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Kenya Technology, Innovation & Startup Report 2012: A Preview

Introduction
Kenya has been identified in recent times as one of the countries to watch in Africa as far as technology and innovation goes. Dubbed the Silicon Savanna, Kenya is rising fast as a technology powerhouse on the African continent and more so in Sub-Saharan Africa. The mobile money revolution started in Kenya. To date it has been fairly hard to replicate the success of mobile money in Kenya in the same way in other countries and regions. MPESA has won Safaricom, the countrys leading Mobile Network Operator (MNO) award after award and has broken record after record for the volume of cash that passes through the mobile money system every single day. Ushahidi has borne testament to what young, passionate and talented Kenyans can achieve by creating an innovative solution in a crisis situation that has gone on to become an organization that hires great talent and whose innovative technology has been used the world over. In the last few years, the Kenyan government has also recognized the great potential afforded by technology and innovation to move the country forward. The ICT Board of Kenya was constituted to move the sector forward and has come up with different initiatives to do so. In 2008 SEACOM, a submarine fiber optic cable went live, connecting Kenya to the world and opening up a world of new opportunities for the country to grow its ICT sector. It was anticipated that this event would mark the beginning of

! rapid growth as cost of bandwidth would come down and there would be a rise in speed and reliability of the same, particularly for the Business Process Outsourcing (BPO) industry. After SEACOM, EASSy and yet other submarine fiber optic cable initiatives have come to bear creating massive digital tunnels connecting the world to Africa and Kenya and Kenya to the world. Kenyans have taken to the Internet like never before. The mobile web has revolutionized Internet access, giving Kenyans access to the digital superhighway. Young Kenyans have particularly taken to social networking and the uptake of Facebook has been a phenomenon in itself. Never before has the digital consciousness of the Kenyan people been as alive as it is today. Kenyans are not just consuming, they are creating, and they are innovating. This report is a look at technology, innovation and startups in 2012 in Kenya. What can we expect as the New Year unfolds? Which trends will become mainstream? Will we see more and more tech innovation? Which startups, if any, are poised for success in 2012? Which are the areas to invest in? We talked to several influencers, thought leaders and pioneers of Kenyas digital revolution to get there take on what the future holds for the country as far as technology and innovation are concerned. We also researched a wide array of materials from published papers, to research publications to blogs to get a clear picture and objectively determine where the country is headed. Some of the people we talked to include: Erik Hersman co-founder of Ushahidi and the iHub , Jessica Colaco manager of the iHub, mobile evangelist and researcher, John Karanja founder of Whive, Kaburo Kobia, in charge of Local Content at the ICT Board of Kenya,

! Kelly Murungi from Open Capital Advisors, Sam Gichuru of the Nairobi Incubation Laboratory, Liko Agosa, founder of PesaPal and Verviant Consulting and Mark Mwongela the MD of Verviant.

The following is a compilation of what we found out. We looked at the following areas in particular: Mobile and Mobile Web o Apps o Mobile Money o Mobile Web Internet and Web o Online services o E-commerce o Infrastructure o Social networking and social media Local content Innovation, Startup Culture and Funding

A Little Context: Where we are coming from

There is a prevailing sense that Kenya is at a turning point. At the turn of the year 2010-2011 the World Bank published a press release accompanying its December 2012 Kenya Economic Update that showed that the overall Kenyan economy was at a Tipping Point. The report estimated 4.9 percent growth in 2010 and 5.3 percent in 2011 The report specifically identified the telecommunications revolution as a key driver to the economic growth of the country The growth in ICT is significant and has out-performed all other sectors over the last decade. Without ICT, Kenyas growth rate would have been only 2.8 percent since 2000, barely exceeding population growth. The report attributes the explosive growth in ICT to the liberalization of the telecommunications sector, which induced competition and innovation, resulting in considerable investment and job creation. The report argues that Kenya could develop into a regional hub of IT innovations and IT-enabled services due to its cost advantages, investment in enabling infrastructure including fiber optic cables and a well educated and urbanized labor force. - Kenya at a Tipping Point for Robust Growth Driven by the Telecommunications Revolution

Figure 1: Kenya's ICT Revolution The latest Kenya Economic Update (December 2011) identifies 2012 as a defining year for the Kenyan economy but still recognizes the vital role played by the information, communications and technology field. According to AllAfrica.coms article Kenya: WB - 2012 a Turning Point for Economy Following the launch of the latest Kenya Economic update, a WB report says that despite facing challenges including national elections, the establishment of a new system of devolved government and the possibility of a deteriorating global economy, that the "surging" information and communications technology field could boost the performance of a number of sectors, including transportation, agriculture and infrastructure. "Africa is on a growth path, but Kenya, particularly, has two advantages," Wolfgang Fengler, the World Bank's lead economist for the East African region said. "(These advantages are) great people and a great location." With the impressive success of MPESA and Ushahidi, theres also a sense of expectation that it will happen again, someone will come up with something else that will emulate the success of these two. So far there are many people trying

! there hand at creating a successful technology company but the vast majority are still at the startup stage. Some of the people we interviewed to in the process of putting together this report were of the opinion that weve talked about these two success stories way too much. There needs to be more, we still have not seen critical mass as far as successes go.