The Nairobi City Skyline on April 27, 2023.
Kenya is now the leading African destination for startup funding, raising $437 million (Sh57 billion), according to 2024 data from startups insights and funding database The Big Deal. This figure is nearly a third (32 per cent) of all funds raised by startups on the continent.
The Kenya tech sector, particularly fintech, has been a significant draw for investors. Companies like M-Kopa, Twiga Foods and Copia Global have raised substantial funds, with M-Kopa alone raising around Sh43.2 billion historically.
The country’s startup funding has pulled considerably ahead of larger African economies, it being the sixth largest on the continent today. Egypt, Africa’s second-largest economy, followed Kenya with $373 million. Nigeria, once a leader and Africa’s largest economy, which has now slipped to fourth behind Algeria, raised $218 million, a notable decline from its historical average of 35 per cent between 2019 and 2022. South Africa, which has rebounded to become Africa’s largest economy, came in third with $125 million. The balance of the startup funds raised was distributed across two dozen African economies. In East Africa, Uganda was a very long way behind Kenya, raising $19 million, while Tanzania attracted $9 million. Ethiopia and Rwanda each came in under $5 million.
The country’s big showing has been attributed, among other things, to its strategic location, tech-savvy population, strong digital and entrepreneurial ecosystem, widespread mobile money usage through platforms like M-Pesa, and an increasing number of tech hubs and incubators, making the country attractive for venture capital.
Tech hubs
However, none of these are unique to Kenya in a considerable way. Nigeria, South Africa and Egypt still have more tech hubs and incubators than Kenya. Additionally, too much is made of Kenya’s “strategic location”. On the eastern side of the continent, it is not any more strategically located than Ethiopia or Djibouti, or South Africa down south. In several respects, Tanzania is more strategically located. Kenya’s Indian Ocean coastline is nearly 600 kilometres long, but Tanzania’s is 1,424 kilometres. Kenya shares borders with five countries while Tanzania does so with seven, including the Democratic Republic of Congo, which supplies more than 60 per cent of the minerals needed for the world’s green technologies.
Indeed, Kenya’s neighbours like Somalia, South Sudan and Ethiopia have been embroiled in war in recent years, so if anything, they would drag its attractiveness down. Kenya’s politics, too, is very loud and fractious and can leave a faint-hearted investor unsettled. And if one looks at various democracy and transparency rankings, Kenya doesn’t even sniff the top five. Additionally, in the recently-released World Bank’s inaugural B-READY Report, which examines business environments, in Africa, Kenya placed ninth. Rwanda ranked first, Tanzanian fifth and South Africa eighth.
Kenya’s secret sauce, therefore, is to be found off the beaten track, and in obscure corners and data. In an annual survey conducted since 2014 by expatriate platform InterNations, Kenya is the only African country consistently ranked among the top 20 worldwide for expatriate workers in recent years. While corruption and police abuse were problematic areas, for them Kenya places high for ease of settling in, housing, and “genuine warmth and hospitality of its people”. The latter deserves some sniggers, because, honestly, Kenyans are nowhere near as warm or hospitable as Ugandans, for example.
Warmth and hospitality
It’s the nature of that “warmth and hospitality” where the magic might lie. It’s not Tanzanian-style politeness, which you can’t take to the bank, or Ugandan warmness, which will lead you into a wild drunken party. It’s the type that you can lean into to do things and make your life easy. A guy whom you meet with a colleague greets you nicely, offers to pay for your coffee to “welcome you to Kenya”, and then slips you his business card in case you are looking for a house, or want to buy a dog or cat.
While it doesn’t show up in tracking and surveys, Kenya outperforms its peers in being a sinfully good place for capital and the relative freedom to move it. While it isn’t Africa’s democracy star student, it has something few other African countries do. The forces of light and darkness—political, social and cultural—are evenly matched in Kenya in ways you hardly find in other places on the continent.
There are no religious orthodoxies, either nationally or in parts of the country, that you can’t cross (like you can’t do with the Sharia police in parts of Nigeria), or histories you can’t challenge (as you can’t with the anti-apartheid consensus in South Africa). You can make a career hating Kenya’s founding father Jomo Kenyatta. It wouldn’t be profitable to do so with Nelson Mandela in South Africa or Julius Nyerere in Tanzania.
The most precious of its attractions is the oddest. Living and working in Kenya as an outsider, you get a lot of comfort from a strong sense that you can always leave. Get out in one piece when you are done. It is tough competing against such an elusive brand.
The author is a journalist, writer, and curator of the “Wall of Great Africans”. @cobbo3.
