- Kenya’s tech industry regulator says Kenyan startups have the potential to drive up to 70 percent of Kenya’s digital transformation.
- However, latest data shows about eight out of 10 Kenyan startups tend to close shop within the first three years of operation.
- Communications Authority CEO Ezra Chiloba says by forming strategic partnerships, startups can receive valuable insights and support for growth.
Despite a majority of Kenyan startups failing to reach three years into operation since launch, stakeholders in the sector maintain that they are key to the country’s digital transition.
According to Ezra Chiloba, the CEO of industry regulator the Communications Authority, startups have the potential to drive up to 70 percent of Kenya’s digital transformation. However, many of them face significant obstacles such as funding and compliance constraints, leading to a high rate of closure within the first year.
Chiloba highlighted that around 80 percent of startups tend to close shop within the initial year of operation. This leaves only a small fraction (three to five percent) making it past this critical stage. Quite often, the remaining 15 percent fall into the unpredictable category, facing low chances of survival.
Tapping partnerships for growth
To address these challenges, Chiloba proposed that startups, particularly fintechs, should collaborate with investors from various sectors.
“Leveraging partnerships means the firms will enhance financial control and drive operational efficiency,” said Chiloba.
He added that by forming strategic partnerships, startups can receive valuable insights and support. Such support will enable them to focus on their core activities and achieve their strategic objectives.
The Group CEO and managing director of Diamond Trust Bank (DTB) Nasim Devji added that collaborations between financial institutions and technology companies allow customers to access personalized, secure, and user-friendly financial solutions, placing both parties at the forefront of the industry.
These insights were shared during the market entry announcement of a Kenyan fintech company, Boya. The company is introducing a virtual expense card that aims at facilitating seamless and cost-effective transactions for businesses. The virtual card solution assists firms in managing both local and international payments and expenses with zero fees.
Boya’s CEO, Alphas Sinja, is attributing the achievement of this milestone to the company’s partnership with DTB and payments giant Visa. Boya has integrated DTB’s cards as a service offering into its platform. This strategy is enabling its customers to access virtual corporate cards supported by the Visa.
Kenyan startups funding outlook
In 2023, Kenya’s startup ecosystem has been flourishing, firmly establishing itself as a dynamic hub for innovation and entrepreneurship. With a favorable regulatory environment, increasing access to funding, and a pool of talented entrepreneurs, Kenya is witnessing a surge in the number of innovative ventures across various sectors.
One of the key drivers of Kenya’s startup growth has been its tech-savvy population. The country is experiencing rapid advancements in technology and internet connectivity, enabling a conducive environment for startups to scale their solutions locally and globally. In particular, sectors such as fintech, healthtech, agritech, and e-commerce are witnessing growth and investment.
The government’s commitment to supporting startups has been pivotal in nurturing the ecosystem. Initiatives such as tax breaks, streamlined business registration, and funding opportunities are encouraging more entrepreneurs to take the leap into the startup world.
Additionally, incubators, accelerators, and co-working spaces have emerged in major cities like Nairobi and Mombasa. These hubs are providing valuable resources and mentorship to Kenyan startups.
Moreover, investors, both local and international, are recognizing the potential of Kenyan startups. As a result, venture capital funds, angel investors, and impact investors are actively seeking opportunities to invest in promising enterprises. This influx of capital is allowing startups to innovate and expand their operations, leading to job creation and economic growth.
Kenya’s startup landscape continues to be vibrant and thriving ecosystem driven by technological advancements, government support, and increasing investor interest.
As the country continues to foster innovation and entrepreneurship, the future looks promising for Kenyan startups to make a significant impact on local communities and the global stage.
