How can Kenyan entrepreneurship be built? How can Kenya grow its startup ecosystem and its economy? We have envisioned potential endeavors and proposals that can build the future of Kenya with global startups through minimal but efficiently placed resources.
Turn the entrepreneurial youth into people able to understand and develop code
Sustain grassroots initiatives such as Nairobi Dev School to learn to code for free
“I wanted to go to a hack school in the US, in New York. But my visa was refused, so I just set up my own school here. The first batch of 12 weeks ended in December 2013” (MartinPasquier.com)
The Nairobi Dev school was founded by Martha Chumo, a 19 year old Nigerian developer. Martha was on her way to Hacker school in New York before her visa problems shut her dreams. Faced with rejection, she instead did what 19 years old rarely do: Set up her own developer school.
At the Nairobi Dev school, she invites women and ethnic minorities to begin coding and programming lessons at her classes. The cost to them? Not a single Kenyan shilling for the first 12 weeks. Yet, she has managed to get guest mentors from all around the world, from San Francisco, Australia and many other countries. She has done this by leveraging on the power of social media, from Indiegogo for funding to Twitter for invitations of mentorship. Many educated youths, unemployed after coming into a turbulent job market, and even professionals come to Martha’s Dev school to help gain new programming skills.
It is grassroots initiatives like these that will ultimately give the best returns on investment. Going beyond the typical arguments of the good such organizations can do for social and economic equality, we can look at other benefits too. A student demographic of youths, women and ethnic minorities are the most well-placed to be able to identify potentials within a wide myriad of society problems and have the energy and passion to tackle them. It is through this demographic that we can see the success and true strength of the entrepreneur spirit.
Help SMEs and existing business to integrate the startup way of thinking
“Eustace’s mission is to have the core concepts of the startup economy (prototyping, incubation) migrate to the more traditional SMEs and big corporations, so as to turn them into intrapreneurs. Startupify the old business, in a nutshell. To do so, Afralti runs programs of incubation, but also assessment of skills for a better placement of the youth (MartinPasquier.com)
Besides imparting specific tech skills to youths, Eustace Maboreke, Director of the African Advanced Level Telecommunications Institute (AFRALTI) also hopes to go beyond that. Although cultivating useful and practical talents is important, youths and entrepreneurs have to be able to carry such skills and communicate them effectively beyond their startup economy and into more established corporations. This phenomenon of carrying the startup mentality within a bigger corporation is known as intrapreneurship. This is what Eustace Maboreke hopes to do at AFRALTI.
This is especially in demand given such a high rate of structural unemployment in the Kenyan labor market that exists despite the relatively well-educated workforce. By giving people both the hard and soft skills to approach local and foreign businesses, these people can then bring the energy, enthusiasm and creative hacking mentality into existing businesses. From there, with an access to resources, and integrating the startup mentality into comparatively larger businesses, they can make a much greater impact.
With organizations like AFRALTI, the Kenyan community can learn to help themselves create an impact on the future of Kenya’s economy.
Let Kenyan entrepreneurship and tech reach out to countries with similar features in emerging markets
Identify countries with similar features as Kenya
“In Kenya, many differences already exist, but some Kenyans share features with people nearby, in Tanzania or Uganda” (Sam Gichuru, Nailab incubator)
In emerging markets, there will always be similar needs. Trawling through the internet, I stumbled upon mVerified, an app that helps verify government documents. This app eliminating the need for a costly and lengthy verification process that requires physically heading down to government offices. In its usefulness, it is similar to the Iranian startup Shafajoo, a startup we covered earlier. Shafajoo is a system that helps arrange booking appointments for patients and doctors. However, it also helps weed out fake medical practitioners by comparing submitted diplomas with the government database.
Although mVerified and Shafajoo are meant to tackle different problems, in different industries and in different ways, their purpose is very much the same; to utilize technology to reduce consumer misinformation.
Even though Kenya may have many cultural differences with the countries around them, people, especially from emerging markets, where food and physical security may be weak and with a lack of a strong centralized government, will always have similar needs. It is spotting these opportunities in countries with similar features (weak government/large mobile base/strong diaspora community) that would allow Kenyan technology and Kenyan startups to grow and expand beyond their borders.
Help Kenyan startups and tech to go and expand out of the country
“Market size is small, and tons of events exist across Africa to spread the word and test markets once a first base has been successful at home”.
Although the Kenyan market size in of itself is relatively small, I would argue quite easily that Kenya still remains the best place for startups to launch themselves. As the regional center for a wide range of industries, not to mention its financial center, Kenya is also well-positioned geographically, with its access to the Indian ocean and its proximity to Middle Eastern and European hubs.
Startups are thus well-placed to establish themselves first in Kenya and expand from there. One example is that of Mpesa, the mobile money platform started by Safaricom. Started and grown in Nairobi, Mpesa is now undertaking the historically unprecedented step of expanding into Romania, unprecedented as the first export of technology from Africa to Europe, rather than the other way around. As established in our earlier point above, the term ‘similar features’ need not necessarily mean cultural features, but rather economic potentials for growth.
While not a perfect example, given that Mpesa had the backing of the large multinational firm, Vodafone, the point remains. Kenya has the potential to act as a testbed which would highly benefit startups and companies with more long term growth strategies. With a more forward looking vision, Kenyan entrepreneurship can become a global phenomenon.
Get a global lead on digitizing Kenyan cooperative movements
Take advantage of a cooperative-based economy at home
“Chama and cooperative economy makes up to 42% of the GDP in Kenya. 300 000 chamas are registered, potentially 3x more are existing” (Ian Grigg, founder of Dinero.sc)
We’ve talked about the chama phenomenon before in detail before to underline the foundation that it stands on. Specifically, the potential that lies behind chamas is the fact that many of these chamas are forced to utilize primitive methods in many steps of its operations.
One startup that is attempting to digitize the chama economy is Airtel Chama, a Ugandan startup that has partnered with the Grameen Foundation. Airtel Chama seeks to digitize private saving and provide credit lines to those who may be unable to obtain them from traditional banking industries. With an established mobile base and a population used to mobile money through tools such as Mpesa, Airtel Chama is in a good position to take advantage of the idea of digitizing chamas and bringing them into the digital age.
With such a large proportion of the economy in the hands of chamas, and its high vulnerability to tech disruption, the digitization of chamas will be a growing market that the Kenyan startup scene will see over the years to come.
Support the expansion of these startups abroad through expanded financial sources
“Turnover of the co-operative economy in 2010: $1 155.1bn”
One of the main problems for Kenyan entrepreneurship is the unreliable financial and investment environment. There exists a misconception from both sides, investors and entrepreneurs, about the needs of the other party. According to Harry Hare, an executive producer for Demo Africa, a platform that showcases innovation by tech companies in the region, local banks and VC’s have a low risk appetite in the region, being accustomed to investing in low risk projects such as infrastructure and traditional brick and mortar businesses. Thus, they are less unwilling to invest in riskier startups.
As a result, many startups in Kenya are largely self-funded, or with the support of family and friends. A report by Groupe Speciale Mobile Association (GSMA) showed that 80.6 % of technology companies are funded by the entrepreneurs or by family and friends. Venture capital firms, angel investors and banks have financed a mere 9.9%. This is in contrast to the much wider variety of financial sources in other markets, where venture capitalists and business angels account for the bulk of investors in tech startups. In Silicon Valley for example, venture capitalists and angel investors account for 64% of the capital to start-ups.
Obtaining financing through friends or one’s own pocket is naturally unreliable. Without a secured source of funding, many start-ups close shop before they reach their full potential. The birth of Kenyan startup funds, such as the Savannah Fund, have helped to provide a source of funding for fledging startups, and are seeing tremendous promise. Other startups have also been appropriately recognized by foreign investors, such as Virtual City, which won the $1 million Nokia Growth Economy Venture Challenge award for innovators. Kenya can also follow models set by other countries, by setting up public or privately funded accelerator programmes, such as SEED Brazil. With strong support from the early onset, promising startups will gain the foundation for which it requires to lift off the ground, attracting even more investors to the region. This could very easily set off a chain reaction, creating a boom in the Kenyan startup scene. Clearly, the potentials for expanded financial services for Kenyan startups are clear and immense.