted came true, and what didn’t.

Some of the things will not be predictions per se, just facts based on announcements already made by government or regulatory bodies. Let’s go:

Mobile Money will be way more expensive than before:

For close to three years, Kenyans have enjoyed what will now look as good transaction rates. Remember my article: M-Pesa is Expensive, Bank to Mobile Transfers are Free, well that is no longer the case. The Central Bank has re-introduced charges between mobile wallets and bank accounts.

For example, in a calculation based on NCBA Bank’s rates, sending say KES 5,000 from NCBA to M-Pesa will cost you KES 43 (up from KES 0). Sending the same from M-Pesa to Bank will cost you KES 33.

This means in 2023, M-Pesa will now be the “cheaper” way to make payments. Some banks will still win with their free bank to bank transactions.

This policy change will lead to the following happening:

• A significant number of people will reduce dependence on mobile money and banking transactions
• This will significantly reduce volumes of transfers between mobile money wallets and banks
• More businesses and customers will find ways of avoiding transaction costs, perhaps re-encouraging cash.
• It will be cheaper and easier to withdraw physical cash and use it for payments instead of Paybills which charge customers and Till Numbers which charge businesses.
• We may see new payment solutions taking shape.

(Meanwhile in Tanzania…)

Smartphones and other Tech Gadgets will be more expensive:

In July of 2022, the Kenyan government introduced new taxes that directly affected prices of phones and SIM cards. If you’ve noticed, we haven’t had any updates to “Best Phones Under KES 10,000” in a while. That’s because there are literally no significant serious launches in that segment.

What used to cost KES 10,000 is now going for between KES 12,000 and KES 14,000. And this is not just because businesses have increased costs, or because the Kenyan Shilling has fallen to the dollar. It is also because of the new taxes.

With more expensive phones in 2023, we will see the following happening:

• An increasing number of people will hold on to their older phones
• Businesses in the space will find it hard to sell newer devices
• There will be increased interest in people importing higher end devices, to avoid local markups

A more vibrant Startup space in Kenya:

According to TechCrunch, Kenyan startups had raised nearly 1 Billion dollars as of the end of the first half of 2022. Disrupt Africa says Kenya is only second to Nigeria in funding in the past 8 years.

We can expect a more vibrant space in 2023. The new National Government seems serious about supporting the space, and will also be issuing the ‘Hustler Fund‘ to MSMEs. Different County Governments are also supporting the space in different capacities, and we should see more people bringing out their ideas, and looking for funding.

So we can expect to see larger funding announcements, and not just for existing companies, but even smaller, newer ventures. We can expect to see perhaps the first of many major acquisitions in the first half, and extended partnerships throughout the year.

More Tech Companies setting camp in Kenya:

2022 has been a good year with different companies setting camp in Kenya.

• We saw the new Microsoft African Development Centre in Nairobi take shape
• VISA announced the first Innovation Studio in Nairobi, and is planning to invest $1 Billion in Africa.
• Google announced its first Product Development Centre, which is also in Nairobi.
• And many more.

In the new year, we can expect many more companies to announce innovation centres, and partnerships with both the National and County Governments. Especially with the drive the new government has for innovation.

M-Pesa Separation from Safaricom:

Safaricom already reiterated that it is not a complete separation that’s happening. So, they won’t be immediately considering a banking license.

Instead, Safaricom is becoming a “group of companies”. The group, Safaricom PLC, will operate M-Pesa, Safaricom Ethiopia and perhaps more “subsidiaries” to launch later on.

This way, we might be able to see the long awaited single M-Pesa Africa platform, bringing M-Pesa to become its own international mobile money and payments provider without the current limitations.

So in 2023, we may see significant changes:

• More interoperable features between M-Pesa and other mobile money wallets including Airtel Money (which is now a separate company on its own) and Telkom’s T-Kash.
• Perhaps provision for sending money to other countries in Africa without the current hurdle around Western Union.
• New M-Pesa products to the already quite bloated M-Pesa Super App.

5G Disappointments?

5G was really hyped. So, in 2023, we will continue to see more people being disappointed not only by the costs, but also by the speeds and reliability.

Safaricom is the only telco with 5G coverage across parts of the country. I’ve connected to 5G across parts of Nairobi and parts of Kisumu. The speeds are not really what was promised, but they’re way better than the current 4G speeds I get.

In the new year we can expect the following with 5G:

1. Even cheaper 5G ready devices from the likes of Xiaomi, TECNO and Infinix, thanks to MediaTek.
2. More 5G ready zones under the Safaricom Network
3. Perhaps another 5G network launched by Airtel Kenya. Telkom hasn’t made any noise in that space.
4. 5G specific bundles – which we don’t know if they’ll be cheaper or more expensive than existing ones.

New Electric Car Hype in Kenya:

Would you want to own an electric car in Kenya right now? Nope. Would you want to own one in the few coming years? Maybe. Maybe not. Reason: 1. We don’t yet have a robust charging network. 2. Normal fuel will take me further and on time, than needing to constantly charge the car.

Kenya already enjoys mostly renewable sources of energy powering up the country. And we have enough power for our needs, including a robust charging network if need be. The problem is the fact that electric cars are expensive, and we still rely heavily on pre-owned cars imported from Japan. So shifting people from that reliable and convenient tradition, to something that requires patience, and planning of routes will be a tough call.

We’ve however seen Kenya Power, KenGen, Basi Go and others try to build up hype for electric cars. We’ve already seen Public Service (PSV) electric buses on the streets of Nairobi. And maybe that’s the way to go: Use electric cars for public transport.

In the new year we can expect to see:

• A couple of charging stations being introduced.
• More startups focusing on the electric car space – both making of, and conversions of existing ones.
• Significant funding in the electric vehicle space
• Push for policy changes in importation of vehicles.

And what else…

Let me know down below (or via Socials) what you’re expecting in the Kenyan Tech Space in 2023. Also, let me know your thoughts on what I’ve listed above.