Kenya has the potential to unlock KES 1.4 trillion of additional economic value over the next decade (2023-2033) from cloud adoption. This represents 0.56% of Kenya’s cumulative gross domestic product (GDP) according to a new study commissioned by Amazon Web Services (AWS)
The study, was performed by Telecom Advisory Services LLC, and directed by Raul Katz, Director of Business Strategy Research at the Columbia Institute for Tele-information (Columbia Business School). It provides a cutting-edge econometrical method for calculating the aggregate productivity gains realized by economies that adopt cloud computing.
The study also extends previous economic research focused on firm-level productivity by establishing cloud adoption as a driver of national productivity and economic growth. It quantifies the relationship between public cloud computing adoption, national productivity, and economic growth in Sub-Saharan Africa (SSA).
According to the report, in 2021 Kenya added 0.08% to the GDP, amounting to KES 12.9 billion of economic value. Over 91% of this impact can be attributed to the national productivity gains or so-called “spillover effects” on the economy. The remaining 9% was driven by cloud spending from both public and private organizations in the SSA region.
On average, SSA countries experience a 0.02% increase in GDP for every 1% increase in cloud penetration. An increase of 1% in cloud adoption by Kenyan organizations will yield an average GDP increase of 0.03%, above the SSA average at 0.02%, but behind the SSA regional leader, South Africa, where 1% cloud adoption yields 0.06% GDP increase.
Kenya has ambitious plans to diversify its economies through digitization. Twenty six percent of organizations in Kenya adopted cloud computing in 2021, versus 49% in Western Europe and North America, showcasing the potential there is to improve cloud penetration.
Amrote Abdella, General Manager for Sub-Saharan Africa at AWS, said “This report underscores the immense potential for SSA to harness cloud computing and expedite economic growth. By increasing the current average cloud penetration, the region can unlock additional economic value. AWS is committed to supporting its customers and partners in SSA, and around the world, throughout their cloud journey. We firmly believe that cloud technology will be crucial in driving innovation, boosting productivity, and scaling businesses in the region over the next decade.”
The study demonstrates that the economic impact of cloud computing is guided by returns to scale – greater adoption of cloud computing will lead to proportionally greater productivity gains and economic impact.
“With the current forecast, the economic impact of the cloud is undeniable and is poised as a key catalyst for economic prosperity. As such, it is important for businesses in the region to invest in cloud computing technology to stay competitive and boost their economic potential,” added Abdella.