Broadband world: Connecting Africa

Man working at iHub

"My aim is to put Kenya on the world map," says the quietly spoken software king of East Africa.

"Companies like Facebook, Yahoo and Google don't have to just come from the US - they can also come from Kenya."

Kamal Budhabhatti, CEO of Craft Silicon, is the closest the country has to a Bill Gates.

His firm - Craft Silicon - is responsible for more than 90% of the country's software exports.

The business - which produces electronic payment and banking software - is still a minnow compared to its Silicon Valley cousins. It has just 200 employees and a turnover of around $15m.

"We still feel that we are a very small company compared to the international software houses - we have a long way to go," he says.

But Mr Budhabhatti's ambition is a sign that Kenya's tech scene is maturing and wanting to establish a global reputation.

He is one of a growing number of entrepreneurs in the region who are helping establish Kenya as East Africa's hi-tech hub.

And he is not alone.

"We are getting to a point now, that if you want to be involved in tech in East Africa then you have to come to Nairobi," said Erik Hersman, co-founder of the crowdsourcing software Ushahidi, based in the city.

'Confidence boost'

Nairobi has long been a trading hub and a source of wealth in East Africa, based around traditional "bricks and mortar" industries.

But over the last decade it has begun to transform itself into a digital hub.

It is already home to a large number of tech firms - including Google, IBM and Nokia - that have helped seed skills and have given the region credibility.

Map of broadband users

And start-ups are able to take advantage of the country's "decent education system", which turns out a steady supply of skilled developers, and a reasonably stable government that sees the value of technology and is willing to encourage investment, says Mr Hersman.

But its progress was kicked up a gear when three undersea internet cables began to arrive in June 2009.

"The cables have been a major reason for the confidence boost in the Nairobi tech sector and in East Africa in general," says Mr Hersman.

They have changed the perception of what is possible in the country, he says, as well as spurring demand for services.

"On the consumer side, we are seeing people use more data and more internet services, which is spurring more development in the space," he says.

Net change

Although services such as Facebook are as popular in Kenya as they are elsewhere, there is a thirst for local content that meets the needs of the local market.

"What we see going on in the tech centres of the west is solutions for that citizenry," says Mr Hersman. "Here you see a different sort of solution - things that don't make sense to the western innovation hubs. We are seeing things that are coming out of Africa that are made for Africa."

KENYAN TECH START-UPS TO WATCH

  • Whive - mobile social network with vernacular versions
  • Mocality - crowdsourced business directory for Africa
  • PesaPal - Online Mobile Payments aggregator
  • Simple - eMagazine with offline printed versions circulated through cyber cafes
  • Hizonnotes - Online notes sharing and selling targeted at college students

Source: Afrinnovator.com

For example, many services focus on the agricultural sector and mobile phones, he says.

In addition, many of the services are built for the "cultural nuances of Kenya" and the way people access the internet.

"When people from the west come here they get confused and they have a hard time attacking the market because they don't understand that the typical African has a different paradigm of what the internet is," says Mr Hersman.

A recent report by the Kenyan government, estimates that more than 90% of people who access the internet in the country, do it through the mobile network. That means slower speeds and smaller screens.

And as people do not have an always-on connection, mass-market, consumer services need to build in other ways of interacting with a service such as SMS alerts, says Mr Hersman.

A good example he said, was a second hand car website called Cheki.

"The site lets you search for cars in the local market, but it also has a mobile web component and you also have a chance to SMS the owner."

"The people that made it realised that most sellers will be able to receive an SMS rather than an e-mail."

For most business ideas, he says, "you need a mobile component and then you work backwards from there".

Mobiles also need to be included in most ideas, he says, because of the ubiquity of mobile payments services in Kenya.

Services such as M-Pesa, which allow people to save and transfer money through their phones, could be regarded as Kenya's biggest hi-tech success so far.

Business brains

The nascent market means that there are still huge opportunities in Kenya, even for services that some regions may now take for granted.

"There are vacuums just waiting to be filled," says Mr Hersman. "We're starting to see Amazon-type sites springing-up.

Mikul Shah Mikul Shah also provides content from his website to newspapers and magazines

Other familiar ideas - such as online restaurant guides - are also appearing.

For example, Eat Out, offers discounted bookings and restaurant reviews at many of Nairobi's top restaurants.

It is one of a minority of firms that have started on the web first.

"Our reason for going on the web was the fact that out clients are not the younger tech orientated - they are the ones with healthy wallets. Most of those can afford to be on the web," says founder Mikul Shah.

However, he admits he will soon be expanding to smartphones and beyond.

Mr Shah started his business in Spring 2010, and is already profitable. However, he says, not all firms are so lucky.

"What is lacking in Nairobi is the combination of the tech world and the business world. There are lots of creative developers here. What we have lacked is members of the business community."

But this too, is changing.

Smart happenings

Just off the Ngong Road, a major thoroughfare in Nairobi, is the iHub.

The large open-plan room is a space for entrepreneurs, developers, and investors to come together and thrash out ideas and businesses.

A tour of the iHub with manager Jessica Colaco

It is often filled with groups of young people - all sporting t-shirts emblazoned with the logos of major search engines and social networks, tapping into their sticker-covered laptops.

Unlike many traditional business spaces, music thumps and the cappuccino machines hisses in the background.

"It has a Nairobi flair, but it's supposed to be a space that anyone walking in from the [San Francisco] Bay area or London would feel at home in as well," says Mr Hersman, one of its co-founders.

The iHub now has 1,800 members. The 100 "green members" all pitched projects or ideas to earn membership, whilst others pay for access to the shared workspace.

The rest come to socialise and take advantage of the programme of speakers, business pitch events and training courses.

Mr Hersman works on the assumption that "if you put enough smart people together in one space, good things happen.

Seed funds

Hubs like this are starting to attract the interest of investors - both local and foreign.

And its members are starting to attract big money.

Local firm Virtual City, which develops supply-chain software, was recently awarded a $1m investment from phone firm Nokia.

Start Quote

Kamal Budhabhatti

Many of concepts that are floating here every day are not sustainable”

End Quote Kamal Budhabhatti

"It is like 2001 all over again," says Kresten Buch referring to the dotcom boom.

He is the founder of human IPO, an organisation that has been set up to help start-ups meet investors and develop their businesses.

"You get this picture of Africa just looking at the general media, that nothing good is happening," he says. "When you get here, your perception completely changes."

The Danish entrepreneur has now set up base in Nairobi and has already doled out his first lot of funds, including an investment in a collective of female programmers called the Akira Chix, who are building a mobile platform for farmers to crowdsource price information from local markets.

Other organisations such as the philanthropic Web Foundation and the government have also stepped in to help seed new businesses and develop local content.

"What has amazed us is that there is no shortage of ideas," said Paul Kukubo, of Kenya's ICT board, set up to promote Kenyan entrepreneurs at home and abroad.

He oversees a $3m pot of money aimed at seeding start-ups.

The scheme - known as the Tandaa Awards - announced the first batch of winners earlier this year

Amongst the finalists, which were given grants of $10,000-$50,000 were a virtual museum that aims to document Kenya's history online, aweb-based tax portal and an education programme to teach people about HIV and AIDS in the workplace.

Growing up

Although there is a lot of excitement about the potential Kenya's tech scene, some still urge a sense of caution.

Mr Budhabhatti, for example, still thinks the technology scene needs to mature.

"Many of concepts that are floating here every day are not sustainable."

He says there are a lot of "impractical solutions" being pitched and occasionally funded.

"I am not trying to discourage innovation - it will mature over time," he says.

As the software king of Nairobi, he offers some advice.

"You can't be rich from day one. Make sure [your idea] is something sustainable. Make sure it really works."

Mr Hersman agrees but his advice is more to the point.

"If it works in Africa, it will work anywhere," he says.

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