Nairobi: East Africa’s Startup Hub

When I asked Mbwana Alliy last month why he founded the Savannah Fund in Nairobi, he had a simple answer—it is East Africa’s technology hub. As part of PDE’s look at Africa I began last week, we focus today on Kenya.

Beyond Alliy, Kenya is also home to rock stars like Erik Hersman who co-founded the groundbreaking mapping website Ushahidi as well as iHub, Nairobi's thriving technology center. It also has a growing number of academic institutions joining the country’s entrepreneurship scene like the Strathmore iLab in Nairobi. It is also the home of DEMO Africa and the core meetings of the LIONS@frica partners.

The iHub I visited in Nairobi started over four years ago with an idea of creating space for the creative genius. It now has more than 8,000 members and holds about 120 events per year. This open community working space and meeting point for accelerator programs and investors is supported by entrepreneurial experts like the Omidyar Network. Its networking capacity alone helps advance Kenya’s image as “Silicon Savannah,” connecting and supporting Africa’s entrepreneurship ecosystems.

The success of the mobile financial transaction facilitator M-PESA and the ever-growing prospects offered by mobile technology inspires young Kenyans to take their ideas to the market (most Kenyan startups are mobile phone-based). This optimism among the young was vibrant during the country’s first-ever Startup Weekend in February of 2012, where ideas such as medAfrica, a real-time public health tool that enables users to check their symptoms by phone and contact a health professional, were exposed to potential partners and investors.

Kenyans are also building bridges with entrepreneurship supporters abroad. For example, two of Kenya’s leading young entrepreneurs were invited to appear last month at South by Southwest (SXSW). Nivi Mukherjee, founder of eLimu, an education technology startup, and Simeon Oriko, founder of the digital literacy Kuyu Project, recently became “Africa Diaspora Fellows” at the Capital City African-American Chamber of Commerce.

There is one important actor in Kenya that is not keeping pace with the growth of the country’s entrepreneurship ecosystem and that is the government—which employs one-third of the country’s formal labor force. Even though Kenya remains an economic powerhouse in East Africa and is forecasted to grow by 6% this year (up from 4% in 2012), the challenges arising from what are dubbed as “inefficient and corrupt” government agencies are many and represent important shortcomings in the country’s emerging startup scene. Compounding those issues are licensing requirements for new businesses that can take more than 100 days and cost over twice the level of average annual income, which obviates the benefit for many of having no minimum capital requirement.

Is there hope for better days ahead? Yes. The recently inaugurated Uhuru Kenyatta’s administration is surrounded by a wave of cautious optimism while there is growing optimism among the young in solving challenges through technology. Kenya offers a textbook example of how entrepreneurs can lead and guide—from the bottom-up—the new government’s efforts to catch up with a greater entrepreneurial vision for the nation. The fact that iHub is the brainchild of the entrepreneur behind the successful Ushahidi is a testament to what young, passionate and talented entrepreneurs can do in this country of 41-million people of which an estimated 70% is under the age of 35.

Stay tuned for how Kenyans are inspiring neighboring countries to push their own entrepreneurship frontiers forward.


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