In the postcolonial era, Kenya emerges with independence and a capitalistic economy. However, the Kenyan startup success story does not begin here. Due to a series of factors; corruption and a lack of technical expertise resulted in a relative stagnant economy. This lasted until the implementation of major economic reforms and anti-corruption campaign in the 90s.
In 2006, the first undersea Internet cable was laid for Kenya. The resulting boom in connectivity kick started the formation of Africa Online, a pan-African Internet service provider based in Nairobi. From here, the background for Kenyan connectivity was set.
Kenya’s mobile market
Entering the 20th century, a drop in phone prices allowed Kenya to see a rise in usage in its mobile market. With greater connectivity, Mpesa, a mobile money system built by the telco firm, Safaricom, first realized the potential for tech-based startups. We did an earlier article detailing the creative rise and history of Mpesa here. Since then, Mpesa, and its resultant knockoffs, have resulted in an economy where 31% of the GDP spent is via mobile devices.
The growth of private Kenyan startups: Ushahidi
However, the true watershed moment came during the 2008 Kenyan electoral crisis. This incident helped popularized Ushahidi, a crowd sourced crisis map accessible through SMS. Riding on this success, Ushahidi founder Eric Hersman launched iHub, Kenya’s first IT cluster downtown Nairobi, now an epicenter of technology development in Africa.
Following the success of locally bred tech startups, the Kenyan government has also stepped in to help encourage the growth of the tech industry. In 2013, the government plan “Vision 2030” was unveiled. Details of it included the construction of a giant tech city “Konza”, dubbed the “Savannah Sillicon” to be built for $14.5bn, to sustain the innovation ecosystem. Their commitment to encouraging startups have even been extended legislatively, with a presidential directive directing that 30% of public tenders be reserved for companies started by youth (below 25), women entrepreneurs or people with disabilities. Such a definition is naturally favorable for young startups and will open up opportunities for government contracts.
The Kenyan market is now growing in a wide range of areas, many of them riding on the growth of the mobile market. With a gradually maturing infrastructure, we can easily see the Kenyan startup ecosystem expanding in other African countries.
If you like emerging markets trends, you may enjoy our BRICS startups series here, with amazing stories from Brazil, Russia, India, China and South Africa