M-Pesa, a mobile money transfer platform owned by Safaricom, ignited interest from foreign investors in Kenya as an emerging hub of tech and innovation as it swept across the country and has now been mimicked across Africa. Focus shifted to Kenya and what else the country may have to offer especially on the tech innovation platform.
Growth of Technology in Kenya
Kenya’s technology services sector has grown from £11m in 2002 to more than £300 million in 2013 and the figures are rising. According to Forbes, in 2013, a staggering 43 percent of Kenya’s GDP flowed through M-Pesa, with over 237 million person-to-person transactions. By 2015, 17 million Kenyans, were using the M-Pesa mobile payments system, making the country a leader in mobile payments technology. Monthly transfers and payment of goods and services amount to around a staggering £733 million ($1.13 billion).
In Kenya, we see a country that has pioneered a mobile technology economy that points to future trends in the rest of the world. The mobile technology platform has transformed how financial services are conducted in the East African country, with small business owners now being able to access loans for as little as shs.1500 to as much as Shs. 100,000 from their mobile phones, which has opened up borrowing opportunities for a huge sector that had previously been locked out. The rate of tech revolution in Kenya is moving at a fast pace as it appears that the country is quickly positioning itself as a trend setter not just for the region but for the continent as a whole.
Calling a taxi in Nairobi shatters the Western world’s outdated preconceptions about Kenya and developing economies, and as Uber, Little cabs and the rest of the mobile based cab services in the country continue to operate in stiff competition, the prices of the services just keep getting lower and enhancing transport especially in the nation’s capital. As the Economist notes, it is easier to pay a taxi fare by mobile phone in the city than it is in New York.
Whilst the likes of Mauritius, Rwanda and Tanzania have experienced a rapid increase in modern services and technology, Kenya is a better bet for investors because its technology is becoming the key driver to economic development and growth.
Where it started
Kenya laid down four markers between 2007 and 2010 to inspire the country’s Silicon Savannah moniker: mobile money, a globally recognized crowdsourcing app, Africa’s tech incubator model, and a genuine government commitment to ICT policy. And in 2009, backed by the Kenyan government, four fibre optic cables came ashore, bringing a new, faster internet connection. Prior to this, the internet was only available via satellite and was too expensive for many users. After 2009, prices fell and, since then, the number of people using the internet has tripled to almost 12 million.
Maximising on past African economy giants’ slips
Nigeria and South Africa have for a long time been the economic giants of Africa, particularly in terms of natural resources, such as mining and oil refinery. Recent development have however led to a shake-up in the sectors that have acted as pillars for the two countries. Nigeria is currently under recession with the country seemingly placing itself under the mercy of the rise and fall of global prices – crude oil sales account for 70% of government income.
Of South Africa’s mining industry, Michal Kotzé, Mining Industry Leader for PwC Africa, had this to say in a report released yesterday, “…Companies had no choice but to cut back on new developments, re-focus on profitable production rather than maximum production and to save costs. The long-term nature of mining investments translates into a significant lag in the supply response to price changes. This lag contributes to the cyclical nature of the mining industry. Although there is no consensus, we have probably reached the bottom of the cycle, but may stay here for some time.”
By focusing on financial services and telecommunications, Kenya has future-proofed itself by becoming the go-to African market for the likely economic drivers of the next few decades. With a supportive government and a young, tech-savvy population, as well as further innovation on the horizon, Kenya is well-placed to continue on its path to becoming Africa’s leading technology hub.
The future of technology in Kenya – Konza City and Silicon Savannah
Dubbed “Silicon Savannah”, this is an area in Kenya that has attracted a range of tech start-ups and venture capital firms. International tech giants such as Google, Intel, Nokia and Microsoft have sites in Nairobi and IBM has recently opened a new tower block, the IBM Innovation Centre, which is the company’s first research lab in Africa.
The country has also channeled a lot to see Konza city – a techno-city still under construction- become a reality. The delopment is located 60 kilometres away from Nairobi. These investments are clear votes in confidence in Kenya’s status as a globally-recognised hub for technology and innovation.
Recently, Nairobi was noted as an emerging hot spot for business leaders seeking to drive social change, according to a poll of global experts on the best countries for social entrepreneurs. Stephanie Koczela, co-founder of Nairobi-based Penda Health, a for-profit medical clinic group, said in richer countries like the united states people often ignored or dismissed social issues and enterprises but poorer nations saw the impact. “In Nairobi, they want to learn more and help to drive change… Communities here are invested in social enterprises because they understand that they are striving to make the city a better place,” said Koczela.
“The mobile platform is emerging as the single most powerful way to extend economic opportunities and key services to millions of people,” says Christine Zhen-Wei Qiang, World Bank economist and editor of a new Bank Group report on information technology and development,Information and Communications for Development 2009: Extending Reach and Increasing Impact.
Silicon Savannah now plans on launching the advent of 5G technology, expected to be rolled out in the next decade. The move will bring unprecedented speed to mobile on a level similar to that of current high-performance optic fibre networks. Speeds of over 800Gbps – the equivalent of downloading 33 HD movies in a single second – will exacerbate Kenya’s technological capabilities.