NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, November 8, 2017

Ten years ago Kenya was on the cusp of a digital revolution. Safaricom, the leading mobile subscriber, had just completed a successful Initial Public Offering that was over-subscribed by more than 500 per cent and coming just a few months after the 2007/08 post-election violence.

The message that Kenya was ripe for a tech revolution was loud and clear. In the year that followed, M-Pesa became another runaway success and later on Ushahidi, which came on board confirmed Kenya’s rich technology exports.

Soon, innovation hubs such as the iHub and Nailab sprouted across Nairobi as developers and tech companies such as Google and Nokia built an ecosystem to nurture more new and productive ideas that would justify Kenya’s new-found distinction as Africa’s Silicon Savannah.

Today, much of the traction witnessed in the last seven years has slowed to a crawl. Growth in Kenya’s ICT sector has petered out and the country is now struggling to attract fresh technology financing and prove its competitiveness amidst competition from new emerging markets such as Rwanda and Ethiopia. A recent report looking into startup financing in the region found that local e-health startups barely managed to take two per cent of Sh1.9 billion in funding that went to the sector in the last three years.

At face value, the numbers paint the picture of an industry that is doing well. Data from the Kenya National Bureau of Statistics (KNBS) indicates that the value of ICT output increased by 11.1 per cent from Sh280 million in 2015 to Sh311.1 million in 2016.

Photo courtesy of Remko van Dokkum.