In 2005, South African ICT company Internet Solutions entered the Kenyan market. How we made it in Africa’s Dinfin Mulupi chats with Loren Bosch, managing director of Internet Solutions Kenya, on the firm’s expansion plans and the dos and don’ts of entering the Kenyan market.[hidepost=9][/hidepost]
Give us a brief description of what Internet Solutions Kenya does.
We are an internet service provider. We play in the layer above physical infrastructure in the country. We engage with companies in the top end of the market in the financial sector. These are companies that are now starting to look at outsourcing their wide area network environments and getting a single vendor relationship in place, but with access to all the infrastructure that is available in the country. A bank, for instance, would come to us and outsource their private network to us. Across the region (Kenya, Uganda, Burundi and Tanzania) we have 582 clients. We play in a very specific niche in the market. We don’t have any consumer products. We play exclusively in the corporate space and more often than not with multinational and regional companies that have multiple offices.
Describe your experience when you first entered the Kenyan market?
It was interesting. The Kenyan regulator is quite progressive. The Communication Commission of Kenya (CCK) I would say is about ten years ahead of the regulator in South Africa. The Kenyan regulatory environment is open and a lot more structured towards competitive engagement in the market place. That was an advantage for us. The good thing is we are getting to a point where for us the market is beginning to mature towards the kind of products we offer.
Some South African companies have struggled to crack the Kenyan market, with many having to close operations. How did you manage to make a success of the business?
We have been here since 2005. We haven’t come into the market with the generally perceived South African arrogance of ‘our way is the only way’. Success in the Kenyan market has a lot to do with how you engage with market players. We have had a very strong focus right from the start to make sure we build our capacity locally so we don’t have numerous expatriates here. We have been able to tap into local talent and local resources.
I think sometimes if you come into a market and underestimate the strengths and resilience of your competitors you can fall short. Our growth has been organic because we look after our customers and provide really good services and support that they wouldn’t get elsewhere. I don’t anticipate that we would have the same kind of demise.
Multinationals looking to enter Kenya should engage with the Kenya Investment Authority. They are helpful with advice on regulatory frameworks and requirements. I would definitely advise multinationals to use this as a point of entry. They should also tap into local resources and local talent.
What challenges have you faced in the four East African countries where you currently operate?
Infrastructure and specifically power is a massive challenge in this region. It is very difficult to maintain world class services in an environment where basic things like power are not necessarily available or reliable. This makes the cost of operating from here very high. Overcoming challenges is however what make us competitive.
What market changes do you anticipate over the next five years?
We expect that over the next five years contribution of revenue from connectivity will go down significantly as a percentage. It will probably drop from in excess of 90% to less than 30%. So it is important for us to be agile and be prepared and build capacity in other services like cloud computing. I think if you don’t do that you may well find yourself in a merger or acquisition type of conversation.
For the next two years or so we would like to establish proper footprints in Ethiopia and Rwanda. We have been pushed into those spaces by our multinational and regional customers who want us to extend our services there.