Nairobi is one of the hottest growth areas in the worldwide tech sector right now. Multinational companies including Google, Nokia and Microsoft have set up shop in the capital of Kenya and turned it into Africa's new business hub. And this May, IBM rubber-stamped Kenya's growing potential by choosing the East African country over Nigeria, Africa's most populous nation, to set up its first African Innovation Lab in.
Online and Mobile Sectors Skyrocketing
What has inspired this enthusiasm? Check out these incredible growth statistics that have emerged from our recent research on African and Kenyan market trends:
- Africa's annual mobile growth rate between 2010-2013 was 82% - the fastest growing region in the world.
- There are 500 million mobile subscriptions in Africa right now - and this figure is expected to increase by 50% within the next 5 years.
These trends are mirrored in Kenya's telecoms sector:
- 78% of the Kenyan population owns a mobile phone - put this in perspective against the fact only 251,000 out of a population of 41.6 million have a landline!
- At the end of 2012, 41% of Kenyans were connected to the internet. Just one year before that, in December 2011, the rate was 22.7%.
And finally:
- Mobile data continues to dominate the internet market, contributing 99% of total internet subscriptions.
We had to read that one twice, too.
Here's the video that launched the Konza City, or Silicon Savannah, in 2011.
Kenya as a Source of Innovation
Clearly mobile is a key technology for the country - so much so that it has enabled Kenya to leapfrog traditional models of development. Kenyan companies have even created successful innovations, for example in mobile money, that are being exported to other countries.
Here are our top Kenyan tech companies:
M-PESA
Over two thirds of the Kenyan adult population is subscribed to mobile money transfer services and 78% of that number use M-PESA. Individuals can send money to others via their phone through a network of over 60,000 local agents. The system is used for everything ranging from mobile phone top-ups to paying bills, managing loans and savings products and even purchasing items online.
BRCK
Brck is a new product that bills itself as Africa's answer to internet connectivity. Created by the makers behind Ushahidi, the crowd-sourced crisis-mapping software that first put Nairobi's tech scene on the map, Brck is a backup internet modem cum generator that will make sure you can stay online even during power outages or while on the move.
M-FARM
M-Farm is an award-winning software company led by an all-female team. The company's technology enables farmers to create market linkages and increase their income by providing them with pricing information and a platform to aggregate their orders and supplies.
Strong Government Leadership
Much of this growth has been made possible by strong national leadership. The Kenyan government has included ICT in its Vision 2030 plan. As well as driving the growth of bandwidth access, Kenya was the first country to introduce a government open data portal.
And this January, the government announced the construction of Konza, a new $10bn technology city that aims to create 200,000 jobs and cements Africa's role as a regional technology leader.
Challenges
Entering a new market is not without its challenges. At $890, Kenya's GDP per capita remains below that of most developing countries. And though Kenya has a strong business environment and good education system, those thinking of entering this emerging economy have to work around weak physical infrastructure.
On top of that, Kenyan consumers are very different from those in other countries. Thorough market research is needed to fully understand the mindset and habits of your target market to ensure that your product or service will be a success.
