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Business & Profiles
by Stacey Vee

Business and Tech Feature

Kenya: Africa’s tech boomtown

The words “start-up” and “Nairobi” are practically synonymous
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While South Africa and Nigeria are slugging it out in an economic fistfight over which country has the biggest GDP, Kenya is quietly carving a niche as the technological heartbeat of the continent.

Well, maybe not so quietly. If you happen to be a venture capitalist, then you know that the words “start-up” and “Nairobi” are practically synonymous. Kenya is attracting investors from across the globe with her innovative solutions and forward-thinking technologies. They’re calling Kenya “Silicon Savannah”.

Companies like EatOut Kenya, Waabeh (a mobile music service which works like iTunes), and Rupu (which is like Groupon), are just three of hundreds of start-ups that are calling attention to the East African country’s foray into the ICT space. In 2002 Kenya’s tech-related exports brought in just $16m. Fast-forward to 2010, and that number is closer to $360m. So what’s behind this leap forward in technology and communications, in a country that is more famous for growing coffee than coding software?

Africa’s technology paradox

Arguably, the flint that sparked this technological revolution, not just in Kenya but right across the continent, is the mobile phone. It is not without irony that because Africa lags behind in the infrastructure needed to provide cheap, accessible broadband to her people, that there are now more mobile phones per person in Africa than anywhere else in the world, and it is this very fact that is driving innovation in the ICT space, thus putting tech hubs like Nairobi in the international limelight. The fact is that Nairobi is one connected city. There has been something of a price war in Kenya, as a third and fourth mobile telecoms provider have entered the market, driving down prices by as much as 90% in the last handful of years. This is according to a report by May 2014 report released by telecoms researchers BuddeComm, who also state that 76% of all Kenyans have a mobile phone, and 63% have access to the internet. Given that only 0.1% have fixed lines that means almost all Internet access in the country comes from mobile phones. To put this in perspective, in South Africa the penetration rate of mobile phones is 154% (so one-and-a-half mobile phones per person), but only 53% of people have access to the Internet. While there more phones in SA, most of them are low-end devices that can’t go online – meaning that the average Kenyan has a better phone than the average South Africa. Out of interest, 7% of South Africans have fixed lines. According to NetIndex.com, which measures broadband speeds across the globe, Kenya beats both South Africa and Nigeria, when measuring upload and download speeds, even if it is well below the global average.

Know more

Upload speeds / Download speeds:

Nigeria 5.9 mbps / 4.4 mbps

South Africa 5.9 mbps / 2.4 mbps

Kenya 7.4 mbps / 5.6 mbps

Global average 21.8 mbps / 9.7 mbps 

The mpesa story

According to The Economist, Kenya leads the world in mobile money. Mobile banking service mpesa was launched in the country in 2007, as a solution for the unbanked population in a rural country where few live close to an ATM. Now more than 13 million Kenyans are signed up with mpesa, and an incredible 25% of the country’s GDP flows through the service. It has transformed the way that money is handled in that country. Vodacom launched mpesa in South Africa in 2010, expecting similar success, but it gained less than 100,000 users in its first year. It was subsequently relaunched in 2014 with a new game plan more suited to the local market.

The big picture

While South Africa, Nigeria and Kenya still have the most tech hubs on the continent, according to a graphic released by the World Bank in February 2014, they’re not alone. Ghana, Tanzania and Senegal are home to fast-growing technology start-ups – which is good news for the Africa. Technology behemoths like Microsoft, Google, and IBM are swooping in to establish accelerator programmes in some of these countries, no doubt that hoping to stake out their share of Africa’s renaissance. Circling back to the fight to have the biggest GDP on the continent, what Kenya’s economy lacks in size, it makes up for in inventiveness and agility. If this were a Darwinian battle for survival, then Kenya just might have the edge.

Meet serial entrepreneur Mikul Shah

Most famous for combining his passion as a foodie and his skills in IT, Mikul Shah has made waves around the world as a serial entrepreneur, by creating online portals and investing energy into networking hubs that make a difference to the lives of many. Born in Mombasa, Mikul spent a decade in the United Kingdom as he studied and then returned home to Kenya, settling in Nairobi to raise his family.

Bringing a global flavour to his home country and applying his Information Technology skills in a clever way, Mikul launched EatOut in 2009, enlisting the help of two partners who were well versed in the realms of marketing and hospitality. As the EatOut portal grew, so too did its reach, with the online offering now branching into other African countries.

In an interview with StartUp Academy, he says of the early days of EatOut’s success: “Kenya’s ICT Board was sort of pushing venture capitalists and angel funds to come into Kenya and look at what the startup scene is like. We managed to get in front of a number of VCs, and we were able to pitch our concept.” But Mikul’s portfolio of success isn’t limited to the EatOut portal and network.

As a serial entrepreneur, he’s played an important part in launching other startup businesses too. Launched as an offshoot of EatOut, SleepOut spotlights African countries and cities, making it easier for interested tourists to book their accommodation at a variety of accommodation establishments. Mikul is also involved as a mentor and investor at 88mph, a hub that helps African web and mobile startups access funding and networking opportunities across the continent.

Rupu.png Waabeh.png EatOut Kenya.png MG_2034.jpg Mikul-Shah.jpg Waabeh.png
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