Necessity might be the mother of invention and so, despite a number of governance and other issues, Kenya has remained one of the most innovative regions in the world.
Kenya ranks 106th out of 139 countries for competitiveness, according to the Global Competitiveness Index 2010-2011 rankings by Switzerland-based non-profit World Economic Forum.
The litany of issues is steep: life expectancy of 54 corruption and state bureaucracy, terrorism and organised crime. The country remains in a nascent economic status where a lack of resources means its potential remains unfulfilled. However, the government’s plan is for Kenya to reach middle-income status by 2030, aided by soaring growth rates in a number of countries on the African continent.
Ten countries are expected to achieve 7% rises in their gross domestic products this year, according to the African Development Bank, and the lack of infrastructure in sub-Saharan Africa means the country is developing innovative services and products that could leap-frog more developed markets through lower cost and greater user experience.
Kenya ranks 56th for innovation, according to the forum, which said it had "good scientific research institutions collaborating well with the business sector in research activities", quality education for those able to receive it and relatively sophisticated financial services. Kenya’s Capital Markets Authority’s recent East Africa Impact Investing Task Force Report, launched in collaboration with the non-profit Rockefeller Foundation, said a crucial barrier to overcome was lack of capital for small and medium-sized enterprises.
This capital could come from for-profit organisations as well as venture philanthropists, sometimes called impact investing, as investors seek to optimise financial returns while achieving a positive social or environmental impact, the report said.
The plan has been developing with local venture capital firm Fanisi recently expanded into nearby Uganda while Helios Investment Partners raised $900m for a private equity fund for Africa earlier this year. Helios’s fund is the largest raised for the sub-Saharan region outside of South Africa, against a backdrop where fundraising peaked in 2008 at $2.2bn, according to the Emerging Markets Private Equity Association. The industry trade body said venture capital funds completed 14 deals last year and 19 in 2009.
Larger businesses are also tapping into Kenya’s entrepreneurs. US-listed industrial conglomerate General Electric (GE) held its second Makers Faire in Nairobi, Kenya’s capital, with more than 200 exhibitors.
Erik Hersman, one of the organisers of Maker Faire Africa whose Nairobi incubator ihub has joined peers in other countries to form AfriLabs, in a report by GE on the Nairobi event, said: "In the west, Maker Faires are mainly for creative types who tinker around in their spare time. But what we find in Africa is that it is much more about practical innovation. It is about ingenuity driven by necessity. It is all about creating something people can try to make a living [out] of."
GE recently published an article in Harvard Business Review on what it called reverse innovation – identifying lower-cost products in emerging markets that could be introduced in developed countries.
In its report on the Makers Faire, GE said "affordable modernisation" was also a lynchpin of its strategy in Africa. The report added: "It is all about embracing homegrown, grassroots solutions to infrastructure and developmental challenges. But what the Faire does is apply that innovation on a micro-level that has the potential for widespread, inexpensive application."
The ingenuity is not confined to making products but also services.
In a World Bank event for software developers around the world to create applications using its data, the majority of entries came from Africa, with Kenya third behind Uganda and Nigeria. Finland-based phone maker Nokia has tapped into this talent with its m:Lab East Africa incubator events for local entrepreneurs to develop mobile applications. M:Lab launched last month and selected as its first incubatees MedKenya, a collaboration between Gruppo Potente and Shimba Technologies; MTL Systems, a platform allowing consumers to order, pay for, obtain and validate tickets for events, travel, goods and services; Space Kenya Networks, a social networks aggregator; PlusPeople Kenya, a cloud-based accounting system for small and mediumsized companies in east Africa; M-Farm’s application for farmers; and Zege Technologies and its peer Kopokopo for mobile payments.
Fact box:
Key indicators 2009
Population: 39.8 million
Gross domestic product: $32.7bn
GDP per capita: $912
GDP as share of world total: 0.09%
Source: Global Competitiveness Index 2010-11 rankings by
World Economic Forum