Kenya’s astonishing internet growth: Six key trends to watch

For many years, Kenya was known as fertile ground for agriculture, but increasingly it’s becoming known as a place where technology companies can grow and flourish. Many new technology players from across Africa have chosen Kenya as a base to serve their East African interests, to expand and launch new products and services into this dynamic regional economy.

1. Online classifieds
MIH Internet Africa and the Bid or Buy group are both set to go head-to-head for the classifieds market in Kenya, and in other emerging African markets across the continent.

After the launch of its mobile directory business, Mocality, MIH has been putting resources towards Dealfish, hiring and building the team to run its operations in Kenya, having made its ambitions for the classifieds market clear.

The online classifieds market is huge in South Africa, and with more players in the market, the prospect of success for the rest of Africa is an opportunity worth noting and capitalising on.

For now, it has been mainly AdWords and targeted Facebook advertising, but the stage is set for the two to go head-to-head for this market as the new year approaches against local and international players including Uzanunua, Craigslist Kenya, Pigia.me, Sambazasoko, Dudubaya, PataUza among others. After what has been seen from mobile business directory Mocality, MIH might have the benefit of an established crowd-sourcing scaling model for Dealfish. This same model in Mocality’s case saw the company make a radical jump from 15 000 Nairobi businesses to more than 60 000. Mocality have recently expanded the model to the coastal city of Mombasa.

2. MXit
Meanwhile South African instant messaging network MXit has been on the ground in Kenya setting up its presence and exploring partnerships. The company has been evangelising to developers since it recently created its API and marketing the product. Locally, it faces competition from Nimbuzz, South Africa-based 2Go and Mig33. MXit’s active approach has seen it activate the product on the ground and provide incentives to the local market by seeding the product through guerilla marketing.

3. GroupOn
The GroupOn model in Kenya is gaining traction with the stakes getting higher as the first players explore the group buying model. Players include SokoPal, Rupu, and Twangoo-affiliated Zetu. The market is rapidly heating up as it will be the player that efficiently adapts the right model for the Kenyan market that has the best shot at success.

Google has also raised the stakes with the launch of its question and answer platform Baraza. This follows on from its SMS-powered classifieds marketplace Google Trader (in Uganda) which also launched a week ago in Ghana. While initially testing Baraza in a handful of countries, the platform is adapted from Ejabat, Google’s Arabic question and answer service.

It’s obvious to see Google is also raising its profile and has made clear its intentions to dominate more than just search by launching products to make the local internet relevant for the African market. Baraza goes head-to-head with existing Kenyan Q&A start-up Majibu.com. In another interesting development, Kenya and Ghana are some of the only countries in the world where Google advertises on Facebook to find the local market. Google serves Facebook ads to advertise Gmail, Google Chrome and Google Baraza as well as its Google Free SMS feature to the 1 000 000 Kenyans on Facebook.

4. Investment
The web start-up sector has been attracting international attention to Kenya, and to Nairobi in particular. Mozilla’s own Global Community Manager, William Quiviger, made a case for why Nairobi deserves to be crowned Africa’s ICT Innovation hub. Foreign investment is certainly taking notice of Nairobi and becoming readily available to the market.

Nairobi recently hosted IPO48, a start-up bootcamp geared around turning ideas into businesses in 48 hours with Ksh. 1 000 000 (US$12 500) in investment for the top start-ups; modeled on Garage48, an Estonian-borne concept in in partnership with HumanIPO.com which connects European investors with African start-ups and founders. IPO48 brought together over 20 start-ups in a race to prototype and pitch their ideas.

The winner, M-Farm, a mobile web & SMS-based app for farmers was put together by all-girl coder group AkiraChix. The runners up included geo-location cab service app TaxiMatch, Groupon-alike MyShillings and school note sharing/selling platform HizoNotes.

Over the past few months, the launch of platforms such as HumanIPO, AfricaPace and the relaunched VC4Africa.biz all reiterate that there are those who see investment opportunities for financing. Access to capital has continued to be a challenge for those in the Kenyan market and the gap in angel investing and other fundraising avenues is a huge gap in this market.

Silicon Valley is certainly taking note of Kenya and investors have been visiting and doing research about entering as well as partnering and supporting existing players in the market. I/O ventures makes a trip to Nairobi on the 14th and 15th of December being one such example.

This December, Nokia concluded its first Open Innovation Africa Summit held in Kenya, which brought 200 leading thinkers from across the globe into Kenya to analyse and derive the best way forward for open innovation for the continent and promote sustainable solutions for education, healthcare, mobile and ecosystems for innovation.

The Summit’s outcomes took local ideas from an ideation competition online to Naivasha, where the conference took place to act on these ideas in the context of the continent.

5. Mobile Money
Mobile money is another key battlefied in the East African tech scene. The race between players continues to pick up pace as telecommunications provider Orange Kenya launched Orange Money in partnership with Equity Bank, the same bank that works on Safaricom’s M-Kesho mobile banking product powered by M-Pesa and Essar Telecom’s yuCash mobile money product.

Orange has chosen to differentiate its offering by targeting a different market segment and offering a debit card to accompany the mobile banking and mobile money transfer product. Safaricom’s M-Pesa numbers continue to grow steadily as they recently crossed the 13.5- million mark, which accounts for over 80% of Safaricom’s 17-million subscribers.

6. iHub
The nexus for all things innovation in Kenya and Africa at the moment has to be the iHub. It’s hard not to point to Kenya right now and not see how this open space is at the forefront of innovation within the technology space. From hosting events with leading thought leaders from across the world to hosting their first set of Green Members — 100 of Nairobi’s most promising developers, creatives and business technologists. And from February next year, the launch of the Mobile Apps Lab will further diversify the iHub’s range after it successfully won the bid to host the infoDev-funded regional mobile applications lab.

The Kenyan market continues to grow and projections look set for Kenya to leapfrog other established economies across Africa and become a centre of African-driven innovation.

This year has been eventful, but next year is gearing up to be a tipping point for technology, mobile and innovation in Kenya.

Hold on to your hats, ladies and gentlemen.