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Economy

Kenya firms up innovation hub status with Sh14bn deals

M-Pesa
Nairobi accounted for more than a quarter of the funds that were sunk into mobile start-ups in Africa. FILE PHOTO | NMG 

Kenyan mobile start-ups raised Sh14.79 billion ($147 million) in 27 deals last year, a new study suggests, highlighting the country’s position as a hub for mobile innovations on the continent.

Nairobi accounted for more than a quarter of the funds that were sunk into mobile start-ups in Africa, only dwarfed by South Africa, the latest Global System for Mobile Communications Association (GSMA) mobile economy report says.

About Sh56.35 billion was raised by 124 start-ups, the report released in Kigali Tuesday states, 52.67 per cent more than Sh36.91 billion raised by 77 mobile innovation ventures in 2016.

The report: Mobile Economy: Sub-Saharan Africa 2018 says about Sh16.90 billion was raised by 42 tech firms in South Africa, making up a third of the total funds.

Nigerian 17 mobile start-ups raised $114.6 million (Sh11.53 billion) followed by Rwanda (Sh3.69 billion), Ghana (Sh2.05 billion), Uganda (Sh1.61 billion) and Senegal (Sh1.08 billion).

Investment in financial technology (fintech) start-ups accounted for 21 per cent of the total funds followed by e-commerce (19 per cent), while the share of education technology (edtech) stood at about 12 per cent, the report states.

“The range of tech start-ups funded and the growing size of deals reflect the accelerating development of the (mobile) ecosystem,” GSMA says.

“This underscores the increasing innovation and investor interest in solutions that address the region’s starkest social challenges, such as limited access to financial services, education and energy by large swathes of the population.”

Tech start-ups in South Africa, Kenya and Nigeria controlled 76.7 per cent of the deals on the continent and 83.4 per cent of the $515 million which were cut in sub-Saharan Africa, the report states.

Kenya is a world leader in mobile innovations after Safaricom’s M-Pesa became the first mobile app on the planet to enable mobile phone users to send and receive money about a decade ago in March 2007.

Nearly Sh3.64 trillion was transacted via mobile platforms last year, 8.44 per cent more than Sh3.36 trillion in 2016, statistics by the Central Bank of Kenya shows.

Kenya also made history globally last year after the Treasury raised Sh397.47 million in two issues from a retail infrastructure bond, M-Akiba, exclusively sold on mobile phones, although it fell short of the Sh5 billion target.

The UN Conference on Trade and Development (UNCTAD) on June 7 partly attributed the 71 per cent growth to $672 million (Sh67.62 billion) in Kenya’s foreign direct investment (FDI) flows to investment in ICT industries.

The country’s tech start-ups continue to attract investments with two major deals publicly declared this year.

They include the $8.6 million (Sh865.42 million) raised by Africa’s Talking, a cloud-based communication startup backed by International Finance Corporation (IFC), Orange Digital Ventures and Social Capital.

Customer feedback platform, mSurvey, also raised $3.5 million (Sh352.21 million) earlier in the year from TLcom Capital, Social Capital, Kapor Capital and Golden Palm.

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