Kenya (namesake of Kenyan Mountain) means “the resting place for Gods”. However, Gods are never at rest in Kenya. In 1890th Kenya (under the name East Africa Protectorate) had been one of the major economic strongholds of the British Empire on the Black Continent. This epoch culminated in the construction of the Kenya-Uganda railway (1890–1900).
That railroad had entered the history after a pair of ferocious lions repeatedly attacked Indian workers in the Tsavo region. It caused an uprising among local population. Frightened peoples believed that the railroad was, in fact, prophetic “Iron Snake” destined to destroy the country. 50 years later, The Mau Mau Uprising had started the prolonged civil war. In 1963 Mau Mau leader — Jomo Kenyatta — became the first president of independent Kenya.
Kenyatta’s party — Kenyan African National Movement or KANU — quickly transformed Kenya into the one-party-state. For the next 40 years the central government dominated in social, economic and political lives of Kenyans. KANU praised itself for installing political stability and attracting foreign investments into infrastructure projects. However, KANU’s monopoly on power had prevented formation of the civic society and, during the period of transition to the multi-party democracy in 2002, resulted in inter-racial conflicts.
Seven major Kenyan ethnic groups (Kikuyu, Luhya, Luo, Kalenjin, Kamba, Kisii and Meru) strive for self-governance and proportional representation in the government. It leads to formation of short-term political unions fighting for dominance on all levels of Kenyan power structure. Three main coalitions — Jubilee Alliance (167 seats), The Caoliiton for Reform and Democracy or CORD (141 seats) and Amani (24 seats) form the lower chamber of the Kenyan Parliament — 349-members The National Assembly.
Developed agricultural sector (notably, tea production and export) boosted Kenyan economic growth in early 2000th. However, 2008 economic crisis hit this country hard and lead to renewed political and social tensions within multi-ethnic Kenyan population.
Kenya, with its modern, cosmopolitan, thriving urban centers (Nairobi and Mombasa) as well as with a relatively friendly foreign investments climate, provides local startup founders with a fair chance to launch a variety of sustainable e-businesses. 50 million peoples and $75 billion economy present a collection of niche market opportunities to exploit in such areas as mobile FinTech, e-marketplaces, e-services and education. Moreover, local startups ecosystem has already received some support from world’s leading VC firms.
On the other side, Kenyan modern, services-based economy is still in its very early stage and local population still relies on agriculture to provide for its basic needs. Additionally, regulatory environment for SME is too harsh and multiple administrative barriers are too high for fledgling entrepreneurs. On top of that, rising level of political instability may undermine long-term perspectives of local startup ecosystem.
Business Notes for Startups Founders:
- political climate: not friendly;
- economic climate: relatively friendly;
- regions to focus: locally;
- industries to focus: FinTech, SAAS, on-line entertainments, e-marketplaces;
- major limitations: slowing GDP growth rate (3% and falling), high CB interest rate (10%), high taxes (individual income tax stands at 30%), population relies on subsistence agriculture and the majority of potential users are either low-income or living under the poverty line, rising ethnic tensions;
- stimulus: fast growing young generation of mobile Internet users, increasing importance of services sector in the overall GDP structure, relatively high fixed Internet penetration rate (almost 50%), quickly developing startup ecosystem (specially in Nairobi);
- opportunities: to launch a variety of services (notably in FinTech and entertainments) aimed at the fast growing young population in largest cities.