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Kenyan startup ecosystem has a significant competitive edge globally, report


A comprehensive, in-depth report funded by the UK government has given Kenya’s startup ecosystem a thumbs up, noting that it has grown by leaps and bounds over the last decade.

The Survey Findings of Startups and Startup Ecosystem in Kenya report confirms through quantitive and qualitative data that the country is leading in the East African region, and ranks 3rd in Africa among countries with robust startup ecosystems. Across the continent, Kenya comes just behind Nigeria and South Africa, while it is ranked 62nd globally.

“Kenyan startup ecosystem has achieved laudable milestones and is recognized as one of the most progressive ecosystems in Africa,” says the report, highlighting that there has been a commendable level of funding received, an increase in the number of components such as technology hubs and other support mechanisms. The report further says that the introduction of policies and regulations by the government has helped to support the sector.

Fintech is the most dominant subsector of the startup ecosystem, holding a 30% grip on the industry. Agriculture and food, energy, and water come in second at 13% and 11% respectively. Retail also holds an 11% stake while logistics and transport have a 10% contribution to the startup ecosystem. Startups in healthcare, work, education, waste management, telecommunications, and media all have less than 10% of the industry’s dominance, signifying a huge potential for innovators and builders to make a mark.

“Notwithstanding the progress made over the last decade, the startup ecosystem struggles to realize its full potential,” the survey elaborates,  “The future growth of startups will depend on impervious regulations that enable the participation of all industry participants through more focused strategies.”

The study also hails the distribution of startups across many cities, although Nairobi is still home to the largest number of them.

Across Kenya, the burgeoning startup sector has the potential to generate wealth, employment, and skills. The survey indicated that other counties such as Mombasa, Machakos, Uasin Gishu, Kiambu, and Kisumu have a presence in startup operations.

The need for domestic funding is also underlined in the report. It still notes that lack of seed and angel capital are among the challenges that Kenyan startups are facing. “Domestic investors need to be encouraged to fund domestic startups, especially given that majority of significant funding rounds are made by foreign investors.”

“Access to capital remains the most difficult barrier for Kenyan startups,” the report elaborates, “ This is despite the huge success of some startups in the country on funds raised.”

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Simon W Nderitu

Simon is a tech enthusiast who keeps a close eye on emerging technologies, startups and the general business environment. You will often catch him totally immersed and drooling over Artificial Intelligence, Machine Learning, Virtual Reality, Augmented Reality, IoT and just about any other tech that promises to revolutionize the way we live. Send tips to snderitu@techtrendske.co.ke

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