By Daniel Mpala
It may not be Africa’s strongest or indeed biggest economy, but Kenya is giving the de facto economic juggernauts of the continent a run for their money. In the last decade, Kenya has taken on Nigeria, Ghana and South Africa on the tech scene and lately it seems to be leading the race in innovation / tech start-ups. Since the turn of the millennium, South Africa has generally led the pack in tech on the continent. This has largely been because it had the best and most advance communications networks as well as an advanced capital market. If it stays the course; Kenya is set to upstage South Africa in the next decade even further.
The world is surely taking notice. Google; Intel; Microsoft; IBM and Facebook all have set up a presence in the East African country.
But, just how did Kenya manage this feat? How did it rise from a country whose economy relied largely on the service industry and agricultural sector to being home to the Silicon Savannah; effectively turning it into major player on Africa’s tech scene?
The Kenyan government’s planning and thinking on ICT has played a fundamental role in getting Kenya to where it is today. There are other significant factors; notably venture capital and the success of incubators in the country.
Venture capital has played an important role in Kenya’s success story. Along with Nigeria, Kenya was identified by philanthropic investment firm, the Omidyar Network as one of the most promising countries to invest money in tech in on the continent. The Kenyan tech scene has proven able to entice venture capitalists; according to Venture Capital for Africa in 2015 alone it attracted more overall investment than any other African country. However according to Disrupt Africa’s 2016 report, available here , funding raised by African start-ups dropped in 2016 to around USD$ 129 million. Kenya accounted for 17,8% of that, second behind South Africa.
Notable venture funds operating in Kenya include Safaricom Spark venture fund; Pearl Capital Partners; Draper-DarkFlow. Foreign investors also seem keen on having a piece of the pie, there are quite a lot ready to fund startups in Kenya. Dutch DOB Equity and American Branch.co; Javelin Venture Partners and Institutional Venture Partners are only a handful of foreign investors that either are currently investing in or have expressed interest to invest in Kenya, and more keep coming. Added to this is the presence of lucrative accelerator programmes like Growth Africa which give tech-preneurs access to investors. The popular ones include; Sinopsis Group; 88MPh and Savannah Fund. There are well over 20 such programmes in in Kenya, at the time of writing there were 6 active ones on the popular small business community FS6 taking applications.
As the unconnected become connected in an increasingly connected world, opportunities as well as applications addressing existing problems are coming up all over Africa. Investors are willing to pump capital into Africa’s tech scene to take advantage of the markets that the next 2 billion will bring up.
However that alone is not enough. Governments need to play their part and ensure their policy not only realises how important the IT sector and start up scene is but also goes the extra mile to support and nourish the skills and talent in it. It will take more than just investment into IT communications infrastructure like Kenya has done. African governments need to rethink their approach to this sector.
On the policy front Kenya has been exemplary; if the rest of Africa were to emulate the way Kenya’s policy and regulatory moves, we could see the African continent take on and possibly lead the world in innovation in the tech sector. Kenya has the regions, if not one of Africa’s most robust ICT policies.
Let’s look at their approach to human capital. Besides the formidable programmers and engineers coming out of Kenya’s tertiary education system; given that the Kenyan government spends between 5,4 to 5,5% of its GDP on education, a clear indication that education is top priority; Kenya also wields another powerful human resource; a skilled diaspora. The returning Kenyan Diaspora, most of which is coming back with skills in Business and IT is a key component to the country’s technological success. While most African countries helplessly suffer debilitating levels of brain drain. In 2014 the Kenyan government came up with a well-received policy to counter that. It is called the Diaspora Policy and in line with the country’s Vision 2030, it aims to include the diaspora in issues of national development and hopes to encourage the diaspora to invest in Kenya. It also sought to create databases of Kenyans in the diaspora with the hope of facilitating skill training and knowledge exchange. In a book published in 2007 titled International Migration and National Development in sub-Saharan Africa, Martel Rutten and Koki Mulli explain how Kenya is one of four Africa countries to have explored and initiated strategies to attract the diaspora back to participate in national development by offering attractive incentives to return. Could this have paid off for Kenya?
One thing that certainly paid off is Kenya’s unwavering commitment and heavy investment in its ICT infrastructure. 87% of the population has access to the internet.Yet another example of Kenya’s model approach to ICT policy. Bitange Ndemo is the architect and mastermind of this visionary forward thinking stance on ICT. The Sheffield University educated former Permanent Secretary for Ministry of Information and Communications who held office between 2005 and 2013 sought to develop Kenya’s ICT infrastructure and ultimately turn it into a regional ICT hub. Ndemo believes in the supremacy of technology and it not being an option but rather a priority economic growth; education and development. Moreover he was instrumental in open sourcing Kenya’s data which has no doubt proven beneficial to Kenyan developers.
One of the hallmark projects he oversaw was the construction of The East African Marine System (TEAMs) between 2008 and 2009. The 5000 km fibre optic undersea cable linking Fujairah in the United Arab Emirates and Mobasa cost USD$130 million and was jointly financed by the Kenyan government; Etisalat and Kenyan operators. This project greatly improved broadband speeds in Kenya. Even more importantly, this project killed two birds with one stone- access points and prohibitive costs; two problems hindering internet access on the continent. Prior to this Kenya had largely been reliant on expensive satellite links. With time, the reduction in costs is expected to trickle down to Kenyan citizens. After the completion of another fiber-optic submarine cable system SEACOM, wholesale customers saw a 90 to 95% drop in price per megabit. Besides the TEAMS fibre optic cable, Kenya is also linked to the East African Submarine Cable System , Lion2 and SEACOM fibre optic cables. These four cables are said to have brought down Kenya’s cost of bandwidth by 80%.
Sadly, one would expect that by now internet access would be fairly cheaper in Kenya by now, however that has not been the case, data from the World Development report suggests that Kenya still has some of the most expensive data prices in Africa. Here’s a crucial regulatory challenge the government needs to take on, but I digress. During Ndemo’s tenure, he saw to it that Kenyan universities got unlimited internet.
Following the tremendous success of ILab Africa and m:lab; the most prolific incubators in Kenya, the government has committed to commit to establishing a tech hub in each of its 290 counties.
The Kenyan government does not just want to stop that there, it literally has so much counting on tech. As part of its Vision 2030, it has placed so much importance in information technology. It clearly sees tech innovation as a key driver of its economic growth in years to come. One of its main focus areas is Business Process Off-shoring and Information Technology enabled services. A key component of this objective is the construction of Konza Tech City. This flagship project which is currently ahead of schedule was launched in 2013 and is set to create around 20 000 jobs in the tech sector with forecasts of contributing up to USD$96 million to the GDP.
Bloomberg predicts Kenya’s tech scene could be worth USD$1 billion in the next 3 years. This seems a modest estimate looking at how innovations coming from the Kenyan tech scene have global applications from election mapping platforms like Ushahidi; Uber for ambulance apps like Flare to internet connectivity solutions like BRCK. There are over 38 Fintech companies operating in Kenya, all seeking to outdo M-pesa which is now famous the world over and has been copied in Africa and around the world. Kenya’s Vision 2030 has placed ICT at the forefront of it’s goals, indeed, technological innovation is central to Kenya reaching its goal of becoming a middle level income country by 2030. The Kenyan Govenrment is in the process of reviewing its ICT policy; what’s more impressive is it plans to consult the very people driving this sector; students; academic institution and private stakeholders. Other African states should be keeping a close eye on this, they could learn a thing or two.