I recently took a 10 day visit to Kenya as part of our quarterly ecosystem trips. During the visit, I met with local investors, founders and many other key players, as well as getting first-hand insight into the nation’s blooming start-up community.
In addition to being a country with nearly 49 million people and a rapidly growing youth population, Kenya is one of the most naturally beautiful places on the planet, and is East Africa's largest and most important business, financial and transportation hub.
From my trip various things became apparent:
1. Kenya is at the forefront of Africa in terms of infrastructure development, with construction work rivalling the likes of Riyadh, KSA. New roads were being developed across the country as we travelled from Northwest mountains to the Southeast coast. From highways to skyscrapers, Nairobi is exploding in terms of construction.
Technology is playing its part here too as platforms such as Jumba look to support access to building materials through marketplaces.
2. There are a staggering number of vehicles on Kenyan roads, an unsurprising phenomenon given how heavily vehicles dominate transport, from buses (locally called Matatus) to the mass of Boda boda’s. With this comes a huge prevalence of petrol stations; I saw one almost every 200m in major cities, and there was extensive economic activity centred around and fostered by transport, such as vehicle garages and auto dealers.
Kenya’s demand for vehicles has created great opportunity for companies such as Safe Boda and Watu Credit, which dominate the Boda financing market across Kenya and now 6 other countries. Further, although EV penetration hasn’t taken off, players are beginning to enter this budding new space, for example Arc Ride, a Kenyan Battery as a Service provider, has come to the forefront of the EV space within the nation.
3. Kenya has been successful in the digital adoption curve and leads Africa in mobile phone penetration; 65.7 million registered mobile subscriptions means practically every citizen owns two devices. Famously, Kenya pioneered mobile money with M-Pesa, and with digital adoption, financial penetration has risen from 27% of Kenya’s population in 2006 to 83% in 2019.
4. Nairobi in particular is a hot spot for Expats in Africa, it’s an incredibly cosmopolitan city, offering comfortable and affordable living for Europeans and Americans.
5. However, it’s not all a perfect development story. Increased phone penetration opened up a new predatory channel of consumer digital loans which exploded in Kenya, raising concerns over indebtedness. Reports suggest at least one out of every five borrowers struggle to repay these loans. More on this in the linked article: https://qz.com/africa/1722613/mobile-money-lending-in-kenya-helps-but-also-spikes-debt.
6. Kenyan Currency has seen recent devaluation of nearly 20%, pushed by an increase in the cost of living, dollar scarcity and inflation (which was above 9% at the start of 2023). Recently however, the outlook has begun to look more promising, with a stabilising devaluation and an inflation falling to 7.5% this summer.
7. Despite these headwinds, technical talent continues to develop in Kenya supported by commitments from the likes of Microsoft, who are developing engineering hubs in Nairobi – See more here: https://africa.businessinsider.com/local/careers/microsoft-opens-new-dollar27-million-tech-talent-hub-in-nairobi-days-after-unveiling/m4ssxnz
We are excited by the opportunity in Kenya and East Africa more broadly, the level of talent and opportunity is clear.
Finally, a huge thanks to all those that so kindly hosted me and gave such a fantastic insight to the local ecosystem.
.... 4DX, Mophones, Lendable, IFC, Fingo, Lipalater, Equity Bank, Jumba, Frontier Invest, Zephy Acorn and our friends at Safari Series
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