The Policy Question at Stake
Kenya’s government has positioned digital services exports as a cornerstone of its economic diversification strategy, training over 1.8 million young people through the Ajira and Jitume programmes and claiming more than 300,000 digital jobs created in 2025 alone. Yet the gap between workforce mobilisation and genuine export competitiveness remains wide, and the mechanisms that will close it are institutional rather than merely technological. The question confronting Nairobi’s policymakers is not whether artificial intelligence and remote work create an opportunity for Kenya, but whether the country’s regulatory environment, infrastructure governance, skills architecture, and labour protection frameworks are sufficiently mature to convert digital participation into a sustained, high-value export industry.
This matters beyond Kenya’s borders. Within the East African Community and across the African Continental Free Trade Area, digital services represent one of the fastest-growing categories of tradeable output. How Kenya structures its digital economy governance will shape whether the country emerges as a regional services hub or cedes ground to competitors including South Africa, Egypt, Nigeria, and Rwanda, each of which is actively courting the same international outsourcing investment and talent pipelines.
From Connectivity Infrastructure to Productive Capacity
Kenya’s first wave of digital economy investment concentrated on connectivity: the landing of submarine cables through Mombasa, the rollout of fibre-optic networks, and the expansion of mobile internet coverage that made M-Pesa and its successors possible. That foundation is real and consequential. Submarine cable access through Mombasa links Kenya to international markets, and the country’s technology ecosystem in Nairobi, anchored by iHub and a dense cluster of accelerators and venture investors, has produced genuine innovation. But connectivity infrastructure alone does not generate digital services exports at scale.
The infrastructure challenge has shifted in character. In September 2025, Airtel Africa’s Nxtra announced construction of a 44MW data centre at Tatu City near Nairobi, expected to be commissioned in the first quarter of 2027, targeting enterprises, governments, and startups requiring secure digital infrastructure. Microsoft and G42 announced a US$1 billion investment in 2024 that included a proposed geothermal-powered data centre at Olkaria, an East Africa cloud region, and commitments to AI research, connectivity, and digital skills development. President William Ruto acknowledged that the proposed facility could require approximately 1GW of power, a figure that immediately raises governance questions about Kenya Power’s capacity, tariff structures, and the regulatory framework governing large-scale energy offtake agreements. Reliable electricity is not a technical footnote; it is a binding constraint on whether data centres, BPO facilities, and home-based digital workers can deliver services to international clients without interruption.
The Energy-Digital Nexus
Kenya’s geothermal endowment, which already supplies a significant share of national electricity generation, positions it favourably relative to West African peers whose grids are more dependent on expensive thermal generation. The Olkaria geothermal fields, operated by KenGen, represent a genuine comparative advantage if the regulatory and contractual frameworks governing power purchase agreements can accommodate the variable, high-load demand profiles of AI-intensive data infrastructure. The Energy and Petroleum Regulatory Authority’s capacity to negotiate, monitor, and enforce such agreements will determine whether international technology investors treat Kenya as a credible long-term partner or a frontier market requiring excessive risk premiums.
Skills Architecture and the Limits of Quantitative Targets
The Kenyan government’s delivery scorecard measures success in the number of people trained and the number of jobs nominally created. These are not irrelevant metrics, but they obscure the more consequential question of what kind of work those trained workers can actually perform and at what price point they can compete internationally. The Ministry of ICT and the Digital Economy reported that Kenya’s BPO sector created 19,650 jobs in 2025, exceeding a target of 10,000. The sector’s aggregate output, the value of services exported, and the income levels of workers performing that work are less prominently tracked.
James Oyange, a data protection officer in Nairobi who worked for the AI training platform Appen, illustrates the structural problem directly. He began with data entry and progressed to transcription and translation for AI systems, but his compensation reached only US$2 per hour, or US$16 per day. His experience is not exceptional. The International Labour Organization has documented that digital labour platforms in Kenya support a wide range of activities, from web development and graphic design to data labelling, but that the income distribution within that ecosystem is highly unequal, with the majority of platform workers concentrated in lower-value, more easily automated task categories. A World Bank assessment identified persistent shortages of highly digitally skilled workers, experienced technology managers, and workers with the combination of technical and soft skills required for higher-value international contracts.
The Automation Paradox
Artificial intelligence creates a structural paradox for Kenya’s digital services strategy. Kenya ranked first globally in AI adoption according to the Digital 2026 Mid-Year Global Update, with 97.5 per cent of internet users aged 16 and above surveyed by GWI reporting use of at least one AI tool in the previous month. Safaricom has integrated AI into customer care and financial fraud detection. For individual freelancers competing for international contracts, AI tools such as ChatGPT and Claude can compress the time required to research, draft, analyse, or produce deliverables, effectively raising output per worker. However, the same technology simultaneously reduces the market value of the entry-level tasks, basic customer service queries, transcription, data entry, and routine content production, that currently employ the largest share of Kenya’s digital workforce. The skills training architecture must therefore be calibrated not to current market demand but to the demand curve that AI adoption will produce over the next five to seven years, a planning horizon that requires institutional foresight rather than reactive programme design.
Geographic Concentration and the Governance of Decentralisation
An ILO survey found that 44 per cent of Kenya’s online freelance workers lived in Nairobi, compared with 10 per cent in Nakuru, 7 per cent in Kisumu, and 6 per cent each in Mombasa and Eldoret. Approximately 60 per cent of those workers had migrated to Nairobi from elsewhere in Kenya, primarily in search of education or employment. This concentration reflects a familiar pattern in African economies where infrastructure, institutions, and investment cluster in a single primate city, generating productivity gains for that city while hollowing out secondary urban centres and rural areas.
Kenya’s devolution framework, established under the 2010 Constitution, theoretically provides county governments with the mandate and resources to develop local economic capacity. In practice, the digital economy has remained overwhelmingly Nairobi-centric because the complementary inputs required for digital work, reliable broadband, stable electricity, co-working and training facilities, and access to professional networks, are not distributed equitably across the country’s 47 counties. A software developer in Kisumu or a digital marketer in Mombasa can theoretically serve international clients without relocating to Nairobi, but only if county-level infrastructure governance delivers the connectivity and power reliability that such work demands. The Ajira Digital platform’s 229 centres and 129 communities represent a partial response, but their effectiveness depends on the quality of infrastructure and training in each location, variables that county governments control unevenly.
Secondary Cities as Specialised Clusters
The more productive policy framing is not whether secondary cities can replicate Nairobi’s ecosystem, but whether they can develop specialised digital service clusters aligned with local economic strengths. Mombasa’s logistics and port economy creates natural demand for supply chain software and customs documentation services. Kisumu’s proximity to the Lake Victoria basin and its role as a regional trade node for East and Central Africa positions it for trade facilitation and cross-border digital services. Nakuru’s agricultural hinterland generates demand for agri-tech platforms and rural financial services. County governments with the institutional capacity to identify these niches, attract targeted training investment, and negotiate infrastructure commitments from national agencies and private operators could convert geographic dispersion from a constraint into a source of sectoral diversification.
Labour Governance and the Social Costs of Platform Work
Kenya’s digital services ambition rests heavily on freelancers and independent contractors operating through global platforms, a workforce category that sits outside most of the country’s formal labour protection frameworks. The ILO has explicitly warned that digital workers in this category face acute challenges around social protection, including access to health insurance, pension contributions, and recourse against unfair contract termination. CCI Kenya Managing Director Rishi Jatania has described the BPO sector’s value proposition to international clients in terms of cost-effectiveness and operational flexibility, qualities that, from a labour governance perspective, translate into pressure on wages and employment security.
Kenya’s Ministry of Labour and the National Social Security Fund face a structural challenge: the legal categories governing employment were designed for physical workplaces and formal employer-employee relationships, neither of which describes the dominant mode of digital platform work. South Africa has begun legislative reform to extend social protection to platform workers, and the European Union’s Platform Work Directive, adopted in 2024, establishes a presumption of employment for platform workers meeting certain criteria. Kenya’s regulators have not yet produced equivalent frameworks, creating a governance gap that suppresses worker bargaining power and limits the tax revenue that digital services activity generates for the state.
Regional Positioning and the AfCFTA Digital Services Protocol
Kenya does not operate in an isolated market. South Africa, Egypt, Ghana, Nigeria, and Rwanda are all competing for BPO investment, technology company relocations, and international digital services contracts. Within the East African Community, Rwanda has moved aggressively to position Kigali as a technology and financial services hub, leveraging its governance reputation, ease of doing business rankings, and Kigali International Financial Centre. Nigeria’s Lagos tech ecosystem generates more venture capital investment than any other African city. Ghana’s Accra has attracted significant fintech and digital infrastructure investment, partly on the strength of its English-speaking workforce and its relative political stability.
Kenya’s competitive positioning within this field depends on factors that are primarily institutional: the predictability of its regulatory environment, the enforceability of commercial contracts, the quality of its intellectual property protection regime, and the efficiency of its tax administration for digital businesses. The AfCFTA Protocol on Digital Trade, currently under negotiation, will establish common rules for cross-border digital services within the continental free trade area, covering data flows, electronic payments, consumer protection, and market access commitments. Kenya’s active engagement in those negotiations, and its capacity to implement resulting obligations through domestic regulatory reform, will determine whether it benefits from continental market integration or finds its digital services sector fragmented by incompatible national frameworks. The opportunity to export expertise from Kisumu to Accra, Lagos, or Dakar is ultimately a function of whether the institutional architecture of African digital trade is built to enable it.
