Ruto pitches Kenya's tech plans to Silicon Valley amid concerns

President William Ruto with Amb Meg Whitman and executives from Nike, GAP and Levi Strauss in San Francisco, United States. [PCS]

President William Ruto has stepped up his push to lure Silicon Valley for increased business for American tech giants in Kenya.

President Ruto made the pitch on Friday during his ongoing visit to the United States at the famed Silicon Valley. He asked the American investors to tap Kenya’s pool of well-resourced app developers.

Silicon Valley is a global centre of technological innovation located in the South San Francisco Bay Area of California. The area was named after the primary material found in computer microprocessors.

President Ruto was accompanied by US Ambassador to Kenya Meg Whitman. The President noted Kenya’s fast-growing technology sector dubbed “Silicon Savannah,” has attracted many entrepreneurs from places like the US and the United Kingdom, supported by a pool of well-resourced software app developers in the country.

“Kenya’s sizeable youth population is ever-hungry for new ideas, fresh innovations and the latest technology, and this makes our country a magnet for innovation, creativity and entrepreneurship,” said President Ruto.

“We are, unequivocally, Africa’s start-up hub.”

The President’s visit comes at a time when Kenya has seen several startups close shop, scale down or report operational difficulties of some kind, casting doubt on their future.

The collapse of these start-ups, some of which recently raised billions of shillings in investor financing, has exposed the underlying myth of “disruption” that drives much of the Nairobi “Silicon Savannah” narrative, and the problematic attitude of investors from the West that perpetuate this hype. Dr Ruto told US investors that Kenya has emerged as a major player in the fintech (financial technology) space since telecoms operator Safaricom pioneered its M-Pesa mobile money service in 2007 for people without access to the formal banking network.

“More than 300,000 young youths graduate from Kenya’s over 65 universities annually, implying that we have a considerably well-educated population, which gives us the capacity to develop internationally certified engineers, scientists and researchers,” he said.

“These people form the backbone of our Silicon Savannah’s technology, innovation, research and development ecosystem to which I am privileged to have the honour of inviting you.”

Ms Whitman, an American billionaire who cut her teeth in California’s Silicon Valley, amassing a Sh575 billion fortune, told US investors there is a huge opportunity for them in Kenya.

The envoy has been keen on the plan to see the US possibly overturn the dominance of Chinese firms in Kenya by linking American tech giants like Facebook, Apple and Alphabet’s Google to local deals. “Kenya is well-positioned to be an African leader in information technology, telecommunications, and mobile banking and is open to partnering with the United States,” she said earlier.

Ms Whitman, who previously served as CEO of top US tech giants eBay and Hewlett-Packard (HP), has underlined fresh plans by the Biden administration to topple Chinese dominance in the country’s vibrant ICT sector. “Techplomacy,” which could build up on an earlier position by the US is, however, expected to be an uphill task at a time when Chinese firms have entrenched themselves in Kenya.

“I have learnt something fantastic from Ambassador Whitman Kenya has innumerable marvellous attractions that we have grown up with and often take for granted,” said President Ruto.

“I agree with her that Kenya is beautiful and brimming with possibilities, which will be unleashed by aligning your investments with our opportunities. My work is to create the best possible environment for that to happen, and I give you my commitment to do my best, and do it quickly.”

The US has been urging its European allies and others not to use Huawei, one of Safaricom’s network vendors along with Nokia, citing security concerns. In 2020, Britain announced it was reversing the decision to let Huawei participate in its 5G network following pressure from the US. It ordered a ban on the Chinese firm’s equipment from its fifth-generation networks by the end of 2027.

Kenya’s fast-growing technology sector - ‘Silicon Savannah’ - has been drawing the most foreign investor interest, supported by an improved business environment. Kenya liberalised its ICT sector in 2,000, leading to a technological revolution, which has stimulated home-grown innovation, transforming Kenyans’ lives.

But amid the hype, the country’s e-commerce sector is littered with the carcasses of brands that have attempted to break through the market for the last 15 years but failed. 

Over the last 12 years, websites such as Dealfish, Kalahari Kenya, Mocality, OLX, Cheki, Jumia and Masoko, among others, have all attempted a crack at the country’s e-commerce sector, with varying degrees of success. 

This made the odds against startups like Sendy and Kune Foods very steep, given that these companies lacked a unique value proposition to succeed where the others had failed. 

These startups presented a digital solution to intervene in a practical problem in the Kenyan economy and convinced investors that it could be packaged and sold en masse to create a sustainable revenue stream. 

Kenyan startups topped the continent in funding volume in the first half of this year even as questions emerge on the future of startups in Africa.

A report by Briter Bridges, a think tank with interest in the private sector, technology and innovation, details the wave of startup shutdowns and a slowdown in investment as some of the reasons the future of startups on the continent is in limbo.

A look at the report shows solar energy was a favourite investment product for funders betting on startups in Africa during the review period.  

The report lists solar energy among the top products funded both in terms of volume and number of deals.

This is possibly due to the increasing awareness of climate change, which points to the sustained adoption of renewable energy.  The H1 Africa Investment Report covers the first half of 2023 and was published in August.

Solar energy is second in both lists of funding volumes and deals. More than 10 deals in solar energy were struck in the review period, attracting $345 million (Sh51.8 billion) in funding. 

While super apps (web or mobile applications with multiple services) led in funding with $400 million (Sh60 billion), credit and lending attracted more deals.