telecommunication infrastructure and on the rate at which Telkom and the regulator, CCK promotes
investment in an affordable digital network. Telkom owns and manages Jambonet, a satellite network
that is used to transmit data communication services.
Intra-country flows of data communication traffic have been relatively slow and expensive because of the
lack of an Internet Exchange Point (IXP), which would serve as a clearinghouse for local Internet traffic
between Internet Service Providers (ISP). Until early 2002, all email message traffic and access to locally
hosted web sites were routed via North America or Europe (Kane, 2002). An IXP was formed early in
2002 and was providing interconnection for 6 of the main ISPs in Kenya.
ISPs play a key role in handling the flow of data communication traffics between Jambonet and
consumers. The ISPs are private organisations that are licensed to download traffic from Jambonet and to
distribute it to consumers. There has been a proliferation of ISPs, especially in Nairobi. In 1996 there
were nine licensed ISPs and this number had risen to 70 by 2002 (Kane, 2002). Some of the main ISPs
operating in Kenya are: Swift Global, Nairobinet, Africa online, Wananchi online, and Kenya Web.
2.3 Potential of E-Commerce in Developing Countries
Many observers have claimed that developing countries’ firms can increase and improve their
performance in international trade through the use of e-commerce. The argument is that e-commerce will
increase the availability of relevant and timely information and reduce transactions times. This, in turn, is
expected to greatly improve developing country firms’ access to international markets. Given the
availability of an adequate infrastructure, firms are expected to invest in e-commerce applications,
especially if they intend to trade with distant customers and suppliers.
UNCTAD (2001), for example, argues that the least developed countries (LDCs) can better position
themselves to engage in trade as a tool for development if they adopt e-commerce. Firms are expected to
benefit for two main reasons. First, the products produced by firms in the LDCs are often uncompetitive
because of high transport costs and inefficient trade procedures, the latter of which can be partially
overcome by the use of e-commerce. Second, e-commerce may allow firms in the LDCs to diversify into
new sectors where they can benefit from their low labour costs. E-commerce is expected to ease the entry
of firms from developing countries into global markets by allowing them better access to information and
to overcome inefficiencies, thereby enabling them to make more advantageous decisions about their
participation in international trade.
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