Kenya, before the obsessions with Singapore, is often referred to as the Silicon Valley of Africa. Like the much-famed US development hub, Kenya has experienced some growth in innovation. Besides, this is the home of M-Pesa. Kenya rivals any other country in Africa in capital raised for startups. This article draws observations from conversations with stakeholders in the innovation space to gauge the level of innovation in the Kenyan startup ecosystem: a foreign investor, a startup critic, and a longtime friend who recently secured funding for his first main project.
Dave (name withheld because he is not legally permitted to speak on the project before its launch) is optimistic about the innovation he is bringing to the market in the near future. This is his first big project as a self-taught developer.
“All I can tell you is that we are going to revolutionize the education systems. We are building something that brings all the school functions into one. We believe it will be a go-to tool for most institutions in the next 10 years. We have received funding, and in the next few months, we are entering the market strongly.”
I probed further into how they secured investor capital and pointed out the complaints from other innovators about the struggle of getting capital.
“I can’t speak for the rest, but we got our investor quite easily. Maybe because we have superior products to the rest. At some point, we must look within ourselves and take the blame from the industry. You must work hard to get these things…I started attending these innovation workshops in Nairobi before even starting the project. It’s always about networking, networking, and networking.”
The startup critic was not shy to refute the claims. He believes networking is just a buzzword with no actual meaning. He blamed minimal government assistance and investor concentration in the big firms.
“We are not at the level of other countries in the support that the government gives us. The closest to any government assistance is the Nyota Fund (laughs). Countries like Egypt have passed laws to enable innovations, and even the government gives regulatory exemptions that are very necessary at the early stages of development.
“Most of the numbers reported in the media are not reflective of the general conditions of the startup market. I think over 80% of the reported investment is in less than ten companies. That can tell you how much the small players in the industry are doing. I have been at the forefront of at least 10 youth startups, and the stages of development are always similar. Excitement before the harsh reality strikes. After some time, you call the guys, and nobody is picking up. You probably meet with the same people in the next project, which almost always goes the same way.
The foreign source who spoke on condition of anonymity indicated concerns of stagnation. He is a foreign investor who has been providing capital to Kenyan companies for over 7 years.
“The challenge at this point is that most young people have this need to replicate M-Pesa and offer a payment solution. Most of their ideas end up getting lost because M-Pesa is too dominant and reliable. They are stuck 10 years ago. Concerningly, there is a euphoria with building among the new developers. Every developer is building something at any point. In fact, most young people avoid jobs to focus on building an obsession without getting the necessary experience. Ultimately, they are better coders than innovators. And better coders than businesspeople. They have a limited understanding of what the market needs, which leads to their failure.
My concern, also, is that the new wave of innovators is attempting to solve non-existent problems. There is never going to be a “payment solution” for a Mama Mboga. As investors, we are moving towards giving debt rather than taking up equity. There is less trust in new inventions and innovations than before. Of course, the hot takes in the industry have already been taken by the big players.
“Before forgetting, there is a massive brain drain. When some foreigners are coming into the country, the top companies in Europe and America are getting the talent out of Africa before they even have a chance to innovate.”
The Kenyan startup ecosystem is bustling like never before. Every other day, there is an innovation on the horizon. One thing is certain: the next phase of the “valley” will be instrumental in enhancing Kenya’s innovation potential. In ten years, we may have the new M-Pesa, as Dave suggests, or be grappling with Mama Mboga payment solutions, as the foreign investor fears. All we can do is wait.
