Nairobi, Kenya, the hotspot of technology in Africa

February 14, 2018

When people think about technology hotspots, places like Silicon Valley or Stockholm come to mind, but few people are familiar with Nairobi, Kenya, the hotspot of technology in Africa. Over the past decade it has flourished, fueled by explosive growth in mobile phone ownership and improvements in connectivity. A decade ago, the rise of the mobile payment system mPesa, enabled a nation, which previously was 95% unbanked, to get access to financial services that leapfrogged many developed countries. Back in 2007, people in Kenya were able to transfer money instantly to each other, while in Silicon Valley, a decade later, people are still writing checks and transfer between accounts takes 3-8 days to process. Today Kenyan’s transfer over $1.1B USD monthly through the mPesa platform.

Two years later, in 2009, four fiber optic cables came ashore, bringing affordable and fast internet connectivity to the country. Prior to that, internet connectivity was mainly provided through expensive satellite connections and very few people used computers to connect. Once the fiber arrived, mobile broadband became the prevalent method of communication, leapfrogging solutions like DSL common in the Western world. Mobile phone ownership rocketed and today 8 out of 10 Kenyan’s own a mobile phone.

This improved connectivity and popularity of mobile phones has helped lay the foundation for Nairobi becoming Africa’s innovation hub, often nicknamed the “Silicon Savannah”. It has attracted technology startups, venture capital firms, and international technology giants such as Google, Intel, IBM, Facebook, Nokia, and Microsoft. The establishment of the co-working space and accelerator iHub in 2010 enabled entrepreneurs to meet each other, have access to affordable working space, and get the attention of global technology companies.

As can be expected, most technology startups in Kenya focus on mobile solutions and there is a large number of home grown smart app solutions that address the needs of people living in developing countries, a market of 6 billion people, usually ignored by the Western technology companies. Coupled with mPesa’s ability to handle micropayments, many of those smart apps enable people with little funds to afford services that otherwise would be unaffordable. An example of this is Angaza, an award winning company that enables pay-as-you-go access to solar energy solutions for communities off power grids.

Providing children with access to digital learning opportunities, farmers with access to market information and guidance on how to increase milk production, and people in rural communities with access to health information and services are other samples of localized solutions that have come out of the blossoming startup ecosystem in Nairobi. The startup ecosystem is therefore not only creating economic opportunities for entrepreneurs and innovators, but also improving people’s education, health, and livelihoods.

The main roadblock for even more rapid growth of the technology industry in Kenya, is access to high quality technology education. The traditional education system leverages technology sparingly and access to practical computer science training is very limited. University education in computer science and related subjects is very theoretical and there is usually a big gap between what employers are looking for in skills and what universities are delivering. New and innovative models of education are required to give students practical training in relevant fields of technology. There must also be new ways of financing these educational opportunities, since the traditional model of paying for courses before getting a job highly restricts people’s access to education. Models such as the one introduced in the US by MissionU might be adapted and replicated for the Kenyan market.

Innovation happens all over the world and that is why we at Beringer Finance believe in fostering the global technology ecosystem and support organizations such as From One to Another, that provides young girls in Kenya with access to secondary education.

/Gisli Olafsson, CTO Beringer Finance