Is Kenya’s tech scene coming apart at the seams?

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Back in mid-2011, I landed in Kenya as a young, wet-behind-the-ears journalist not knowing what to expect and where it would lead. It was a heady time to arrive in the East African country.

I arrived with no particular specialism, but within no time at all there was very little doubt what my primary focus would be. Tech. Six years ago, Nairobi was a buoyant place to be when it came to technology.

The iHub was still in its early, most exciting stages. M-Pesa was still a relatively new innovation, an important story that had not yet got old with the telling. Crowdmapping startup Ushahidi was the darling of the Kenyan tech space, and going increasingly global.

At a myriad of conferences and pitch events I was meeting startups with genuinely exciting products. Not a week would go by without a major investor pitching up at Jomo Kenyatta International Airport, or another undersea cable landing at the coast to provide Kenyans with more bandwidth they could even use at that point.

Those days seem a long time ago now. M-Pesa is an old story, a major innovation no doubt, but one that we are all increasingly tired of reading about in the regularly posted, tired descriptions of African innovation. Ushahidi is now a major global company, a true example of Kenyan innovation exported, but recently found itself at the centre of a sexual harassment scandal that spiralled into accusations of some of its executives holding for too much sway over the local startup scene.

Part of the problem is that there have not been enough major success stories to pick up the baton from M-Pesa and Ushahidi in establishing Kenya – and Nairobi in particular – as a major African tech hub. The Kenyan tech scene has been living off past glories for too long, and in the meantime has been caught up with or overtaken by other aspiring hubs.

There was much excitement back in 2015 when local fintech startup Weza Tele was acquired by AFB for US$1.7 million. Yet this exit is suggestive of part of the problem. Impressive as it may have seemed, US$1.7 million is a drop in the ocean, far less than the majority of Western startups would raise even in a seed round. One person intimately involved in the deal that I spoke to, when told of the reaction in Nairobi, told me they found that “very sad”.

That about sums it up. And, in stark contrast to those heady days of 2011, it is getting harder and harder to find exciting startups from Kenya. Trust me, we’ve tried. Take a look at the startups from across Africa that Disrupt Africa has profiled over the last couple of years – and we publish at least two or three a week – and you will note Kenya is very underrepresented. And this in spite of regularly reaching out to big players in the scene that could recommend startups, if only they could.

This has also been noted by investors. Disrupt Africa’s most recent report on funding for African tech startups – released in January – found the overall amount of funding raised by Kenyan startups declined by 77.9 per cent in 2016 from the 2015 figure. Kenya lagged far behind South Africa and Nigeria, and only raised narrowly more than Egypt and Ghana. A number of investment firms have been and gone. 88mph gave up on Kenya long ago. Even the Savannah Fund is increasingly looking outside of Kenya’s borders for deals.

Where, in all of this, is the government. Since first being elected, President Uhuru Kenyatta has talked a good game when it comes to the local startup scene. He hosted the Global Entrepreneurship Summit alongside Barack Obama, touted Kenya as a “gateway to Africa” for US investors, and told Parliament Kenya was becoming a “startup nation”. He also paid an impromptu visit to a number of Nairobi tech hubs in 2015.

The flagship initiative of Kenyatta’s government when it comes to the tech startup scene was Enterprise Kenya, launched with much fanfare by the Ministry of ICT and the ICT Authority in early 2015 in order to support and build the technology entrepreneurship ecosystem in the country. It was even suggested in April 2015 Kenyatta had set the Ministry of ICT a target of investing in at least 50 startups over the next year. How many has it managed? You guessed it: none.

In spite of the lack of tangible success stories and inactivity on the government’s side, Kenya still has a chance to address the slide. The recent US$10.3 million funding round raised by agri-tech startup Twiga Foods suggested local startups still have the potential to attract the attention of international investors.

Indeed, there should on the face of it be plenty to keep investors active. Politically the country is relatively stable, and as more people get online the market is growing. Integration between East African Community (EAC) member states will also assist this progress. Kenya also has a very developed startup ecosystem, with the iHub especially leading the way in supporting local startups while making itself sustainable as an organisation.

The potential is undoubtedly there, but for a number of reasons Kenya has allowed itself to fall behind. What the local tech scene needs now in order to address the slide is more tangible success stories to attract investors and build momentum.

Ushahidi and M-Pesa were – and are – great innovations. Yet the buzz they generated belongs to the past. It is up to present entrepreneurs and innovators – and the organisations that support them – to ensure Kenya continues to innovate to propel it into the future.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent’s most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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