Silicon Savannah

East Africa's gem, and why it's a glimpse of Africa's future

Welcome to Proximity Weekly #4!

In case you’re new here, this newsletter will get you smarter on Africa’s tech scene in under 5 minutes. Maybe 7 if you’re a slow reader 🐢

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This week, we will dive into how Kenya became one of the most tech-enabled cities in the world, how mobile money has changed how people live, and why Big Tech is flocking to set up in Nairobi (aka Silicon Savannah).

Let’s dive in!

For the last few weeks I have been calling Africa the tech frontier of the future.

But, Africa has it’s problems.

And they are hard problems that startups can’t solve.

They’re a bit tougher - Civil war, dictatorships, political instability, humanitarian crises. The type to break countries and political systems.

I’m an afro-optimist - meaning I’m excited about the potential for Africa.

But, it’s easy for people like me to skip over the realities on the continent.

And I think Africa’s realities are most pronounced in East Africa.

East African Realities (a glimpse into a past life)

Before I got into tech, I managed a consulting firm that specialised in security and migration policy in East Africa.

Our research informed United Nations programs that stabilised countries and supported people who had been displaced from conflict.

These problems are complex and ongoing. A few examples..

South Sudan, the worlds newest country, continues to relapse into a deadly civil war.

Eritrea, known as the ‘North Korea’ of Africa, has experienced one of the worst dictatorships - with no democratic institutions and a population trapped in the country.

Ethiopia, one of the most promising countries in Africa, descended into civil war in 2020 - one year after Prime Minister, Abiy Ahmed, received the Nobel Peace prize.

To keep it brief: Countries in Africa have complex, structural problems.

And it’s important not to forget that.

But, there’s good news

We’ve seen a few countries on Africa change the narrative on peace and stability.

They have built political systems that work, and economies that reward participation and innovation.

Before we dive into the main star of the show, I want to shout out a runner up.

Rwanda came out of one of the most brutal humanitarian disasters of the century in 1994, the Rwandan genocide.

Almost 20 years later, they have rebuilt to become a home for innovation and startups in East Africa.

Rwanda’s turn around is a case study in development done right. But, that’s for a future edition.

Kenya, the gem of East Africa

Since independence in 1963, Kenya has been free from large scale conflict and instability.

Kenya is not a perfect democracy or completely safe. But, it is an African success story.

Kenya’s real growth has come through its development program, Vision 2030.

Vision 2030 aims to transform Kenya into an industrialised, middle income country.

And I’d say they’ve gone above and beyond. As of 2020:

  • 98% of Kenya’s population had a mobile phone (the global average is 67%)

  • 59% of the population has internet access.

  • Mobile money (called M-Pesa) was introduced in 2007 is used by 96% of Kenyan households.

  • 4G Internet covers 77% of the Kenyan population, with 3G covering 94%.

On this trajectory, Kenya is being transformed into one of the most tech enabled societies in the world.

Respect where it’s due.. M-Pesa

Kenya’s success story wouldn't be the same without M-Pesa.

M-Pesa, launched by Vodaphone and Safaricom, is a virtual banking system that lets you send and receive money through a SIM card.

Money is sent via text - no bank or internet needed.

When was the last time you needed to send your friend money for that dinner, or had to pay a bill?

It’s infinitely easier than adding an account number, BSB or SWIFT Code to send over funds.

And, it’s how you pay for almost everything in Kenya - from bills, to school tuition, to theatre tickets to see Minions.

This has changed the way people live in the Kenya.

Bootstrapping Milkrun

(For our non-Australian readers, Milkrun is a quick delivery grocery app - like Instacart in the US)

Kenya’s tech transformation has made it easier to build and scale businesses online.

This is Pauline. She has a grocery and home-delivery business in Nairobi.

Originally, she sold groceries from her storefront.

More recently, she has grown to acquire customers online, and delivers food by courier to 300 customers a month. Move over Milkrun 💁‍♂️

Here is how she operates:

  • Pauline gets updates on the produce and stock in real time from farmers

  • Pauline pays farmers through M-Pesa.

  • Pauline uploads photos of the new produce on WhatsApp and Facebook Stories

  • Customers send their orders online through WhatsApp or Facebook Messenger

  • Customers pay through M-Pesa and are send the goods by courier

Compare this to your local grocer up the street - they likely don’t have an online presence, a way to order produce from farmers in real time, or a way to pay via text.

Tech adoption in Kenya has transformed the way people live and do business

And, the country is being recognised internationally.

Silicon Savannah

East Africa’s economic hub is Nairobi, the capital city of Kenya - also known as the Silicon Savannah.

Nairobi has been ranked in the top 50 greatest cities of 2022 by TIME, and is a close second to Lagos for the best tech hub in Africa.

Startups, leveraging the adoption of technology have, raised over $1.9b since 2019.

This is over 19% of total funding for African startups, with most of those startups raising their largest rounds in 2022.

And with the funding and talent growth in the country, Big Tech is doubling down on Nairobi.

This year saw huge announcements for the city:

  • Microsoft launched a $27m African Development Center in March, hiring 450 people.

  • Google announced a Product Development Hub, and will hire 100 people in the city.

  • Visa is launching an ‘Innovation Hub’ in Nairobi later this year.

  • AWS also plans to set up a hub in Nairobi

Africa has hard problems. Sometimes, they debilitate countries.

But some countries have changed their narratives, using tech to transform how people live.

Kenya, the gem of East Africa, is a dream for afro-optimists for me.

And, it's a glimpse into what the future of Africa could look like.

Did you learn something new about Kenya? Want to share your thoughts?

Continue the conversation below on LinkedIn or Twitter, or let me know what you think over email.

And if you enjoyed this and know someone else who might please share it over 🙏🏾

Catch you next week!