Legislative reform, security and infrastructure improvements working alongside edtech and agtech to transform Kenya’s economy, write Thabiso Makekele and Terry Shapiro
Education and agricultural technology are leading transformation of Kenya’s “Silicon Savannah”, with 133 edtech start-ups at last count, offering a diverse range of solutions from online learning platforms to gamified educational content. Both are helping to build the human capital needed for the country’s future growth.
In the agtech sector more than 100 firms offer technology that is empowering farmers to increase yields, cut costs, access markets, and improve their financial wellbeing.
Mobile money platform M-Pesa is probably the country’s best known tech success. Launched in 2007, M-Pesa revolutionised financial services by allowing users to conduct transactions via mobile phone, bypassing traditional banking infrastructure. It rapidly became the most widely used mobile money system globally, with more than 40-million users in multiple countries.
The platform’s success lies in its ability to provide access to financial services for millions, particularly in rural areas, who were previously unbanked. More than 60% of Kenyans now use M-Pesa, contributing significantly to the country’s financial inclusion rate, which soared from 27% in 2006 to more than 80% by 2019.
Benchmark
M-Pesa set the benchmark for financial inclusion, demonstrating how technology can be harnessed to empower individuals and drive economic growth, and has underscored the potential for innovation to create jobs and foster a more inclusive economy. Other tech services are boosting entrepreneurship and productivity, particularly for micro and small enterprises, through access to finance and market opportunities.
While average growth of 4.1% is expected for African economies this year, Kenya is expected to be the continent’s fastest growing, with growth projected at 6%. Its GDP grew 5% last year despite a global slowdown and rising production costs.
Innovation is helping agriculture – which accounts for almost 40% of Kenya’s exports, and with forestry and fishing and contributes almost a quarter of the country’s GDP – to transform from subsistence farming. Mirroring South Korea’s agricultural reforms in the 1960s with a focus on value addition and export-oriented production, it rebounded in 2023 after two years of decline.
Other tech services are boosting entrepreneurship, particularly for micro and small enterprises, through access to finance and market opportunities.
A staggering 70% of nonagricultural workers are self-employed or work for micro-sized firms, which often struggle to access to capital. The problem is especially acute for women entrepreneurs and youngsters in rural areas who are on the periphery of economic prosperity.
Breakdown of Kenya’s $7,3-billion exports for 2022
Source: Observatory of Economic Complexity, https://oec.world/en/profile/country/ken
Popular hustle
Inspired by India’s direct benefit transfer scheme and Brazil’s Bolsa Família social assistance programme, a government e-voucher programme has been launched to provide Kenya’s smallholders with easier access to essential resources such as seed, fertiliser, and equipment. This digital voucher system allows farmers to receive subsidies via their mobile phones, and to redeem them at accredited agro-dealers. A modern take on agricultural subsidies, the approach streamlines aid distribution and reduces the risk of corruption, and is naturally aligned with the digital transformation evident in other sectors of the economy.
Kenya’s government is driving initiatives at multiple levels to improve the economy, and with it, living standards.
Labelling data for international AI companies is a popular hustle for young people in Kenya, which competes with countries like India and the Philippines for online work. Al Jazeera’s Anne Kidmose says a video promoting a government-sponsored tech skills hub in Kitale in 2021 prompted more than a million young Kenyans to sign up for remote online work.
Ingenuity
The country’s National Innovation Agency encourages start-ups to compete for a Presidential Innovation Award. Last year’s winners, recognised for their work’s commercial value and potential, included:
Bioafriq Energy: Makes hybrid solar dehydrators for year-round processing of farm products, minimising post-harvest losses.
Agritech Analytics: Combines AI-powered satellite data analytics and data from a solar-powered sensor to analyse soil and plant health, detecting crop pests and diseases.
Farmer Lifeline Technologies: Leases AI-enabled cameras to farmers to detect pests, and recommends affordable, locally available chemical and fertiliser applications in exact quantities for increased yields.
Ruphids Autotech Solutions: Makes devices that notify parents by SMS whether their children are at school.
Bevis Africa: Makes blockchain-enabled devices that allow small-scale carbon sequestering and carbon credit sales.
Bafiex Products: Extracts banana-stem fibres to make braids, wigs, weaves and pillows.
Greenium Energy: Makes briquettes from water hyacinth.
The ingenuity does not stop there. To raise income and improve food security, other Kenyan projects focus on creating more pest-, drought- and disease-resistant crops, improving access to farm inputs and markets, better farm record management and livestock identification, and innovation such as optical sorting to remove fungus from grain in Kenyan mills.
Multifaceted approach
Kenya has set up special economic zones and invested in technology to boost the manufacturing sector’s contribution to GDP.
Meanwhile, enhanced security is putting the country back on the map as a tourist destination. The Institution for Economics and Peace notes that Kenya’s Terrorism Index score dropped to 5.62 in 2023 from 6.16 in 2022, thanks to improved security operations. It was at its worst in 2015, at 7.28, after Islamic militants murdered 148 people – mostly Christian students – at Garissa University College in the Rift Valley town of Eldoret.
Kenya’s cabinet secretary, Kithure Kindiki, told The Nation in February that the government had procured hi-tech equipment, including drones and other surveillance equipment, weapons, and helicopters to counter sporadic Al-Shabaab attacks and ensure areas prone to them were safe for development and investment. These measures, alongside the upgrading of airports and road networks, are expected to bolster Kenya’s appeal as a tourist destination. With 1.75-million tourists visiting last year, 15% more than in 2022, the tourist industry is beginning to recover from covid travel bans.
Scrapped visas
Hoping to triple tourism inflows and entice business travellers, Kenyan President William Ruto recently scrapped visa requirements for all foreign passport holders.
“His argument for scrapping visas to Kenya, a hub for tourism and nonprofit work, was that every human being historically has roots in Kenya’s Turkana County and that it was absurd for children of the soil to require authorisation to come home,” Al Jazeera reported.
However, a $30 electronic travel authorisation fee was introduced for visitors, excluding East African Community residents, South Africans, Ethiopians, Eritreans, Comorans, Mozambicans and those from Congo-Brazzaville and San Marino, who are exempt from the fee.
Keen to attract more foreign direct investment to fund manufacturing, technology, and renewable energy, Ruto also announced that 35 state companies would be privatised, and 100 more considered for privatisation, in the wake of legislation enacted recently to eliminate bureaucracy. Among the enterprises earmarked for privatisation are the Development Bank of Kenya, a number of hotels and lodges, Kenya Pipeline Company, Kenya Ports Authority, and Kenya Tourist Development Corporation.
While government is also working on regulatory reform to improve the business environment, Kenya’s score on Transparency International’s Corruption Perceptions Index is slowly improving, up from 25 in 2015 to 31 last year. The index considers levels of bribery, misappropriation of public monies, abuse of public office, bureaucracy that could create opportunities for corruption, nepotism, public servants’ income and asset disclosure, whistle-blower protection, state capture, and access to information.
All in all, Kenya is working hard to ensure its economic growth continues to lead the pace in Africa.