Kenya innovation ecosystem

A 1-week exploration following the Afrikoin conference in Nairobi

December 2013

We believe…

Innovation has no place in a global world, it’s everywhere

Innovation ecosystems can learn from one another

Local context matters and should be a source for innovators

This is why…

We’re on a world tour of innovation ecosystems!

History & context of innovation in Kenya

Political sparks in an already fertile background

A brief history of Kenya innovation ecosystem

• 1895: The British Empire established the East Africa Protectorate• 1964: The Independent Republic of Kenya is proclaimed, English is its official

language• 1960-1980: Although officially “non-aligned”, Kenya adopts a pro-western

stance, resulting in a capitalistic economy (neighboring Tanzania is socialist)

A brief history of Kenya innovation ecosystem

• 2002-2005: drop in prices of phones make them accessible• 2005-2006: 1st first undersea cable for internet in Kenya. Africa

Online, based in Nairobi, 1st pan-African internet service provider• 2007: Mpesa, the mobile money system, is built by telco Safaricom

A brief history of Kenya innovation ecosystem

• 2008: An electoral crisis makes Ushahidi, a crowdsourced crisis map accessible through SMS, hugely popular

• 2010: Ushahidi founders & team launch iHub, Kenya’s 1st tech/IT cluster downtown Nairobi, now an epicenter of tech in Africa

• 2013: Government plan “Vision 2030” includes giant tech city Konza to be built for $14.5bn and sustain the innovation ecosystem

Success stories in the Kenya tech industry

• Mpesa, a mobile money system built by Kenyan telco Safaricom, makes 31% of the GDP spent via mobile

• iHub is the 1st coworking space and tech center in Kenya, with many startups, incubators and community-driven events

Online & tech landscape of Africa

Kenya is a top connected country in Africa…

• As often in Africa, Kenya is a “mobile first” country• 12% of mobile users in Kenya are smartphone users

... With high social media activity…

Asia 27%

• More than “social media”, social is a way of life in Kenya, with 45% of the GDP coming from the co-operative economy

• Political events (elections crisis in 2008, Westgate attacks in 2013) stir social media use

… and strong co-operative/sharing economy

Asia 27%

• 42% of Kenya GDP made by cooperative companies/ventures• Chama (groups of women) are the base unit of this sharing economy• They tap & collect money from unbanked women and own most

transportation mini-buses in Kenya, for instance

The best is still to come in Africa tech

Asia 27%

Kenya innovation ecosystem today

Pros & Cons, Top Connectors & local best practices

Pros and cons of Kenyainnovation ecosystem

• Hub of a 150 million people region (Tanzania, Uganda, Rwanda, Burundi, and Kenya) with forthcoming monetary union

• English-speaking (mother tongue)

• Diversified economy = many innovation possibilities in different industries

• Cooperative/Sharing economy accounts for 42% of GDP (chama): highly social base

• Diaspora effect: $1bn remittances in 2013

• Supportive government: KONZA city + 30% tenders allowed to youth/women entrepreneurs

• Security issues (Somali & South Soudan nearby) and recent Westgate terrorist attack

• Success in Kenya/East Africa does not mean success in other parts of Africa (cultural differences)

• Lack of technical skills/talent

• Market size not so big + many cultural differences inside Kenya (biggest ethnic group = 20% of population)

PROS CONS

Top connectors in KenyaEric Hersman (Twitter), founder of Ushahidi then iHub, Kenya’s first tech cluster. Known as “White

African” online. Reputed observer of the African tech scene beyond Kenya.

Mbwana Alliy (Twitter), founder of the Savannah fund, Kenya’s VC. Tanzanian national with Stanford

education and Silicon Valley experience.

Martin Obuya (LinkedIn), engineer in satellites comms turned facilitator and multi-hat man at iHub. Also connects new media community and education.

Brian Muthiora (LinkedIn), worked previously at Safaricom, Kenya’s telco and operator of mobile

money Mpesa. Now at GSMA (telco association) as regulatory expert.

Top connectors to bridge Kenya to the world

Pelle Braendgaard (Twitter), Danish & American codeur turned entrepreneur with Kipochi. Ties up

Bitcoin to remittances with strong vision on crypto-currencies.

Eran Feinstein (LinkedIn), veteran of the mobile payment industry in Africa, heading 3GDirectPay.

Njeri Chelimo (Twitter), Codeur turned hacktivist, running Nairobi Dev School to teach for free coding

to Kenya youth.

Gianluca Iazzolino (LinkedIn), research at the University of Edinburgh, working on how Somali use

mobile money (hawala).

Best practices of Kenya innovation ecosystem

• iHub tech cluster runs without support from government or “usual suspects” of the tech world

• Large autonomy and “test and try” culture for anyone with a project and a will

Best practices of Kenya innovation ecosystem

• A long-term vision from Kenya government embodied in “Vision 2030”• A new huge tech cluster called Konza City ($14.5bn investment) to be

build nearby Nairobi

Best practices of Kenya innovation ecosystem

• New Constitution includes 30% of public tenders reserved for companies started by youth (below 25), women entrepreneurs or persons with disabilities

What’s next for Kenya?

Recommendations to push forward the innovation ecosystem

Next steps for Kenya innovation ecosystem

Turn the entrepreneurial youth into people able to understand and develop code

• Sustain grassroots initiatives such as Nairobi Dev School to learn to code for free

“I wanted to go to a hack school in the US, in New York. But my visa was refused, so I just set up my own school here. The first batch of 12 weeks is ending this December 2013” (MartinPasquier.com)

• Help SMEs and existing business to integrate startup way of thinking

“Eustace’s mission is to have the core concepts of the startup economy (prototyping, incubation) migrate to the more traditional SMEs and big corporations, so as to turn them into intrapreneurs. Startupify the old business, in a nutshell. To do so, Afritel runs programs of incubation, but also assessment of skills for a better placement of the youth (MartinPasquier.com)

Next steps for Kenya innovation ecosystem

Reach out Kenyan tech to countries with similar features in emerging markets

• Identify countries with similar features as Kenya

“In Kenya, many differences already exist, but some Kenyan share features with people nearby, in Tanzania or Uganda” (Sam Gichuru, Nailab incubator)

• Help Kenyan startups and tech to go and learn out of the country

“Market size is small, and tons of events exist across Africa to spread the word and test markets once a first base has been successful at home”.

Next steps for Kenya innovation ecosystem

Get a global lead on digitizing cooperative movements

• Take advantage of a cooperative-based economy at home

“Chama and cooperative economy makes up to 42% of the GDP in Kenya. 300 000 chamas are registered, potentially 3x more are existing” (Ian Grigg, founder of Dinero.sc)

• Support the expansion of these startups abroad

“Turnover of the co-operative economy in 2010: $1 155.1bn”

Eager to learn about the other innovation ecosystems?

Documenting innovation through key events Hot posts, interviews, live-tweet, Google Hangouts

Identifying key connectors on & offline

Discovering alternative and emerging innovation ecosystemsBeyond the Silicon Valley, local innovation hotbeds

Tech, Social impact, Education, Life Sciences…

Increasing mobility of innovators and ecosystem enablersConnecting doers and thinkers through monthly Hangouts

Offering innovation ecosystem enablers to learn and exchange from peers

About our project A world tour of innovation ecosystems

Documenting innovation through key events Hot posts, interviews, live-tweet, Google Hangouts

Identifying key connectors on & offline

Discovering alternative and emerging innovation ecosystemsBeyond the Silicon Valley, local innovation hotbeds

Tech, Social impact, Education, Life Sciences…

Increasing mobility of innovators and ecosystem enablersConnecting doers and thinkers through monthly Hangouts

Offering innovation ecosystem enablers to learn and exchange from peers

A world tour of innovation ecosystems

About our teamAnalysis, community & network

Martin Pasquier

Entrepreneur in Singapore (social media

agency), long-time traveller

Mixes economics, politics and travels to analyze ecosystems,

reports on innovation

Anne Lalou

CEO of Innovation Factory & Web School

Factory in ParisTransfer knowledge of

ecosystems to new generation and to a

network of top French companies

Nicolas Loubet

Serial entrepreneur in Paris

with 3 companies, growth hackerManages and

nurtures creative communities on & offline

Catch us if you can! Roadmap ’13-’14

SUPPORT US! Travel & time of exploration isn’t free Custom reports on emerging markets & trends Workshops, talks on innovation trends Connection to key local players for VCs, brands, tech communities

Links & resources to know more about Kenya innovation ecosystem

• Our archive blog to find all the content produced for this report

• Follow us on Twitter: @martpasquier, @nicolasloubet, @annelalou

• Support us for our world tour, get reports on-demand and more!

Innovation is everywhereAbout

About Sources on the web

• Afrikoin Conference (website)• iHub Research ongoing projects (website)• Kenya’s government “Vision 2030” (website)• Mark Kaigwa’s blog (blog)• Erik “White Afrikan” Hersman’s blog (blog)

Thanks!

Martin Pasquier, for Innovation is Everywheremartin@innovationiseverywhere.com