The technology ecosystem in Kenya: is government playing its role sufficiently in supporting local tech companies to grow? What’s the take of money men #VC’s?

The last two weeks have seen a very intense debate on social media (Twitter and Facebook) around the role of government in creating a more enabling environment for local IT firms. The debate first started on Konza, the proposed technopolis that will cost an estimated  Sh800 billion. Condensed thoughts from the Konza discussion were…


Wrong side up?

The first is that we might be getting the approach wrong and building an ecosystem the wrong side up. This can be aptly summed up by – “If you want to build a great soccer team, invest in great players, not a massive stadium”. The argument here is that we already have what it takes in-terms of infrastructure to take IT related services to the next level and the real need lies in empowering techpreneurs to create and scale innovative services – growth capital that will see them increase “exportable value”. There is also the concern of capital flight when inviting the global players in, who will create jobs but ultimately the revenue is repatriated.

Many pieces to a puzzle

The second is that there are both macro and micro economic elements that must be taken into consideration when planning for the growth of an economy and the government-techie priorities may not be aligned. However in the larger scheme of things, the technopolis will have a spillover effect of attracting investors beyond those in construction, transport and energy and the onus is on the techpreneur to be ready to ride this wave of capital and exposure. Of note is that the funding is being sourced from outside markets and is not coming from government.

The more recent discussion on Twitter centered on the governments direct role in creating an enabling environment for local IT companies to flourish and even grow beyond our borders. The issues raised are both timely and relevant; and this has resulted in the creation of a forum where stakeholders will meet and “lay it bare”.

Some of the thoughts and questions are:

Government says we lack local capacity, yet the contracted international firms  simply set up shop and poach from the very same companies that “lack the capacity”, all the while the costs for training that the local companies foot “go to waste”. High attrition rates, high costs of talent development mean growth stagnates.

It’s not about infrastructure and partnerships but  more about creating local IP that has exportable value. The contracting of international companies does two things, the first is revenue repatriation and the second is it leaves us as net consumers of technology.

If the government could setup a finance  institution to support agriculture, why not do the same for tech? Someone fed into this and said agriculture has supporting structures and policy and is a main revenue earner for the country and ICT doesn’t have these enablers and doesn’t bring in that much anyway. My counter…isn’t that why the government should think  strongly about this? If we grow our local IP and create…exportable value think of the comparative ROI, which would buffer us from agriculture reliant revenue generation. Yes…if Mpesa was Kenyan created  and IP owned by a local firm that then deployed it across Africa… finish the thought

Where is government with its tax incentives and programs to spur innovation and growth?

If  the government doesn’t award local IT firms with contracts, why entertain the idea that some other government or company will want to? The likes of IBM became who they are by servicing local and built the kind of clout that opens doors in other markets.

IT feeds into all sectors of the economy…enough said

Where are the techpreneurs when government is formulating policy that touches on technology? The e-government secretariat looks like its bogged down with a lot of academic and policy type discussions. How is the progress even output to the would be implementers?

Smaller type capital deals that firms need to grow seem nonexistent. Funding gaps of between USD 50,000 and 500,000 open firms up to vulture capital with some firms barely breaking free from the stifling conditions and stumbling blocks presented by such deals. Can government bridge this gap?

 

How does one plug into government procurement to ensure they are in the radar when it comes to opportunity notification? If this info public?

 

More thoughts as they are distilled from the social media timelines………

An Africa based entrepreneur in the pursuit of opportunities without regard to resources currently controlled striving to build services that have real-world value for my beloved continent and beyond while having fun along the way.
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8 Comments

  1. Mbugua you ask some very pertinent questions here. Most important is that we arrive at not just answers to them but rational and practical ones. Without a doubt, there is plenty of work to be done on both the part of the Kenya govt and its agencies.  There’s also plenty to be done by Kenyan techpreneurs in building a reputation that allows them earn respect and more importantly more projects both here and elsewhere. Having skill and capacity is non-negotiable and many have built that. Having a culture and practice that allows the local firms compete with global players……. ?  Personally I am yet to be convinced that we’ve gotten there.

    Great piece!

  2. Ngigi Waithaka

    Mbugua,

    Interesting article, just seen this, and incidentally I just blogged on the exact same topic a couple of days ago.

    If you think about it, if two guys are given the 800B to invest, one invests in the stadium, the other in building up players, the latter guy can turn around his money in a couple of years time, while the former would still be waiting to put up a show with no players.

    Last I checked Man U can still be Man U even if they relocated from Old Trafford to Kasarani, but taking your favourite High School team to Man U will not make them great players.

  3. silas

    mr ndemo and mugo kibati are like dogs who cant bite we have a constitution adviser to the president but does he have an ict advisor!!

  4. VC’s are NOT what is required to embrace the next step here guys! Real, “walk the walk” application is what will transit to next step faster than you’d believe possible!!
    Trust me, I’m NOT a doctor.

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