The potential of data vending in Kenya
The poor penetration of Internet services coupled with low levels of computer literacy in Kenya are holding back the country’s emerging data vending industry.
The data vendors, who sell and distribute financial and business news, are targeting rural populations as well as Kenyans in the diaspora.
Mr Bildad Kagai , the managing director of data vending firm MediaCorp Limited, told the Business Daily that while data vending has the potential to be a major industry in the financial services sector, more needed to be done to ensure computer services reached majority of the people.
“Kenyans, especially those outside Nairobi, have been waiting eagerly for the Real Time data, but inability to access the Internet remains a big challenge,” says Mr Kagai
He said traders did not have to physically go to the bourse to get financial data, but they could do this in the comfort of their offices through the Internet. He said the highest potential for growth in data vending was in rural towns and that lack of Internet services was limiting the uptake of online financial news and data.
MediaCorp earlier this month launched its data vending services in Mombasa to increase its presence in the country.
Symon Ndirangu, the chief executive officer of Information Convergence Technologies ICT Ltd, says that with the signing of an average of 50 to 100 new users every month, most of the six data vendor currently operating in the market should break even within the next 12 months.
“Although it is taking time for many investors to appreciate the value of data, we are upbeat that revenue will pick up very soon.”
Currently, the cost of a data vending license from the NSE is valued at Sh170,000 (US$2500) while ISPs are charging about Sh50,000 per month for connection.
With an estimated Sh180,000 in other costs, data vendors are paying at least Sh400,000 a month or Sh4.8million annually to stay afloat.
Ndirangu however projects that with the developments in the ICT sector as well as the Capital Markets, the data vendors should have at least each have 10,000-20,000 customers utilizing their services. At an annual charge of Sh5000 per customers, data vendors could easily rake in Sh50 million in a year.