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Microeconomics of big data revolution

Big Data analytics is gaining traction in Africa and Kenya is in the lead as a power house in technology innovations.

By Kevin Gikonyo

The study of behaviour on individuals, firms and households in making decisions in allocation of resources within an economy is regarded as microeconomics; a word coined from the Greek word “mikro” meaning small. “Big data” is a trendy catchy phrase used by scholars and the techy community to mean large amount of data. When an organisation or institution has the privilege of holding large amounts of data, regarding their clients or customers and decides to study their behaviour in a meaningful way they enter a 21st century space known as “Big Data Analytics”. All these words read big, sound like a lot of jargon and seem too far-fetched but they are closer to you than you think as an individual, institution or organisation.

Currently, Kenyans are rushing to beat a deadline to be re-registered, in a push dubbed “Huduma Namba” that is meant to help them get easy access to government services. However, large data can only be as useful as the much you are able to decipher value, to make informed decisions. Institutions could choose to enhance security, health and human resource capacity, in their analysis of large data.

Big Data analytics by corporates

Organisations get data in their course of interacting with clients, what they do with it, to derive meaningful information is what separates a common mind-set, to that which is revolutionary. Internationally, more organisations are beginning to embrace this, with the likes of Uber, Netflix, Youtube, Spotify and Rubikloud at the helm of Big Data analytics. Uber for example, can tell; what time you go to work, where you like to eat, where you live et cetera, and use that to customise client’s settings. Netflix can sell more movies from analysing past viewership on one’s profile, while Youtube, Spotify and Rubikloud are able to tell your personality and age from what you watch, listen and hence suggest to marketing firms the kind of adds to hit your screen. Locally, Safaricom had their “Eureka” moment when they realised there were many cancelled transactions from their customers, while trying to use their mobile wallets to transact on the ‘buy goods’ or ‘paybill’ number, the main reason being lack of enough funds. Using this data, they were able to successfully launch “Fuliza”, a mobile overdraft service, which is making heads turn due to the mind-boggling revenues it has recorded in the last 6 months after its launch. The service has attracted over 5 million users with an average repayment period of 2 days for the 30-day facility, at an interest rate of 1.083 per cent. In the first month alone, Fuliza advanced over KSh.6 billion and analysts are tipping the product will hit over KSh.300 billion by close of year.

Effects of Big Data on business practises

According to Thomas and Randy in their research “How Big Data and AI are accelerating business transformation” 2019, 75 per cent of those exploring big data analysis are doing so for fear of missing out from trends and disruptions by others, 92 per cent are driven by their agility to become pace setters in operation efficiencies and market dominance, while 5 per cent mentioned they were driven by the expectation that it shall help them reduce their overheads.  Wikbon (A global IT peer review platform of consultants and tech experts) infers the global market value for big data at USD49 billion in 2019 and predicts it to be over USD103 billion by year 2027.

Big Data analytics is already influencing decisions that individuals, households and firms make in supply and demand of goods and services. In Kenya, besides the Safaricom mobile overdraft facility Fuliza, we have many organisations that could make the best out of the amount of data at their disposal. Such as universities, supermarkets, hospitals, banks, POS merchants (Visa, MasterCard), Car park operators, mobile techs among others.

Big data comes of Age in Kenya

Information in data can be derived using special software algorithms that can evaluate consumer patterns in elaborate behavioural analysis. Big Data analytics is gaining traction in Africa and Kenya is in the lead as a power house in technology innovations. According to 2018 Global Innovation Index (GII) report, Kenya ranks third in Sub Saharan Africa (SSA) after South Africa and Mauritius and 78th globally of the 126 nations evaluated. It ranked highly with an innovation efficiency ratio median of 0.69 to rank 41st, beating South Africa and Mauritius at 0.55 and 0.47 at position 83 and 105 respectively.

In 2017, Jomo Kenyatta University of Agriculture and Technology in partnership with German Flensburg University of Applied Sciences (FUAS) established the Kenyan German Centre for Data Analytics (KGDA) to serve Africa. The centre was formed to address the nexus between ICT and modern business, by maintaining and developing internationally competitive technology, while stimulating economy through the application of cutting-edge research to industry-based problems. In the new world order of ICT, for one to remain relevant and trendy you must think data and how best to maximise its use in making meaningful and cutting-edge solutions.

Kevin Gikonyo is a Director at Spine Global Solutions. Email:Info@spineglobalsolutions.co.ke.

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