Entrepreneurship has flourished in Kenya over the past few years as technological advancements, access to capital and networks, amongst many other things, have enabled the growth of an entrepreneurial ecosystem. Following the success of Silicon Valley, Kenya’s capital, Nairobi, is emerging as the country’s own “Silicon Savannah”, hosting over 200 startups with a combined valuation of USD 1 Billion (Wired, 2018).
A shift away from survival businesses to opportunity-driven entrepreneurship might be what Kenya needs to ensure a healthy private sector that generates wealth and provides well paid employment opportunities. In the Kenyan economy, like for many other Sub-Saharan countries’ economies, there exists an informal and formal sector. The former revolves around micro businesses built out of necessity and jobs with irregular income sources, and accounts for ~35% of GDP in Sub-Saharan Africa (versus ~10% of North America's GDP) (IMF, 2019). The latter sector is taxed and regulated, allowing governments to reinvest tax revenues into various economy-building activities and provide more services for its citizens.
In the past decade, the nascent entrepreneurial ecosystem has allowed formal sector entrepreneurship to flourish. More specifically, we believe that the ability to move money more easily and the access to vast amounts of knowledge and networks have contributed to Kenya developing its own “Silicon Savannah”.
Breaking barriers to entrepreneurship
Kenya is already beginning to see the benefits of its technological advancements. M-Pesa, the mobile banking service introduced by Safaricom in 2007, has made it significantly easier for Kenyans to move money. Previously, Kenyans had to carry non-digital money in their wallets to pay for goods and physically travel to a person to receive or give money: now, one can do so almost instantly through M-Pesa. This mobile service is claimed to have lifted 2% of Kenyan Households out of poverty (
Pooling knowledge and resources
The ever increasing presence of incubators and accelerators in Kenya has contributed to the country being ranked 2nd in terms of being an innovation hub in Sub-Saharan Africa (Business Daily, 2019). They act as hubs, a place where insights can be exchanged, networks built, mentorship provided and ultimately, businesses grown. In the past two decades, Kenya’s increased access to the internet has also allowed Kenyan entrepreneurs, even those with small businesses, to access a vast array of resources from all corners of the globe, whether it be online learning programs on various business topics or the ability to connect with other entrepreneurs. Entrepreneurs, armed with greater access to global resources and unprecedented levels of connectivity, are better equipped than ever to achieve business growth.
The impact of a healthy private sector in developing countries is immense: it can hire more people at better salaries, contribute to government revenues for healthcare and educational institutions, develop solutions that will address key challenges, and so on . Through various mentorship programs and access to incubators and accelerators, Kenyan companies are able to more easily grow and innovate within the context of their reality. Recent technological advances have allowed Kenyan business owners to adopt best practices around the globe. We need to build on this initial foundation to ensure that the formal sector entrepreneurs have the right entrepreneurial ecosystem - technology, capital, networks, knowledge - to achieve sustainable growth, and continue on a path of ever growing prosperity.