[Column] Patrick Ndegwa: Is 2022 the year for African startups?
Africa is the place to be if you want to discover and support new ideas. According to a Substack newsletter titled Africa: The Big Deal, the continent was the recipient of startup deals worth a combined $4.27 billion, spread across more than 800 deals, each worth $100 000 or more. This number indicates a year-on-year increase of more than 73%, much higher than 2020’s YoY increase of 25%, with 12 deals alone accounting for $1.9 billion in value.
But a startup ecosystem is only as good as the technology that enables it, which is why Kenya deserves the spotlight. Now more than ever, the country is benefitting from a collective push to embrace new technologies related to data, cloud-based computing, and enterprise Internet solutions that seamlessly connect it with the continent and, indeed, the rest of the world. But what exactly are these technologies, and what makes Kenya so appealing compared to the rest of Africa?
A healthy startup scene
Moving inward from a continental perspective to a regional one, Kenya is set to retain its position as one of Africa’s leading startup powerhouses. The country’s ecosystem is expected to grow from $3 billion to $10 billion in 2022 and, in 2021, it was only second behind South Africa in Statista and StartupBlink’s index ranking for best African countries for startups.
Kenya has also made great strides in formalising its ecosystem by introducing new and relevant legislation. The Startup Bill, first published in the government’s gazette in February 2021 and passed by the Senate in December that same year, establishes a national framework to help regulate startups, facilitate investments, and create an environment that promotes local entrepreneurship. At the same time, the bill also safeguards the ecosystem by establishing essential parameters, such as requiring startups to be based in the country, as well as having at least 15% of each startup’s expenses be attributable to research and development activities. This not only signals a political drive to effectively enable the startup scene, but also an awareness of its long-term potential as a vehicle for national investment and innovation.
Many may refer to the “Silicon Savanah” as if it’s a distinctly built section of Kenya occupied by nothing but startups, but it’s essential we don’t compartmentalise the sector in that way. Startups, whether they be focused on fintech, retail, or healthcare, are all connected, and many of them share the same technological requirements to succeed. Engaging with all stakeholders is essential. We see this with events like Africa Tech Summit Nairobi, where technology takes centre stage and the whole ecosystem converges to interact and work together to promote business development.
But there’s another aspect to this convergence. Just last month, Nairobi played host to the 9th edition of the International Data Corporation’s (IDC) annual East Africa CIO Summit. The summit, featuring experts from across multiple industries, highlighted several factors that are essential for transformation. They included cloud computing, the impact of Internet of Things (IoT) and 5G-enabled technologies, and data-driven intelligence. These are the building blocks of an effective digital strategy, not just for Kenya but also globally, resulting in standardisation regarding available resources and knowledge, and creating a level field for all players. With the right approach and support, startups can enable themselves like never before.
The startup’s technical toolbox
Even in the case of enterprises that do not need to deploy extensive connectivity and hosting solutions, there are things that everyone always needs to consider. First and foremost, every startup needs an Internet connection. A lot of progress has been made in widening availability across Kenya, but there are specific solutions available that cater to specific needs. For example, enterprises that operate in remote areas can benefit from a wireless connection backed by a service-level agreement, ensuring consistent service delivery. However, what’s applicable and potentially essential for all enterprises is direct connectivity to leading cloud services. The result is reduced network costs and a smooth data transfer and storage experience.
Another item on the list is colocation. Not every startup is inclined to host its own resources or equipment. The ideal solution is to turn to providers who operate hosting facilities and who, in turn, provide open access. A key point to remember is that the reliability of your digital partner is measured by their transparency and openness. The business world moves fast. Clients must be able to adapt and execute actions around their digital strategy at a moment’s notice.
Internet solutions are forming the backbone of countless enterprises globally, and it’s up to the next generation to adopt strategies that reflect that. It is essential for any fledgling business and, in the case of Kenya and indeed the rest of Africa, the future is looking bright.