For a first-time visitor, what strikes you is how Kenya adores its natural heritage. And just as it invites you to soak it all in – the statues of elephants, giraffes, hippopotamus, and much other wildlife that adorn the lush green roadside leading from the airport into the city of Nairobi, Kenya is fiercely loyal to its local tech companies.
“By the time you see our park and meet our businesses, you will want to stay more in Kenya,” said a policeman at the airport. There was a glint in his eye: “Welcome to Kenya.”
Nigeria commands the largest tech ecosystem in Africa, with about 800 startups providing innovation in the different sectors of the economy. The country also takes the top funding destination in Africa for tech companies, raking in about $1.4 billion in 2021, and is already on course to beat that mark in 2022. Tech funding in the first quarter of 2022 was at $600 million, more than double the funding recorded in the first three months of 2021.
But for what the most populated country in Africa gains in size, its tech ecosystem has yet to replicate in the adoption of tech services by the local people.
While many average Nigerians will still blink twice to recollect the names of fintech companies like Paga and Flutterwave, banks come easily to their minds.
“Trust in mobile payments in Nigeria is so low that vendors will rather ask you to withdraw from a PoS than transfer to them,” said Samuel Orogun, a Lagos-based USSD expert.
In Kenya, tech and fintech companies do not just roam freely, they are enjoying cult-like followership. According to an index of 158 countries released by the United Nations Conference on Trade and Development, Kenya also known as Silicon Savannah of Africa is above developed economies such as the United Kingdom and Russia in the use of the Fourth Industrial Revolution technologies to address various challenges, when per capita income is weighed against the ability to adopt modern technologies.
The technologies Kenyans are adopting include artificial intelligence, the Internet of Things, Big Data, blockchain, 5G, 3D printing, robotics, drones, gene editing, nanotechnology, and solar photovoltaic. Already, the country is seen as the cradle of mobile money in Africa, with M-Pesa having dominated the market for many years. It is therefore not surprising that it is one of the prominent digital banking services positioned at a very strategic spot at the country’s airport. M-Pesa has about 30 million active customers against a population of 48 million.
“In Kenya, I can bet people use fintech products more than banks,” said Kiruti Itimu, a tech expert and marketer based in Nairobi. “For example, Kenyans either moved (C2B, B2B, G2C, C2G, or P2P) or deposited around $67 billion in M-Pesa between 1st of October and 31st December 2021 as per the latest CA data.”
According to him, Safaricom makes more money through M-Pesa than what most banks make in a calendar year. M-Pesa raked in $717.6 million in 2021. Another fintech solution that is popular in Kenya is Equitel, which is under the fintech arm of Equity Bank. Equitel has more than 1.4 million customers.
The Kenyan tech ecosystem is currently second behind Nigeria in the top three countries in Africa that have raised the most funding in the first quarter of 2022. Tech companies in Kenya have raised $482 million in the first three months of 2022 according to data from thebigdeal.com compiled by Max Cuvellier, head of mobile for development, GSMA, and Maxime Bayen, Senior Venture Builder, BFA Global.
The penetrative adoption of tech innovation and the growing perception of the country as the tech hub of sub-Saharan Africa is a big attraction for foreign investors like Visa which is launching its Innovation Studio in Nairobi.
“It is a place where we will collaborate, co-create and explore the future of commerce and the impact of new technologies on the way we shop, pay, and are paid. The centre will also offer access to best-in-class payment thinking and technology to tackle the most challenging business problems and uncover new commerce opportunities,” Visa said in a briefing.
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Partners and co-creators can interact with Visa subject matter experts in spaces designed for real-time experimentation and rapid prototyping to develop, using Visa’s APIs and SDKs through the Visa Developer Platform.
Visa is merely tapping into the expansive innovation hub market that has found a home in Kenya. There are over 55 tech hubs in the country.
Nigeria’s Co-Creation Hub also acquired iHub, Kenya’s biggest tech hub at the time, in 2019. The Visa Hub, however, takes things up a notch, especially for payment infrastructure.
According to the global payment company, partners and clients at the Innovation Studio can build upon technologies such as Tap to Phone and Pay on Delivery to develop smarter payment solutions. Cutting-edge technologies that leverage the blockchain, IoT, VR, and biometrics are also being developed at the Innovation Studio.
While more Kenyans would prefer a fintech product over a bank, sentiments are not all positive for the tech ecosystem. Many Kenyans believe that products like M-Pesa are still expensive although they are useful and have become indispensable which makes them continue to use them. But that sentiment is not helped by rising inflation and scarcity of fuel which has hit the income of families in recent times.
Sentiments for banks, on the other hand, are a mixed bag, said Itimu. Some sentiments are positive about the banking products and others are negative, depending on the bank.
