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Foundation sets aside Sh9.1b to revive Africa’s start-up revolution

FINANCIAL STANDARD
By Frankline Sunday | March 3rd 2015

Kenya: In 2012, The Economist wrote a colourful article about how Kenya, “previously known for its coffee and safaris”, was in the middle of a tech boom.

The article said Nairobi was fast becoming a “Silicon Savannah”, a phrase that has since become a moniker for the city’s burst of apps, hubs and industrial complexes.

Today, however, the optimism that first characterised the global success of Ushahidi and the thirst for ‘the next M-Pesa’ seems to have waned, with industry players having to retreat to the drawing board to figure out what is going wrong.

Sustainable industry

An underlying theme in the new shift towards a sustainable start-up industry for Kenya is rethinking technology and innovation as enterprises, rather than one-off apps designed to win pitching competitions and prize money.

Ory Okolloh, the director of investments at Omidyar Network, and co-founder of watchdog site Mzalendo and crowd-sourcing site Ushahidi, said the potential in African start-ups remains strong, but the continent is in an evolution of sorts.

In an interview, Ms Okolloh, who is on the judging panel of the $100 million (Sh9.1 billion) Tony Elumelu Foundation Entrepreneurship Programme (TEEP) to nurture African start-ups, gave insight into the opportunities and pitfalls in the sector.

Sh9.1 billion is a lot of money. What informed this huge spend on African start-ups?

Yes, it is a serious investment but it was made confidently.

Africa’s economic growth story has been dominating the headlines, but what’s also required is to make sure that the growth is sustained and that it is as inclusive as possible so more Africans can reap the benefits

The continent has a huge youth population that can either find jobs or build businesses. There is a vast amount of talent in Africa, and people with burning ideas often lack the support structures, such as training, mentorship and capital. Therefore, the Sh9.1 billion is meeting an opportunity, not a challenge.

We are looking for ideas that can transform Africa, that are led by entrepreneurs who are passionate about making these ideas a reality across several sectors.

Why do you think start-ups in Kenya find it somewhat difficult to get financing?

I think that entrepreneurs start by asking the wrong questions — funding is not the starting point.

Entrepreneurs need to know the answers to questions like: Do you have a great idea? What exactly is your idea? Is it a product or service? Is there a market for it? Can you see customers and clients paying for it? What is your competition? What is the quality of the team behind that idea?

Investors, whether banks, Government, private sector or funding agencies, all look for a return on investment, and those seeking investment must be able to answer such questions from potential investors.

What is your take on the idea that the Kenyan tech scene places more attention on pitching competitions and prize money than on sustainable business plans? How can this pitfall be avoided?

I think the problem is not competitions or prize money per se — seed funding is a scarce resource, no matter the vehicle being used to disseminate it, and many companies got their start or were able to grow through pitching competitions.

What is sometimes missing is the ‘softer stuff’ that can help make or break a business, such as support networks and connections that help build the business and offer mentorship when the attention fades.

TEEP is structured as a holistic programme; yes, there is funding involved, but the primary focus is on providing well-rounded support for start-ups and entrepreneurs.

There is a perception in some quarters that the hype around Kenya being a ‘Silicon Savannah’ has toned down somewhat. Are we losing our shine as an ICT hub?

The commitment is there from the public and private sector to invest in technology as an enabling tool, so I don’t think the shine is lost, we just need to evolve.

I would love to see more Government support for the ICT sector, and not just through initiatives like the Digital Talent programme, Konza and other interventions that might take a long time to materialise, but through where the real money is — in the procurement of technology skills and products. Partnering with local companies to deliver Huduma and e-Parking tickets is a good start, but what if the Government got serious about committing significant procurement spend to local technology businesses?

Frankly, a lot more can be done on the regulatory side — there are opportunities to rethink broadband, to make it easier to build hardware in Kenya and to drive efficiency in how we run things.

On the entrepreneurship side, it is great to see companies like Pesapal take a more regional approach to business, or start-ups like Sendy find an opportunity in the nightmarish Nairobi traffic, or start-ups like Angani tap into the wide open B2B [business-to-business] space. I’d say the ICT space is in its teenage years — turbulent, but with a bright future ahead.

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