Kenyan Government Invests in Booming Nairobi Tech Sector
Kenya’s Information, Communications and Technology Ministry announced on March 17th it would revise the sector’s policy guidelines, due by June 2016, in an attempt to introduce new technology and expand public investment in the booming tech sector based in Nairobi. Since 2010, the Kenyan economy has consistently grown at 4-6% per year, bolstered by high population growth, urbanization and a burgeoning tech market. Under the leadership of former President Mwai Kibaki, Kenya began heavily investing in communications and technology projects, such as The East African Marine System (TEAMS) and the Notational Optic Fiber Backbone Infrastructure (NOFBI). TEAMS, completed in 2009, links Kenya’s port city of Mombasa with the United Arab Emirates through a fibre-optic undersea cable, while NOFBI has greatly enhanced the country’s data integration and transmission network with final work to be completed in 2016.
By way of its many technology infrastructure projects, Kenya has undergone a tech boom. According to a Bloomberg report, Kenya’s tech sector accounted for approximately 8.4% of GDP in 2014 and could possibly be worth as much as 1 billion USD in the next three years.
Nairobi, often called Silicon Savannah, is currently home to over 300 startups, many of which focus on microfinance, developing mobile payment systems, and increasing online market access.
One of the most renowned startups, M-Pesa, was pioneered in 2007 by Kenya’s largest local telecom firm, Safaricom, which noticed that its customers were using mobile airtime as a proxy for payments. A formal framework was developed allowing subscribers to securely deposit money into mobile accounts and send the money to relatives or customers of their own. In 2012, over 37.2 billion USD (one third of Kenya’s GDP) was transacted through the mobile money-transfer service.
M-Farm, another Nairobi startup, provides farmers with real-time market prices and the opportunity to sell their goods online, where customers can browse for products like tamarinds, cabbages and watermelons.
As Nairobi vies to be the tech hub of the African continent, competing against a more populated Lagos in Nigeria and wealthier Cape Town of South Africa in particular, its fundamentals remain strong. A 2012 study from the Economist Intelligence Unit projects Nairobi to be in the top 40 growing cities in the world by the end of 2016, due to skilled workforce and low cost of living. Internet penetration continues to accelerate, as 43% of the Kenyan population have access to the Internet and 82% owns a cellphone as of 2014, according to the World Bank.
With the Kenyan government’s continued financial and moral support for the tech industry, including the opening of 30% of public contracts to young entrepreneurs by executive decree, Nairobi’s tech industry looks to be a tech hub for years to come.