The Influence of Policy Environment on Growth of Information Communication Technology (ICT) Firms in Nairobi, Kenya

Entrepreneurship plays an important role in the socio-economic development of the country. Its significance can be seen in terms of contribution towards economic growth, employment creation, poverty reduction and development of an industrial base. Kenya is going through a paradigm shift from an industry based economy to a knowledge based economy anchored on ICT. The government has reiterated the development of ICT industry in the country given its strategic importance. These commitments manifest in the various policies and strategies that the government has put in place over time, aimed at the growth and expansion of ICT in the country.

Despite the policy and strategy pronouncements, there are various constraints that are currently facing the growth and expansion of ICT in the country especially amongst ICT providers. The Purpose of the study was to establish the factors affecting growth of ICT Firms in Nairobi. The specific objective of the study was; To establish the influence of policy environment on growth of ICT firms in Nairobi.

The study involved a case study of ICT firms in Nairobi. The target population constituted ICT service providers located in Nairobi. The study targeted 92 firms out of 304 registered ICT service providers in the CCK database. The sampling frame used was acquired from the CCK directory of licensed ICT providers 2012. Stratified random sampling technique was used based on categories of ICT service providers registered by CCK.

Questionnaires were used to collect data from a sample of 92 ICT Firms. The respondents were owner/ managers and selected employees. The study findings indicate that ICT policy environment significantly affects growth of ICT firms negatively or positively. Regarding ICT policy environment; The government has fully liberalized ICT sector in the country, there is effective and fair regulation of the ICT sector in the country, the policy environment is conducive for the growth and expansion ICT in the country, the government has favorable ICT policy to promote growth and expansion of ICT, the government has effectively promoted ICT infrastructure in the country and Government supports capacity building in ICT sector. Despite the existence of a conducive policy environment, there are no sufficient policy incentives to enhance investment in ICT.

The study recommends the following regarding Policy Environment; The government should strive to improve the effectiveness of the existing institutions by strengthening the Department of Micro and Small Enterprise Development (DMSED) and MSE Associations, establishing National Council for Small Enterprises and legislating a Micro and Small Enterprises Act.
The government should undertake to invest in ICT research centres that nurture innovation and networking of entrepreneurs, streamline licensing procedures and enhance capacity building initiatives in ICT firms especially on emerging technologies and monetization strategies for application developers.