Kenya's Start-up tragedy:
Pilotitis, policy failure and the absent domestic investor confidence in young entrepreneurs
Two days ago, I attended a World Bank sponsored consultative forum on the World Development Report – 2016. I got myself caught up in a riveting discussion on scaling up start-ups and why it has thus far been problematic in Kenya. I have banged my head ever since about this. I couldn’t resist ranting the two pence opinion I didn’t get a chance to dispense at the forum. Well, here it is:
Investors and young entrepreneurs – two worlds apart
There is a fundamental disconnect between Kenyan young entrepreneurs and possible domestic investors. Notably, the typical (prospective) Kenyan investor is wired for hard concrete investments: real estate, construction, agribusiness, and manufacturing. Tangible investments that come with lesser risks of uncertainty. Not 'faith' in some 'pizza ordering' 'direction pointing' 'weather predicting' or 'breathe alcohol level calibrating' app developed by a weird spectacle, jeans-tshirt-trainer wearing 19 year old at iHub least known to him.
Make no mistake, Kenyan investors have serious dime. Some of the machines these folks show up with in town; some of the homes we see on TV after some Karen-Runda tragedy - they spell BLISS, BLING, BALLING. Some of them were acquired by giant multinationals, others learnt the genius of business in +254, and some in mind blowing hereditary wealth.
A quick census - they are 60 - 70 year-olds who do not understand and care least about ICT revolution, big data, new media, the internet, yadda yadda. They are traditional conservatives who hang out at analog exclusive membership clubs and enjoy the country, game, and choma more. You sure won’t find them at Nairobi Java, or Brew Bistro or Michael Joseph Centre or Strathmore or Nailab or Mojos where our start-up entrepreneurs elect to quaff their chaff as my good friend Tom Osanjo puts it.
‘Pilotitis’ – too poor to sustain start-ups
We are too poor. Our young people survive on very thin limited resources that can never support their maintenance (food, transport, accommodation) as they concentrate on C++, python, SQL, Java etc birthing some bad-ass Sportify-alibaba-uberlike idea.
People have got to eat; it is only logical that entrepreneurs will pursue projects for as long as they meet their immediate rudimentary needs; not the Facebook or Apple the project could metamorphosise into a decade from today. Maybe our entrepreneurial culturing is still inept - in shaping the correct attitudes and discipline needed to see through an idea to its fruition however long it might take, however frustrating it could be. So that we don't drop ideas as soon as they fail to meet our immediate expectations. 'Pilotitis' - that's what my friend John Kinuthia calls it.
Maybe our investors as well aren't ready to cough out million after million into projects without obvious direction towards success, surplus.
‘Expat capture’ – domination of the start-up scene by foreign social entrepreneurs
Then there is the clever 'mzungu'. The bearded, man-bag carrying, sun loving MIT, Stanford, Georgetown, Oxford student that jets in with substantial funding, and fancy save-Africa social entrepreneurial ideas. From the 'brick' to every other M-something (M-kopa, M-changa, M-ngombe, M-Gormahia) these folks have clogged up the start-up scene in Kenya (no Nairobi, it seldom leaves the capital).
I am a staunch proponent of knowledge transfers and spill-overs, but am also well aware of the dynamics of multinational domination and crowding out of local enterprise and innovation. Lord! that might have come across a tad bit too leftist!
There are the awesome ones - I hear the genius of M-Pesa was born by their ilk. Then there are the stealthy borrow ideas-pimp ‘em up-come back to Kenya-bang new idea kinda guys. And of course the mundane-nothing to write home about-boring ones with ideas not worth the visa or Nairobi mahindi choma lot.
Point is, all these folks play in a concerto of domination that easily and unknowingly downgrades Kenyan start-ups, unfairly competes for investor limelight/attention and could demoralize budding home-grown talent. I sound ridiculously political on this right?
Controversial as it may sound, the role of government, institutions, policy, or legislation in propping up start-ups is profound. Whether in setting up the requisite infrastructure (like broadband), guaranteeing funding, or providing the regulatory environment (for example protection of intellectual property rights).
Am willing to argue that the government of Kenya has equally failed our start-ups (someone said that 'government' is an amorphous nothing entity). Yes this is stuff that is best executed by the private sector and facilitated by market dynamics. But for a country with such an acute youth unemployment problem, it is in the interest of government to put together a working framework for nurturing and supporting homegrown entrepreneurs especially after proclaiming our intentions to build a knowledge economy - Konza, Tatu City blah blah.
And I don't mean dishing out Kshs 50,000 to young people hurdled into groups of 50 to hatch one day old chicks in the name of Uwezo Fund, Youth Enterprise Development Fund, Kazi kwa kijana and the likes.
The Missing link between knowledge and post-class work experience
A few weeks before exiting the University of Birmingham, I had the opportunity to attend free seminars and tutorials on penetrating the job market. Resume building, pitching, presentation skills, the works. No offence, but the education system in Kenya (can’t speak for other Sub-Saharan countries) fails flat in preparing students for the post-class work experience.
This largely explains the inability of many of Kenya's young entrepreneurs, with brilliant ideas to market, sell their genius; to speak to the right audience and to win investor confidence.
Yes, you learnt programming at JKUAT and are extremely good at it - developing apps. Yes you studied design at Maseno University and you are superb at crafting Ankara-African apparels. But you end at that. You cannot explain yourself in 2 minutes to a Chris Kirubi at a cocktail at Alliance Francaise or to a Bob Collimore at the gents at Ngong racecourse, or to a Vimal Shah on the elevator at Lonrho House.
How will you ever get your idea funded? scaled up?
The missed opportunity in industrial clusters
What we sure lack, and which kick-start, sustain and encourage entrepreneurship especially in knowledge driven economies in other parts of the world are industrial clusters. Where knowledge meets industry and investors and policy support.
Across the globe start-ups thrive in such unique clusters. See the ICT & Biotech clusters in Massachusetts, the engineering clusters in Batten Wurttemberg Germany, the Silicon Valley, Emilia Rogmana & Tuscany's automobile and apparel clusters in Italy; Toyota City in Japan, Scotland's Silicon Glen, Sinos Valley in Brazil, Daegu South Korea, the French Sophia Antipolis, the examples are plethoric.
What is Kenya doing to get there? The famed Thika town of our high school days?
Skewed focus on tech start-ups masking other entrepreneurs
I will say one last thing, then shut it, before I cause me trouble. This one will not go down well with some of my tech and media folks.
In Kenya, there is a skewed focus on tech oriented start-ups. So much so that it makes entrepreneurship today almost synonymous with an ICT oriented something. And it need not be so. Mainstream media most often highlight techy stuff, maybe because tech is sexy and savvy, or they are easily accessible, or because of elite capture or simply because they are the more of our young entrepreneurs. I don't know!
But surely, this near obsession with tech start-ups almost masks substantial developments in other areas like agribusiness, art, new media, that could do with the light.
Maybe if we broadened our focus, coverage (now am talking to the media hehe), we could discover more young Kenyans, struggling with marvelous ideas that could create employment and get our young people off want and trouble. Remember the pencil portrait super-guy who did President Kenyatta the other day. Imagine how many more of such are out there unnoticed.
I rest my case on Kenya's #Startuptragedy.
Yours truly - Okwaroh Ja Paprombe