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The Paradigm Shift: Disruption, Creativity, and Innovation in Kenya

  • Bitange Ndemo
Open Access
Chapter
Part of the Palgrave Studies of Entrepreneurship in Africa book series (PSEA)

Abstract

A paradigm shift is underway in Kenya. New innovations are destroying old ways of doing business, and smart young start-up entrepreneurs are at the forefront of this quiet but historic transformation. Teams of skilled developers and programmers have sprung up in innovation hubs, incubators, and accelerators across the country to build information and telecom solutions that capitalize on the country’s mix of challenges and opportunities. At the same time, we have seen a number of spinoffs of Kenya’s unique entrepreneurial revolution reach across Africa and into other corners of the world, attracting global recognition for the country.

Introduction

A paradigm shift is underway in Kenya. New innovations are destroying old ways of doing business, and smart young start-up entrepreneurs are at the forefront of this quiet but historic transformation. Teams of skilled developers and programmers have sprung up in innovation hubs, incubators, and accelerators across the country to build information and telecom solutions that capitalize on the country’s mix of challenges and opportunities. At the same time, we have seen a number of spinoffs of Kenya’s unique entrepreneurial revolution reach across Africa and into other corners of the world, attracting global recognition for the country.

Digital Kenya addresses the many different aspects of these technological changes, innovations, and entrepreneurial activities, including policy formulation, impediments, and opportunities. It is the first book to chronicle the digital entrepreneurship revolution in Africa and describe how it has emerged in the face of high unemployment rates, poverty, lack of technological infrastructure, and disparate cultural interpretations of entrepreneurialism and risk taking. In this context, the book heralds a new way of thinking about and understanding emergent opportunities in the digital world and how best to exploit them in the face of significant developmental challenges.

The book also shows how the paradigm shift that facilitated Kenya’s digital revolution was the result of a number of overlapping factors. For one, India’s experience and policy framework served as a benchmark and source of inspiration for growth in the face of real challenges. As in India, innovators in Kenya learned that information and communications technology (ICT) had great potential to help propel the country out of unemployment and poverty. The percentage of Kenyans in gainful employment compared with those actively seeking employment has been estimated at 40 percent. The World Bank reported that of the Kenyan 800,000 youth (ages 15–35) that join the labor market every year, only 50,000 secure a job. Some 70 percent of them are unemployed. But rather than view youth unemployment as the ticking time bomb it is often described as, a number of innovators have used the platforms created by ICT as a strategy to absorb large numbers of well-educated unemployed youth and thus to contribute to economic growth. Digital Kenya reviews the many different ways this was achieved and the challenges faced along the way.

In addition, the book describes the development of pro-entrepreneurialism policies and partnerships in Kenya. A simple five-point policy became a key driver of the shift—focusing on the development of ICT infrastructure, leveraging of ubiquitous mobile platforms to build applications, creation of local content, building of human resource capacity, development of public–private partnerships, and creation of employment opportunities for the growing youth population—with the result that Kenya’s policy environment has slowly become a conduit for successful ICT development.

The laying of the first fiber-optic cable on the Eastern Seaboard of Africa, the TEAMS cable, it will be shown, was another crucial step and heralded a new chapter for cheaper telecommunication access. With it, opportunities to mainstream Internet access were created, such as subsidizing broadband for all universities and creating start-up hubs where entrepreneurs had access to high-speed Internet.

Soon new Web applications (apps) were being created. M-PESA, the money-transferring app, capitalized on the fact that only 5 percent of the Kenyan population had access to bank accounts and created a solution that revolutionized citizens’ financial freedom. The post-election violence of 2007–2008 also brought some unexpected innovation when a small group consisting of Erik Hersman, Ory Okolloh, Juliana Rotich, and David Kobia began to collect eyewitness reports of violence from emails and text messages and upload them to Google Maps, giving rise to Ushahidi (Swahili for “testimony” or “witness”), a groundbreaking information-gathering, visualization, and interactive mapping tool that is now used around the globe. Ushahidi, along with M-PESA, changed the minds of even the doubters that it was possible for innovation to stimulate world-class entrepreneurialism in Kenya.

Although the landing of the cable was a foundational step in Kenya’s emergent entrepreneurial revolution, the opening up of public data was equally important. Kenya developed the Kenya Open Data Initiative, a portal to fuel new apps and new enterprises. Civil society, through the online discussion portal KICTANet, began to push for additional data sets and raised many additional policy issues beyond a mere call for data. Other factors, such as investments in research and seed capital for social enterprises provided by institutions such as the Rockefeller Foundation, propelled Kenya’s many ICT programs and projects in ways that involved and empowered the less fortunate.

The Purpose

Digital Kenya seeks to bring into perspective the ongoing debate about adoption of disruptive ICTs not just in Kenya but throughout the world. Kenya is not new to disruption, considering the fact that our own innovations, such as M-PESA, Ushahidi, BRCK, and BitPesa, are causing disruptions in other parts of the world—and that many more Kenyan-led innovations are underway. To ensure that Kenya and Africa continue to contribute to this important growth, we must open up the conversation about entrepreneurialism and risk and be supportive of disruptions coming from elsewhere. The ICT revolution is a global and competitive phenomenon that is heralding a new paradigm of creativity and innovation in virtually every part of the world. In fact, by the time this book goes to press, there will be hundreds of new apps on the market and nations newly acceding to disruptive change—alongside new movements to restrict rapid technological advancement.

It is hoped that the book will help policymakers approach policy differently than they have done in the past. Looking at policy from various perspectives—such as the entrepreneurial approaches explored in Chap.  1, “Inside a Policymaker’s Mind: An Entrepreneurial Approach to Policy Development and Implementation,” by the author of the present chapter (and co-editor of the book)—as a strategy for dealing with some of the more pressing challenges could revolutionize how we tackle development challenges in general and help the world make real progress toward the United Nations’ Sustainable Development Goals. Opening access to hospital registry records, for example—which can help researchers discover new patterns of diseases and ultimately improve health systems across the globe—is one such strategy.

When historians write Africa’s digital story, Kenya will likely assume its place as the cradle of ICT revolution on the continent. Never before has an African nation gone through a disruption such as the digital transformation that is still underway in Kenya. With so much creativity and innovation going on, the nation is witnessing a gigantic paradigm shift. It is a revolution of a kind that is empowering ordinary citizens and reshaping their communities and lifestyles, heralding a new way of thinking about and understanding entrepreneurial opportunities and how to exploit them.

Chapter Overview

Digital Kenya investigates the power of technology in Kenya to help strengthen every sector and of entrepreneurship as the key driver in innovation creativity and disruption. The book records the so-far-undocumented story of technology start-ups, entrepreneurship, and policymakers that have been on the forefront of ushering in a new era for Kenya.

The words “creativity” and “innovation” were uncommon in Kenya and in Africa until the advent of the digital age and thus mark how far we have come. In 1982, the Kenyan government banned the use of computers in public offices for fear that the new technology would take away secretarial jobs. Today, virtually every public office has computers—with more people than in the past engaged in their use—to enhance service delivery. Chapter  2, “The Internet Journey for Kenya: The Interplay of Disruptive Innovation and Entrepreneurship in Fueling Rapid Growth,” by Muriuki Mureithi, takes us back to this time and gives the historical background of the foundation of the digital revolution in Kenya. In doing so, it describes the evolution of the digital enterprise and also presents the significant challenges of the day, including new competition, changing customer engagement and business models, unprecedented transparency, privacy concerns, and cybersecurity threats.

Although most research on the role of the digital economy in economic development has focused on the “digital divide,” Chap.  2 also describes how new research is linking digital transformation to faster economic growth in much the way the Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan) did with industrialization. African countries have incorporated (information and communications technology - or technologies) ICTs in their development planning—or “vision”—policies. Kenya’s Vision 2030, for example, promotes ICT as one of the flagship areas to help the nation realize its vision.

Chapter  3, “The KINGS of Africa’s Digital Economy,” by Erik M. K. Osiakwan, describes the history behind the frontrunners in ICT transformation in Africa: Kenya, Ivory Coast, Nigeria, Ghana, and South Africa, designating them as the “KINGS.” The chapter argues that, like the Asian Tigers, the KINGS will lead the continent’s technology innovation, thanks to their rapid growth and high-tech entrepreneurship, setting the pace for the rest of the continent.

Market Opportunities

Africa presents a sea of economic opportunities in virtually every sector, and the continent’s (comparatively youthful) population structure compared with that of other parts of the world is an enormous opportunity in this digital era. The demand for online services is increasing, including the digitization of records to improve data visibility. These are all areas that will require a young, educated population—which is now abundant in many African countries. Chapter  4, “Addressing Voids: How Digital Start-ups in Kenya Create Market Infrastructure,” by Marissa Drouillard, seeks to unlock the hidden market opportunities presented by market-enabling digital platforms. It reviews various market-enabling digital platforms in Kenya brought to light through research on digital entrepreneurship ecosystems, finding examples where Kenyan digital start-ups have achieved success in breaking down traditional barriers and offering better value propositions to customers.

The combination of knowledge and technologies makes a powerful tool for change. Chapter  5, “Reimagine What You Already Know: Toward New Solutions to Longstanding Problems,” by Jay Larson and Michael Munger, argues that knowledge and technology combined can change societies dramatically, creating opportunities that were previously unthinkable. African nations now stand on the threshold of revolutionary changes based on ICTs, especially mobile platforms, and the chapter makes a strong case for why education needs to be reimagined from the ground up. Once society takes education out of the four walls of the traditional classroom into homes, libraries, Internet cafés, and city streets, a completely new learning experience becomes possible—an experience that innovators need to harness now in order to leverage our digital potential.

The private sector has had interesting engagements with the ICT sector in Kenya, specifically through social entrepreneurship. Chapter  6, “I-Entrepreneurship: Changing Lives through Technology,” by Carmen Merab Wamukoya and Amolo Ng’weno, examines the growth of social entrepreneurship in Kenya and demonstrates how businesses can create shared value in the field of technology. It illustrates the role of impact sourcing as a means of generating employment through an examination of Digital Divide Data, Kenya’s innovative ICT program for the training and education of disadvantaged youth. It also reviews the potential of ICTs to transform businesses and provide an enabling environment for the development of technology-based social enterprises.

Customizing a complex technology to local environments makes it simpler and more relevant even in the most unexpected areas. Today, even the poorest citizens in shantytown areas participate in social media, which has given rise to new approaches to communication. Chapter  7, “From Cyber Café to Smartphone: Kenya’s Social Media Lens Zooms In on the Country and Out to the World,” by Mark Kaigwa, explores the expressions of the “connected Kenyan.” Often used by Kenyans online, it is the common denominator in all of the other chapters of the book. It seeks to answer questions such as what happens once a Kenyan comes onto the grid of Internet connectivity—be it smartphone or cyber. What is his or her experience, how do they find their way, and what becomes important to them? What is to be said for the digital spaces of community and expression that have emerged and become part of the fabric of how information now travels? The chapter addresses these questions and argues that it is not enough to be connected: It is also how you are connected and how the news, for instance, finds you that defines the depth of ICT penetration in a community.

The Inner Life of Technology Entrepreneurship in Kenya

To foster greater opportunity, Kenya has sought to develop an ICT ecosystem—which was soon dubbed the “Silicon Savannah”—in Konza, 60 kilometers south of Nairobi. This project seeks to address the problems of disjointed development, in which research communities rarely interact with industry, for example, and even less with policymakers. Chapter  8, “Building ICT Entrepreneurship Ecosystems in Resource-Scarce Contexts: Learnings from Kenya’s ‘Silicon Savannah,’” by Johannes Ulrich Bramann, explores how ICT entrepreneurship ecosystems can be established in resource-scarce contexts, such as a scarcity of financial resources, established ICT sectors, and relevant human capital. It sheds light on the evolution of Kenya’s ICT ecosystem and examines the barriers and subsequent enabling processes encountered when growing an ICT ecosystem in a resource-scarce context, providing a holistic perspective on the barriers and enablers encountered in the areas of culture, human capital, finance, policy, entrepreneurial support systems, and markets.

Many countries in the Global North offer a variety of incentives for start-ups. Yet African countries have not, so far, been able to encourage or support start-ups in the same way. Chapter  9, “The Challenges of Technology Entrepreneurship in Emerging Markets: A Case Study in Nairobi,” by Marlen de la Chaux and Angela Okune, investigates why the creation of technology start-ups in Nairobi has remained challenging despite support from an increasing number of innovation hubs and seed capital investors. The authors look at three different groups—entrepreneurs, innovation hubs, and seed capital investors—and expose the divergent views among these groups that lead to contradiction, misalignment, and ambiguity in Kenya’s ICT industry. De la Chaux and Okune attribute this phenomenon to the fact that the industry is still in an emergent state, with the result that the many stakeholders hold divergent views on the exact challenges—in the areas of finance, skills, and market readiness, for example—and how they need to be addressed, thereby inhibiting the development of a shared agenda for growth.

Chapter  10, “Organizational Cultural Hybrids: Nonprofit and For-Profit Cultural Influences in the Kenyan Technology Sector,” by Eleanor R. Marchant, builds the case that in order for progress to take place in the Kenyan technology sector, we need to move beyond the stale debate about whether non-profit grant funding is good or bad—and instead find ways to take advantage of the multiculturalism that exists in the sector. The chapter draws on existing theories about culture at organizations to demonstrate that even incubators, often associated with the for-profit model that dominates the discourse, are not purely for-profit when they are examined more holistically using the lens of cultural theory. Using Schein’s theory of the three levels of organizational culture—that is, observed behaviors and artifacts, espoused beliefs and values, and underlying assumptions—the chapter demonstrates in a more nuanced way that cultural hybridity exists at key organizations in Kenya’s technology sector and how practices and behaviors of these organizations are shaped by their fundamental underlying assumptions.

Managing the Fine Details of Doing Business in Kenya

There are no longer confused arguments about why a country would, or would not, seek an ICT-enabled transformation. As Nagy Hanna in Mastering Digital Transformation: Towards a Smarter Society, Economy, City and Nation explained, it is “through ubiquitous connectivity, digitization of content and processes, crowdsourcing, collaborations, tools, knowledge networks, sensors, data capture and sharing, artificial intelligence, and analytics, [that] ICT can help build innovative enterprises, mobilize local knowledge and problem solving, and make global knowledge accessible to all. ICT can network actors and organizations across sectors and regions, build collaborative platforms to co-create development solutions, and enable client-centric service delivery.” To achieve these benefits, there must be good leadership and an enabling dynamic policy environment.

Chapter  11, “Inside a Policymaker’s Mind: An Entrepreneurial Approach to Policy Development and Implementation,” by the author of the present chapter, offers an analysis of the policy process that led to the ICT boom in Kenya during President Mwai Kibaki’s administration (2003–2013) and of the policy developments that spurred the highly successful innovations in the country’s ICT sector. The chapter explains the course of establishing the institutions that supported ICT entrepreneurship and describes the process involved in the making of far-reaching policies and analyzes, using three case studies in ICT policy development—the TEAMS fiber-optic cable project, the M-PESA application project, and the Posta land development project—and discusses their contributions to Kenya’s ICT boom, arguing that if there is any lesson to be learned from the Kenyan experience, it is that political will is by far the most important aspect of policy development. Countries in the Global South are replete with failed projects, in part because of a lack of political will. The chapter also describes how other factors, such as pro-activeness, innovative outside-the-box thinking, and an appetite for risk, played key roles in the success of the Kenyan ICT transformation process.

International organizations seeking to collaborate with local organizations need more than an enabling policy environment. They also need to understand local dynamics. Chapter  12, “The Art of Managing Worldviews in Kenya’s International Technology Sector,” by Tim Weiss (co-editor of the present volume) and Klaus Weber, documents what a prospective investor needs to do to become successful in Kenya’s tech scene. It investigates if there is such a thing as a Kenyan recipe—a holy grail—for success. The research brings into focus two different worldviews, a “Kenyan worldview” and an “international worldview,” that stand on different sides of the question of how to do it “right.” This dynamic sheds light on the contested issues that have surfaced during Kenya’s international tech boom. However, it also shows that tension and contestation, if tackled with the right mindset, can also become opportunities. The chapter thus introduces the art of managing worldviews in order to help equip actors with new tools to work through challenges and infuse technology entrepreneurship with a unique Kenyan character.

Chapter  13, “Developing Strategies to Harness the Power of Parallel Entrepreneurship in Africa,” by Eskor John, identifies some of the most salient factors related to parallel entrepreneurship—factors that, if better understood and supported, have the potential to make a significant contribution to the transformation of Global South economies. It also explores the contextual factors contributing to the growth of entrepreneurship in Africa and the prevalence and implications of parallel entrepreneurship. It concludes with a number of recommendations on how to support and develop parallel entrepreneurship in other contexts and countries.

The success of an enterprise depends on the ecosystem in which it operates. Leveraging primary and secondary sources, Chap.  14, “Venture Capital in East Africa: Is There a Right Model?,” by Stephen Gugu and Wilfred Mworia, seeks to establish if there a right model for venture capital in East Africa, concluding that the ideal model does not currently exist. The study suggests that the high cost of operating a fund in the region and the length of time it takes to find, evaluate, and make investments are the top concerns among fund managers. In addition, fund managers in the region are called upon to take on roles that are atypical of conventional fund management, including, in particular, getting heavily involved in investees’ businesses. The authors conclude that in order to succeed, venture capital needs to adapt more effectively to suit the context and characteristics of venturing in the region.

In Chap.  15, “Entrepreneuring for Society: What is Next for Africa?” by Tim Weiss (co-editor of the present volume), the author weaves the chapters of the book and the conversations with thought leaders into a single narrative. He highlights key issues and trends, among them a profound mindset change that is underway in Africa, affected through self-awareness and pro-activity. He goes on and revisits the cultural impact of state and non-governmental organisation (NGO) dependency, something that has been a critical barrier to innovation on the continent. In his critical inquiry on the entrepreneurial revolution he also asks: Which traditional norms and values should remain and which new ones should be incorporated and adopted to foster—rather than impede—societal development? Weiss then continues and expands on the mythical character inherent in the information age that exposes the deeper wish to level the playing field through digital solutions albeit power continues to remain in the hands of a few global companies. This fallacy, however, he argues should not stop us from resolving challenges in the education sector, and advancing social impact. Rather a calls for a mindful creation and implementation of innovations, critically assessing the intended and unintended consequences of change. He concludes with a roadmap for the years ahead, and with that introduces an intriguing discussion that places Africa’s response to various grand global challenges on the center stage.

Summary

Our aim with this book is to generate debate on the role of ICTs in economic development through entrepreneurship. It is also intended to create awareness of the emerging opportunities in ICT and to present new ways of exploiting them. There is no doubt that ICTs are changing the African narrative: Africa is no longer the Dark Continent. Africa is rising. The rate of change in Africa today as a result of ICTs is unprecedented and cuts across all sectors. From innovations such as M-PESA to large-scale business process outsourcing developments, ICTs are creating jobs, addressing poverty, reducing inequality, and providing mechanisms to monitor and address the Sustainable Development Goals. Governments are becoming more productive, farmers are getting value for their produce, transportation is becoming more efficient, and education is increasingly accessible and practical. External stakeholders are noticing, too. Multinational corporations are increasingly setting up research laboratories in Nairobi, and international policymakers are coming to Kenya to learn how we did it. These are just a few examples of ICT’s impact in Kenya. There will be even more promise if we continue to adopt ICT instead of fighting it.

We hope that Digital Kenya will serve as a resource for those wishing to better understand the genesis of Kenya’s ICT boom for policy, practice, and research.

Footnotes

  1. 1.

    See Moraa, Hilda. 2015. A Kenyan Startup Journey: My 10 Key Lessons.

  2. 2.

    See https://medium.com/@brendawambui/corruption-in-the-silicon-savannah-9e393a00aa0e#.8uz9dnugf.

  3. 3.

    See ‘Portuguese and other Europeans in Africa in the early 1500s,’ http://www.fsmitha.com/h3/h17port2.htm.

  4. 4.

    See Minna Salami. ‘To change the world, change your illusions’; https://www.youtube.com/watch?v=PiVB5niLrWg&feature=youtu.be.

  5. 5.

    Access Wikipedia. ‘Traitorous Eight’. https://en.wikipedia.org/wiki/Traitorous_eight for more information.

  6. 6.

    Access Wikipedia ‘Savanna’, https://en.wikipedia.org/wiki/Savanna for more information.

Supplementary material

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© The Author(s) 2017

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Authors and Affiliations

  • Bitange Ndemo
    • 1
  1. 1.University of NairobiNairobiKenya

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