Licence Fees Prohibitive, Say ICT Service Providers in Kenya


Ongoing changes in the licensing regime are holding back Kenya's potential to become a regional e-commerce hub, industry players said.

Entrepreneurs say most of the changes are making it harder for them to compete and are tilting the market in favour of their rivals.

The operators are particularly pointing at high licensing fees as the country moves to a comprehensive licensing regime that was aimed at creating a level playing field for investors.

Marcel Warner, an official of the Kenya ICT Federation describes the new licensing process as restrictive because of the high fees it proposes.

The uptake of e-Commerce has been sluggish in Kenya with operators blaming the licensing regime and high cost of entering the market.

In September, 2004, the industry regulator, the Communications Commission of Kenya (CCK) put up a notice of intention to change the licensing framework in tandem with the ongoing changes in the telecommunications industry.

Under the new framework that comes into force on July 1 this year, all players will fall under three loose categories - network, service and content providers - and will be expected to provide services according to the specifications of their licences.

This move is expected to reduce the range of licences available from 40 to three. Under this regime e-commerce and related activities will attract a Sh100,000 licensing fee.

Mr Werner reckons that this amount of fees will make it harder for the majority of local e-commerce solution providers to remain in the market.

The Government has since clarified that the new licensing structure is not final but still open to debate.

"This is an area of concern to us and we are looking into it," said Dr Bitange Ndemo, the Information permanent secretary. He said the regulator had recently responded to similar concerns from business process operators and revised the licensing fees from Sh100,000 to Sh10,000 to stimulate interest in the sub-sector and ease entry.

"There is no reason why we cant do the same to promote e-commerce entrepreneurs," the PS said.

Apart from high licensing fees, potential entrants into the e-commerce world have to contend with high Internet and telephony costs and an unclear legislative environment.

Internet and telephony costs are expected to fall significantly with the arrival of international fibre optic connectivity later in the year, a move expected to create increased demand for Kenyan e-commerce initiatives.

Mr Joshua Chepkwony, the chairman of the Telecommunications Network Operators Forum (TNOF), says policies that ensure legal certainty, security and consumer protection for online transactions and interactions will need to be enacted before the cables arrive.

"These include the resolution of issues such as transactional security, electronic contract enforceability and the authentication of individuals and documentation," said Mr Chepkwony.

Business Daily