What SMEs can learn from five Kenyan firms that made it on to ‘Companies to Inspire Africa’ list

Fifty Kenyan companies made it to the first ever Companies to Inspire Africa report compiled by the London Stock Exchange Group. The UK financial organisation said it singled out these firms for their “entrepreneurial spirit” and “vision, ambition and tenacity”.

But what exactly made these companies stand out in a country where, according to a Kenya National Bureau of Statistics (KNBS) survey done last year, close to half of all small and medium enterprises collapsed within their first year of inception. We took a look at the operations of five of the businesses that made it to the list, and picked valuable insights for local entrepreneurs.

Java House

Entrepreneurship is all about taking risks. It is about walking on the path few fear to tread. And that is what Java House, now arguably the most popular coffee house in Kenya, did. Not many people imagined Kenyans would troop in their millions to drink a cup of coffee at cafés.

The result was that, for a long time, all the country’s coffee was shipped overseas to be consumed by foreigners. And then Java ventured into the coffee shop business and invested in getting Kenyans to appreciate their own produce. It has since reaped the benefits and gone beyond coffee into the self-serve frozen yoghurt business with Planet Yogurt, and a pizzeria, 360 Degrees Artisan Pizza.

“When we established Java House in Kenya, there was only an export market for coffee,” said CEO Ken Kuguru in the report.

“Through Java, we were able to bring the coffee culture to Kenya, Uganda and Rwanda.”

The company has grown by offering better services and a wider range of choice to the region’s emerging middle class consumers, as well as keeping its supply chain local, which shields it from price fluctuations in global markets.

Shop Soko

Shop Soko, founded by Gwendolyn Floyd, Catherine Mahugu and Ella Peinovich in 2012, runs an app that transforms the mobile phone into a tool that gives local artisans access to international markets.

The app gives buyers the ability to “shop with minimal inventory, waste or overheads”, which has enabled artisans to earn more money by selling through Soko’s supply chain. The firm has customers, who include supermodels, in 35 countries across the world.

“Soko is changing the fashion industry for good, transforming the way artisans produce and retailers source, from emerging markets,” co-founder and CEO Ella says in the report.

“Using its proprietary mobile technology, Soko co-ordinates more than 2,100 independent artisans into a distributed production model or ‘virtual factory’. It aims to revolutionise the global supply chain to make it more inclusive, distributed and ethical.”

M-Kopa Solar

Who knew that at some point there would be millions of Kenyans who owned smartphones but lacked access to electricity? Well, M-Kopa did. The solar energy company was founded in 2011. Jesse Moore and Nick Hughes decided in 2009 to leave their telecoms jobs and set up a firm that would leverage on the country’s mobile phone technology by providing solar energy to people who were not on the grid.

“We didn’t see any trade-off in the pursuit of building a really strong commercial business and making lives better,” Jesse is quoted as saying by the Financial Times.

To date, M-Kopa Solar has helped more than 400,000 homes across East Africa replace expensive kerosene lighting with solar power. Since launching solar-powered digital TVs in February, more than 25,000 of the company’s customers now have access to news and entertainment.

“Our focus is on providing life-changing products and services to low-income homes, and using mobile money and affordable financing to do this,” adds Jesse in the report.

Craft Silicon

Forbes magazine described Kamal Budhabatti, the CEO and founder of software company Craft Silicon, as Kenya’s Bill Gates. The company provides banking, mobile, switch solutions and electronic payments for customers across four continents.

Born to a newspaper-vendor father in Jamnagar, a small town in India, Kamal struggled to find a job after graduating with a degree in physics. He moved to Kenya after he was told of a data-entry job in Nairobi. He soon got bored of it, until a friend told him there was a bank that desperately needed clearing house software.

“Kamal deployed the programming skills he had garnered (he learnt computer programming as a pastime in university), and set to work, using his office hours to develop the software. When his boss found out that Kamal was using office hours and property for his own personal interests, he was fired instantly and deported back to his native India,” reported Forbes.

But Kamal had seen an opportunity in Kenya and raised money to purchase a ticket back to Nairobi. He finished the clearing house software, which the bank loved and paid well for, and then set out to sell it to other financial institutions. With this, Craft Silicon was born.

Kamal’s latest project is taxi-hailing app Little, in partnership with telecoms provider Safaricom.

Kenya Highland Seed Co Ltd

Agriculture is the mainstay of the country’s economy. A lot of people are involved in farming, but quality seeds have been an issue for many of them. Kenya Highland Seed (KHS) saw this gap and set up in 1998 to supply quality, open-pollinated and hybrid seeds to the farming community. The company’s seeds include tomatoes, cabbages, peppers, kale, watermelon and carrots, with a particular focus on high-yielding hybrids.

KHS stands out for targeting smallholder farmers with accessible products. For instance, it sells its seeds in packages that bear local languages and offers discounted pricing. It connects farmers to dealers, provides training on agricultural practices, and disseminates technical information on seeds through bulk SMSes.

KHS also trains customers on seed storage to reduce losses and re-invests 15 per cent to 20 per cent of local sales in demonstration projects for smallholders in Kenya, Tanzania and Uganda.