Kenya, Africa’s Silicon Valley, Epicentre of Innovation - Post image

Kenya, Africa’s Silicon Valley, Epicentre of Innovation

Technology has and still continues to play a vital role in the development and advancement of African economies at large. Technology is constantly reinforcing regional trends in business, investment, opportunities and modernisation, which accelerates globalisation in developing countries. We have witnessed stupendous growth of technology entrepreneurs – from startups and innovation centres/hubs from South to East, North to West Africa.

Africa has at least 200 separate tech hubs which have sprung up in the last few years. The number of new tech ventures has also risen to 3500, with $1 billion in venture capital available to accelerate these (2016-2019). These hubs have consistently made headlines in their effort to bring or rather accelerate technology businesses to the grassroots level. They have brought many new ideas/innovations – have provided a rich source of employment and new business formations. The origin of Africa’s tech movement can be traced back to Kenya, which has been home to several major technological innovations between 2007 and 2010. These innovations birthed Kenya as the Silicon Valley of innovation in Africa. Now, Kenya is known to all as the Silicon Savannah.

The Rise of Silicon Savannah

Nairobi, the capital city of Kenya, has transformed into a technology epicentre. An agile mobile banking system has created new market opportunities for digital entrepreneurs. 3G internet connections became more and more affordable and still are mobile payment services are booming up and the promising startup scene and ecosystem constantly is reinventing their offerings. Silicon Savannah has positioned itself as an epicentre of startup weekends, innovations meet ups, accelerators, incubator events and investors get together. True to that form, Nairobi has one of East Africa’s highest concentrations of US dollar millionaires accounting for 8400 in number as of 2016.

We should give credit to the following 3 intertwined factors that has positioned and transformed Nairobi as the Silicon Savannah, mimicking Silicon Valley in California, USA:

  1. Kenya government at the forefront of technology development – investors are being lured to invest in Nairobi, and are heeding the call positively so and the city has positioned itself as an investor friendly city by being open to aid agencies, development funds and foreign NGO’s.
  2. The birth of M-Pesa revolution by Vodafone in 2003 and subsequent launch by Safaricom in 2007. This revolution inspired many to be tech entrepreneurs and proactively launch startups.
  3. The launch of iHub in 2010 – as an open space for startups, positioned Kenya’s capital, Nairobi as the future of startups, technology and innovation.

Silicon Savannah success is highlighted by the following figures according to the research conducted by Legato Consultancy:

  • 54 startups in Nairobi are on AngelList,
  • iGDP account for 2.3%,
  • 1% – average annual growth of services in economy,
  • 96th in the world – according to the Global Competitiveness Index (World Economic Forum)
  • 8400 – number of dollar millionaires, 5th in the African continent,
  • 62% population aged below 24 years,
  • 31% of GDP in Kenya is processed through M-Pesa,
  • 99% of total internet subscription derive from mobile data contributions,
  • 2 million – number of smartphone users,
  • 8 million – number of Facebook users in Kenya,
  • $140,3 million – capital invested with public funds into startups in 2012,
  • 4 major accelerators active in Kenya – 88Mph, Savannah Fund, Sinopsis Group and The Growth Hub,
  • 2 major incubators are active – iLab Africa and mLab, and
  • 3 major co-working spaces exist – Business Lounge, Genius Executives and iHub.

Nairobi’s tech scene could be worth as much as $1 Billion to Kenya in the next 3 years (by 2019) according to Bloomberg reports.

Silicon Savannah – Where It All Started!

  • 2003 – M-Pesa, a mobile money transfer service, was first conceived in London in 2003, by Nick Hughes, Head of Social Enterprises at Vodafone, one of whose group partners was Kenya’s mobile phone carries, Safaricom.
  • 2007 – Fast-forward 4 years later, Safaricom rolled out on a mass scale in Kenya – where M-Pesa tapped into a huge demand for mobile money services among the unbanked. M-Pesa has a stronger and more trusted brand as well as better distribution channels than any local bank. “The success of M-Pesa strongly suggests that banking for the masses in Africa is likely to be driven more strongly by mobile operators than by legacy banks” according to Gordon Institute of Business Sciences – Digital Disruption: Changing The Rules of Business for a Hyper – Connected World Report.
  • 2007 – Also saw the conceptualization of Ushahidi.
  • 2008 – Ushahidi, developed as geo-mapping software to pinpoint violence during Kenya’s disputed 2007-2008 presidential elections. Ushahidi has evolved into a highly advance open software provider and to date, the organisation has made possible the creation of more than 60 000 maps detailing environmental issues, elections and human rights abuses in 159 countries and over 31 languages.
  • Ushahidi also launched BRCK – a robust portable internet connectivity device designed to keep people connected in rural and urban areas where electricity and internet connectivity are problematic. This service has been received well as far as the US.
  • 2010 – iHub formation and 152 companies have formed out of the iHub since launch. iHub has +- 15 000 members and on a day to day, – young Kenyans work in tis labs and interact with global technologists such as Yahoo CEO, Marissa Mayer (a past speaker).
  • 2010 – The completion of the TEAMs (The East Africa Marine Systems) undersea fibre optic cable – significantly increasing broadband in East Africa. TEAMs was a project by Kenya’s then Permanent Secretary in the Ministry of Information and Communications – Bitange Ndemo – who saw Kenya’s vision as becoming a regional ICT hub.
  • 2010 – Launch of M-Farm which was founded by a trio of women – the company gives farmers access to real time information about market prices and where they can sell produce and buy supplies. M-Farm was recognised by President Barack Obama as an inspiring “hope” for the country – during his July trip to Nairobi for the Global Entrepreneurs Summit, which also confirmed Kenya as fast emerging as a business hub within the global market place.
  • 2013 – Kenya formed its own fully fledged ICT Authority.

Also Kenya has seen recently the launch of innovative solutions in the market by tech startups, such as M-Kesho (by Safaricom and Equity Bank) a mobile phone savings account. M-Kesho is an extension of the already successful M-Pesa. It offers M-Pesa users the opportunity to open and operate a bank account, save, withdraw, access loans and micro-financing and other services – which responds well to Vision 2030 Kenya’s economic blueprint which aims to propel the country into a middle level income nation by 2030 according to Equity Bank Report.

Nairobi has also seen the advent of serious startups such as iCow, Ma3Route, Eneza, Mawingu and most recently the Konza Technology City, a partnership between America’s National Business League – a planned urban development in Machakos and Makueni counties, a 5 billion pound 2000 hectare technology city 60 km from Nairobi that will house 200 000 people and become the new African headquarters for Google, Microsoft and Facebook.

The Tech Landscape Environment Spread

Silicon Savannah is but one corner of Africa’s tech movement, development and advancement. Africa is continually producing regional ICT hubs and countries in the Sub Saharan Africa (SSA) region are jumping into the tech bandwagon. The notable innovations spaces across SSA are CCHub in Nigeria, Hivecolab in Uganda, Meltwater in Ghana, Silicon Cape Initiative, JoziHub, Innovation Hub and MLab Southern Africa in South Africa.

Also the continent has succeeded in inspiring individuals in becoming global spokespeople for Africa tech and serves as mentors to its youngest aspirants. Individuals playing a vital part in this marvel include, Rebecca Enonchong, CEO AppTech; iHubs’s Erick Hersman and Juliana Rotich; Marieme Jamme – UK based business woman; Sim Shagaya, founder of Konga – Nigeria; Chinedou Echerou, founder of Hopstop and Vinny Lingham, Founder of Gfyt and a Silicon Valley Venture Capital, Entrepreneur. Investors have also been keeping tabs in the tech development of the continent, to an extent of attracting the US foundation – Omidyar Network; USAID to mLabs; African governments (Nigeria funding of iDEA Hub); Facebook opening its first Africa head and SSA office located in Johannesburg, South Africa; SAP investment of $300 million through 2020; IBM opening its first Africa research centre in Kenya – a $100 million facility creating an African version of its Western supercomputer – dubbed Project Lucy.

The value of venture capital investment fuelling Africa’s startups has moved from the millions to billions. In 2014 more than $400 million was in venture capital funding for Africa startups and projected to be at least $1 billion in VC investment in Africa tech startups in the next 3 years according to Crunchbase Report.

Positive Support System for Kenya Tech Ventures

The Kenyan government recognises that startups create jobs – and to that end is making several investment to support the entrepreneurial ecosystem as compared to other governments in the SSA region.

During 2013 – the government partnered with Nailab incubator to launch a $1.6 million technology program to provide entrepreneurs with access to capital and education – helpful industry networks and contacts.

The IPO48 startup competition – another initiative that proved useful to M-Farm’s founders, which have received total $10 000 in investment prize money and additional funding from other investors.

Kenya government has been instrumental in been supportive to women in business. The president of Kenya is at the forefront of ensuring that women entrepreneurs are being actively recognized and heard.

In closing, what to expect from Africa’s technology future?

4 factors are certain in this case:

  1. Silicon Savannah used as a template by other developing countries on the continent to advance ITC plans and infrastructure and to actively tap on technology as an economic drive of GDP growth, advancement, value addition and most importantly, job creation.
  2. Africa will continue to utilize technology as a panacea to solve long standing socio-economic problems. Technology will continue to disrupt even the most stable of environments – thus increasing the likelihood that the continent would become a commercial tech opportunity.
  3. Utilizing Africa technology solutions with global application – positioning Sub-Saharan Africa tech apps as solutions to local problems and also positioning the solutions on a global competitive scale.
  4. Positioning the continents tech startups for commercial large scale rewards through first exists, IPO’s and tech mogul type sensation.

Africa is on the right path; Kenya has proved that with the Silicon Savannah, M-Pesa, the Konza Technology City and the iHub and subsequent emerging startups – producing multinational tech startups capable of listing on global stock exchanges and generating amazing revenues and returns – coming out of Africa.

Today Kenya is recognised as the pride of the global technological innovation sphere through the revolutionary M-Pesa, a mobile transfer service – which can well pass as the innovation of the decade which has transformed lives and given most Kenyan’s who for years had been shunned by conventional banks a reason to walk tall. E-commerce, digital finance, fintech, video on demand, app development, sharing economy, will create Africa’s tech first billion dollar home run, and Africans are vying for that to happen.

Documented and Compiled by Mr Dipolelo Moime, Chief Executive of Legato Consultancy Pty Ltd – South Africa – dipolelo@legatoconsultancy.co.za

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