The Kenyan tech scene has in the recent past given significant media and 5th estate coverage to the concept of the Silicon Savanna. However, beneath the media coverage of OLX, m-Pesa, Rupu, Kopokopo, iHub, AkiraChix and so forth, there exists a sub-stratum of technology firms that I refer to as the ‘unsung’ heroes of the Silicon Savanna. You may already have heard some of the names in this in-exhaustive list. What may not be obvious is the significance of their stories. A large percentage of these people and their firms operate in financial services technology (FST) and have been instrumental in the growth and competitiveness of Kenya’s financial services industry.
Paul Kukubo and Ken Njoroge of 3M and Cellulant
Paul Kukubo set up 3Mice Interactive Media which handled digital branding and exposure (website management, digital campaign planning and so forth) way back when the most tech savvy people I knew were catching up on the difference between a computer mouse and a server. At that time, one could make a clean 150,000 making a basic 3 page website. Mr. Kukubo also deserves special mention because it was under his watch at the Kenya ICT Authority that Kenya’s tech ecosystem began to receive international plaudits for its credentials. As we speak, he is breaking new ground as usual heading up East Africa’s first commodities exchange.
Ken Njoroge of Cellulant was the first techpreneur to see the potential in Kenya’s nascent mobile revolution. All those ringtones and local digital content on mobile phones started out from Cellulant. Nowadays, there is a chance that several services that you use on your phone may be running on a Cellulant-provided backend. His list of clients includes Barclays, Kenya Airways, KCB and Standard Chartered among others. As a matter of fact when the Nigerian government wanted to bypass all middlemen in their fertilizer procurement process, it was none other than Cellulant which provided the necessary technical skills to enable them to do this.
If I am not wrong, Fintech was Kenya’s first indigenous FST company. It was started by a group of 5 bankers who saw the gap between industry standards at the time and the cutting edge. They decided to fill this gap which in my understanding was a conceptual leap at the time. Rumour has it that they did not leave their jobs to bat for the fence. Being bankers, they were more considered in their risk-taking. However, shortly thereafter Fintech became a powerhouse in the FST industry and have clients in 16 countries across Africa. In recent times Fintech has experienced stiff competition within the market. However this is a natural part of industry maturing.
Mike Macharia of Seven Seas Technologies
Back in 2004, working in Seven Seas Technologies was the equivalent of working at Twitter or Google today. An SST engineer would swagger onto campus, very likely to teach a class or give a talk. There would be hushed whispers of acknowledgement “This guy works at Seven Seas” to which the response would invariably be something along the lines of “Wacha!” Given SST’s early bent towards network-related products and services, it goes without saying that around this time there was massive investment by corporates in networking technology. It could be that it is around this time that the concept of branchless banking came into vogue. Kenya has since developed the capacity to produce trained networking engineers which has marginally driven down the pizzazz associated with this sector of IT. Be that as it may, it is rumoured that Mike Macharia turned down an opportunity to study in the US of A to chase down a business opportunity in Rwanda. It was a case of two tickets and only once choice, with one ticket more likely favoured by his parents. And here we are, several years down the line, discussing Kenyan tech history. Perhaps not all youth is wasted on the young.
Kamal Budabhatti of Craft Silicon
This gentleman in my opinion could easily vie for the resident wizard of this group. Reason being that he developed an entire core banking system (CBS). From my point of view that is a massive undertaking. There are countless banking products, SWIFT formats, government regulations, multiple possible user configurations, different client-relationship structures and a whole myriad of things that go into a core banking system. In short, if you take away the people running a bank and its relationships, a bank is its CBS. And if you go the bank and the teller tells you (pun intended) “Sorry, systems are down,” it is most likely that their CBS is suffering from one form of flu or another. Craft Silicon has clients across Africa, Asia, Europe and the Americas. His is definitely a resounding Kenyan success story.
Ken Ngunjiri and Paul Mbugua of Eclectics International
Eclectics International is arguably Kenya’s largest FST company. In a brief space of time it has acquired over a hundred clients across Africa, the vast majority of these being banks. The conceptual leap behind Eclectics’ meteoric growth has been their development of proprietary intellectual property to meet their clients’ needs. This IP is developed by the firm’s strong bench of tech wizards who would put any ‘Silicon Savanna aspersions’ to shame. The thing about these wizards is that they are busy serving behind the scenes as opposed to developing apps in our startup ecosystem. For every Rupu or Kopokopo you see there could easily be a legion of tech wizzes out in offices or server rooms designing, developing or tweaking software for large corporates.
Vincent Ntalami and Conrad Akunga of Innova Systems
Vincent Ntalami and Conrad Akunga are the founders of a firm called Innova which specialises in custodial, investment banking and bancassurance software. Mr. Ntalami and Mr. Akunga are both graduands of a program called IMIS which was quite the rage in the late 90’s and early noughties. (IMIS graduands hooba!) Mr. Ntalami studied actuarial science and became AIG’s youngest vice president globally (before 2008!) while Mr. Akunga studied computer science and went on to become one of Microsoft’s top MVP’s in Africa. They have clients across East Africa including top tier banks in Kenya and are bent on world domination in their space. Anyone who has ventured into bespoke banking software in Kenya will agree that landing top-tier clients can be an extremely competitive and rigorous process. What I particularly like about Innova’s enterprise is their conceptual leap into a niche category which drew on their skills and experience. This precluded entrenched players in the industry from claiming a stake in their space.
As has been mentioned above, one of the reasons we don’t hear much about many of these people is because they serve behind the scenes in niche markets. Their primary sale is to enterprise buyers as opposed to the average Joe on the street. Another reason is that we have not been putting out enough local content on the Internet. This has resulted in these stories getting crowded out by ‘noise’. It is said that in order to know where you are going, it is important to know where you are coming from.
The important thing is that these stories need to be told for the benefit of the new generation of students going through and emerging from our technology colleges and universities. During my time in campus, the stories of Yahoo, Amazon, E-bay, Paypal, Google, Facebook and LinkedIn had me enthralled. Much as that was the cutting edge of global tech innovation I was so enthralled that I overlooked the significance of these local stories happening right in front of my eyes. After entering the workplace and working the grind I forgot to dream. However, this same grind gave me a much higher appreciation for the significance of these local stories. It taught me that if I want to make a difference globally, I would have to start locally and solve local problems. In my opinion it is in understanding the stories of these gentlemen that we can figure out the next frontiers of opportunity.
Observing the valuations, profit margins and threat-of-new-entrants for most of these companies, it becomes apparent that industry first-movers accrue serious incumbency benefits and in most cases are able to lock out other entrants from gaining a foothold. Most importantly, new entrants are forced into increasingly niche areas.
So how does this affect cocoa production in Ghana? It appears to me that the FST industry, which has traditionally employed a considerable portion of our best and our brightest, is maturing. The implication is that profit margins are narrowing together with the space for ground-breaking innovation. Additionally new entrants are being forced to newer and more niche segments of the sector. Coupled with the fact that Kenya should be moving to a cheaper energy regime in the next 2 years or so, this could easily mean that the next frontier of opportunity for Kenya’s IT graduates, engineers and aspiring industrialists might, at long last, lie in manufacturing.
As a matter of fact, there exists a very real danger in the ‘Africa Rising’ narrative. The danger is that African entrepreneurs could fail to seize the opportunity presented by ‘Africa Rising’ by failing to develop a competitive manufacturing base. The result would be that our rising markets and growing middle class would be supplied with foreign products, a scenario which would be hard to come back from. It has been opined that one of the main structural differences between Germany’s and Britain’s economies is that Germany retained its industrial base and edge while Britain did not. The effects have been clear to see post-2008.
All in all, in order for us to take full advantage of this information may well require conceptual leaps such as the gentlemen above have made.