HISTORY has shown that economic development is intrinsically linked to technological innovation. Just look at the likes of the printing press, which sparked the Renaissance in Europe, Newcomen’s steam engine, the vanguard of the industrial revolution, or even semiconductor electronics and microchips from the last century, which laid the physical foundation for the virtual world.
Jumping back to the present, and turning our attention to Africa, and specifically Kenya, we see a country that has pioneered a mobile technology economy that points to future trends in the rest of the world. Kenya’s technology services sector has grown from £11m in 2002 to more than £300 million in 2013.
Calling a taxi in Nairobi soon shatters the Western world’s outdated preconceptions about Kenya and developing economies. As the Economist notes, it is easier to pay a taxi fare by mobile phone in the city than it is in New York. 17 million Kenyans – over half the population - use the M-Pesa mobile payments system, making the country a leader in mobile payments technology. Monthly transfers and payment of goods and services amount to around a staggering £733 million ($1.13 billion).
Mobile based economy
Many emerging countries, particularly African nations such as Nigeria, Kenya and South Africa, typically have fewer people connected by landline and therefore find it easier and cheaper to install mobile telephone networks. This means that these countries have had different economic development paths compared to those in Europe and North America. Emerging nations have bypassed the analogue age and have jumped straight into mobile digital networks. This, combined with few people having traditional bank accounts, provided the perfect setting for a thriving mobile payments-based economy.
Until relatively recently, South Africa was regarded at Africa’s core technology hub, principally due to its superior infrastructure and more mature investment market. However, multinational corporates have since moved to other fast-growing African countries. Whilst the likes of Mauritius, Rwanda and Tanzania have experienced a rapid increase in modern services and technology, Kenya is a better bet for investors because its technology is becoming the key driver to economic development and growth. Importantly, the policy decision-makers in Kenya seem to agree.
In 2009, backed by the Kenyan government, four fibre optic cables came ashore, bringing a new, faster internet connection. Prior to this, the internet was only available via satellite and was too expensive for many users. After 2009, prices fell and, since then, the number of people using the internet has tripled to almost 12 million. And with 74 mobiles to every 100 Kenyans, rather than expensive laptops it is via mobiles that Kenyans are connecting to the internet.
Africa’s ‘Silicon Valley’
This improved connectivity has helped lay the foundations for Africa’s “Silicon Valley” in Nairobi. Dubbed “Silicon Savannah”, this is an area in Kenya that has attracted a range of tech start-ups and venture capital firms. International tech giants such as Google, Intel, Nokia and Microsoft have sites in Nairobi and IBM has recently opened a new tower block, the IBM Innovation Centre, which is the company’s first research lab in Africa.
Furthermore, in Konza, 60 kilometres away from Nairobi, construction of a new techno-city is planned. These investments are clear votes in confidence in Kenya’s status as a globally-recognised hub for technology and innovation.
With a burgeoning smart app industry, Kenya is producing apps that solve problems particularly relevant to Kenyans. One example is the M-Farm app, which provides farmers with food pricing information and is helping them to achieve fairer prices for their produce. Equally, iCow is an app designed to help boost the productivity for small-scale dairy farmers in Kenya, offering tips on cow breeding, animal nutrition, milk production efficiency and gestation. These are perfect examples of how domestic technology advances have helped Kenyans address real problems affecting the country head on.
So what will be next for the Silicon Savannah? Well, the advent of 5G technology, which is expected to be rolled out in the next decade, will bring unprecedented speed to mobile on a level similar to that of current high-performance optic fibre networks. Speeds of over 800Gbps - the equivalent of downloading 33 HD movies in a single second – will exacerbate Kenya’s technological capabilities.
Perhaps most significantly, 5G’s revolutionary compact antennae technology will mean that antennae can be mounted on almost any structure, such as a house or telegraph pole, instead of bulky masts. This will help connect the entire country from Nairobi’s suburbs to rural Rift Valley villages.
Access to a 5G network will provide a major boost for innovative industries as well as business in general. It will also help break down barriers, improving access to a higher proportion of the population to the internet whilst boosting their educational opportunities and prospects.
Nigeria and South Africa have for a long time been the economic giants of Africa, particularly in terms of natural resources, such as mining and oil refinery. By focusing on financial services and telecommunications, Kenya has future-proofed itself by becoming the go-to African market for the likely economic drivers of the next few decades. With a supportive government and a young, tech-savvy population, as well as further innovation on the horizon, Kenya is well-placed to continue on its path to becoming Africa’s leading technology hub.
Tej Kohli is a technology entrepreneur and FinTech expert