When the phrase Silicon Savannah was coined, there was great optimism that Nairobi was about to experience a technological revolution that would attract high-value companies and, in turn, spur job creation.
It was 2010. Airtel Kenya, then Zain, had just obtained the second 3G license, M-Pesa was interoperable with banks and the crowdsourcing platform Ushahidi was deployed in Haiti to help map the humanitarian crisis after an earthquake earth of magnitude 7.0.
On Ngong Road, iHub had opened its doors to software developers with ideas and in need of a workspace, as they built and tested their solutions before hitting the market.
“When all of these people come together, Google has innovative platforms that we can offer in terms of software, support and our engineers and our time to make sure that we mentor people where necessary and support the activity that ‘they want so we can see innovation grow,’ said then-Google Country Director Joe Mucheru, speaking at the launch of iHub, long before he became ICT Cabinet Secretary.
Within months, an ecosystem resembling America’s Silicon Valley emerged, and Nailab, Startup Garage, mLab, Fablab, 88mph and iLab quickly opened their doors to developers chasing the next M-Pesa or Ushahidi.
The premise of Silicon Savannah in Nairobi was simple and promising: to create an environment for innovation and to provide talented people with the time and resources to explore their ideas which were often presented as local solutions to local problems.
This ecosystem would then attract potential investors to invest in these start-ups, which would then become sustainable businesses and create jobs.
“This is the most important project in terms of innovation for us,” said Paul Kokubo, then CEO of the Kenya ICT Board, now the ICT Authority. “These types of hubs are hotbeds of innovation.”
But 12 years after those big promises, Nairobi’s Silicon Savannah is falling short of the promised start-ups and jobs.
Only a handful of companies remain out of hundreds of start-ups located in more than a dozen incubation centers that were once spread across Nairobi.
Where did he go? To begin with, a large number of start-up founders were drawn to Silicon Savannah by the hype and promise of prize money rather than sustainable business plans.
The largest and most prestigious of these awards was Pivot East, a presentation competition launched in 2011 and organized and sponsored by mLab East Africa, iHub, eMobilis, the University of Nairobi and the World Wide Web Foundation, among other sponsors.
Each year, 25 start-ups were shortlisted from hundreds of entries and five winners each received 1 million shillings – half in prize money and half in capital investment – to develop their projects.
“Pivot East is much more than just a mobile app competition – it’s a holistic platform for mobile startup organizational development and business model refinement,” reads the press release announcing the launch of the presentation season.
Between 2011 and 2014, 15 start-ups received 13.5 million shillings, while 15 of the 75 finalists raised 532 million shillings in venture capital, according to organizers.
“In 2011, entrepreneurs lacked the business mentorship needed to achieve market readiness and sustainability,” wrote Nicolas Friederici, consultant for the World Bank’s infoDev program at the time. “Investors wanted more ‘investable companies’, meaning those that were past the proof-of-concept stage, with some traction in the market. The 2012 edition was a leap forward but still lacked a strong footprint beyond Kenya and many of the finalists continued to focus on prize money rather than building their business,” he said. noted again in 2013.
In 2016, Pivot East was quietly shut down, with some organizers and sponsors citing lower enforcement standards. Clicking on a link to the contest website today redirects you to a phishing website.
Some start-ups and entrepreneurs, however, have managed to leapfrog the competition to become successful businesses. One such entity is Eat Out Mobile, a restaurant finder app that was a finalist in 2011. It remains popular to this day, earning revenue from partnerships such as Nairobi Restaurant Week and advertising through its publication , Yummy Magazine.
Kopo Kopo, a finalist payment processing company in 2011, secured over 500 million shillings in funding. The company, which changed its name in 2020, has more than 70 employees and launched a bulk payment feature on its Android app last year.
And Alloys Meshack, winner of the competition in 2011 in the mobile payments and e-commerce category with Mshop Ltd, went on to co-found Sendy, the e-commerce and logistics company which late last year expanded its operations in Ivory Coast. But along with the success stories, a particular trend has emerged. The majority of start-ups that have attracted large funding had one or more Caucasians on their board. An unspoken truism in Nairobi’s Silicon Savannah is that if you want funding for your start-up, hire Caucasian board members.
A study published in 2017 by Village Capital, and funded by the Bill and Melinda Gates Foundation, found that out of 60 deals signed with tech start-ups in East Africa between 2015 and 2016 – and which were valued at 8, 5 billion shillings – 72 percent went to just three companies.
Start-up founders are therefore forced to shape their companies according to a certain model that investors can easily identify with – enter an accelerator program and hire a European/North American executive – and voila! attract funding.
This not only limits young founders’ ability to take risks and explore diverse solutions to unique local issues, but also creates a closed system where approval and investment are distributed based on who knows who.
In 2013, Nigerian serial entrepreneur Iyinoluwa Aboyeji and two of his partners co-founded Fora, a distance learning platform for African universities. A year later, the team reached out to Jeremy Johnson, the founder of 2U, a company that partners with universities to bring digital education to millions of learners around the world.
According to Aboyeji, Andela needed to pivot and the founders lacked the political networks to navigate various regulatory hurdles. At the same time, investors in his home country of Nigeria were proving elusive. “We met at Fresh and Co on the 28th and at Park in New York, and I told him Fora wasn’t working,” Aboyeji explained in a 2016 Medium post.
“We tossed around a few rough ideas, and he walked me through one that would become Andela. He promised to fund us personally and join our board if we were willing to consider it.
Over the next three years, Andela raised 20 billion shillings in funding, including 2.7 billion shillings through the Chan Zuckerberg Initiative, the foundation launched by Facebook founder and billionaire Mark Zuckerberg and his wife Priscilla Chan. “We live in a world where talent is evenly distributed, but opportunity is not,” he wrote. “Andela’s mission is to close that gap.”
With the new funding, Andela took off, opening new offices in Nairobi and inviting young engineers to apply for its remote work training and internship program for Fortune 500 companies.
However, two months after Facebook funding arrived, Andela announced that Aboyeji was leaving the company.
In 2019, the company announced that it was laying off 420 junior developers in Nigeria, Uganda and Kenya. The following year, at the onset of the Covid-19 pandemic, the company announced a new round of layoffs that would see 10% of its 1,300 employees across Africa lose their jobs.
Andela CEO Jeremy Johnson said the layoffs were the result of a shift in market demand where customers needed more engineering talent.
This left the company with a large number of junior engineers and few job opportunities for them. Last year, the Employment and Labor Relations Tribunal ruled that Andela should pay its former CEO for Kenya, Joshua Mwaniki, 9.2 million shillings for unfair dismissal in 2019.