Kenya, the country of safaris …and startups 🇰🇪

A week ago, I arrived in Kenya under unique circumstances.

Just days before, the country was in turmoil, with anti-tax protests escalating into clashes with the police. From the outside it looked like civil war 😳.

However, when I arrived, the city felt quite safe, and there were no further protests. It's a reminder that events often appear more severe from afar, influenced by media coverage.

After 1 week in the country, here are some random first impressions: 

• Dammmn, Nairobi is much more developed than I imagined.

• Roads and infrastructure are modern.

• Cash was almost non-existent. Everyone uses M-Pesa (more on that later).

• Most people speak perfect English.

• Big inequalities: you see deep poverty and very wealthy people.

• You can find all the big companies/chains (Uber, McDonalds etc) which was not the case in Ethiopia.

• You can see a lot of foreigners.

• Kenya is very diverse: with hundred of different ethnicities, arab/european influence, religions etc, the country is a melting pot.

Now, more seriously, let’s jump into some concrete numbers to understand Kenya's tech landscape:

• Kenya's nominal GDP for 2023 is estimated to be around $118 billion. It’s the 7th biggest GDP in Africa.

• GDP per capita (nominal) is approximately $2,150.

• Mobile phone penetration in Kenya is high, with about 122% penetration rate as of 2023. This rate indicates that many Kenyans have more than one mobile subscription.

• Internet penetration in Kenya stands at approximately 42% as of 2023, with most users accessing the internet via mobile phones.

• M-Pesa has over 30 million active users in Kenya.

• Approximately 90% of the adult population in Kenya uses mobile money services like M-Pesa.

• Kenya is the country in African where startups raised the most: $800M in 2023

Now let’s jump into one (big) details that makes Kenya so unique: M-Pesa👀

M-Pesa: The Mobile Money Success Story 📲 

If you have the chance to go to Kenya, you’ll observe white and green store written “Safaricom M-Pesa” everywhere.

Safaricom is the main telco in Kenya, and M-Pesa is the mobile money they launched in 2007, used by most Kenyans.

The name "M-Pesa" is derived from "mobile" and "pesa," the Swahili word for money 💸.

How M-Pesa Works

M-Pesa operates through a network of agents, typically small retail outlets or kiosks, where users can deposit or withdraw cash from their M-Pesa accounts. Here’s a step-by-step overview of how it works:

1. Registration: Users register for an M-Pesa account by visiting an authorized M-Pesa agent with their identification documents. Once registered, they receive a SIM card that includes the M-Pesa service.

2. Depositing Money: Users deposit cash into their M-Pesa account by visiting an M-Pesa agent. The agent converts the cash into electronic money, which is credited to the user's M-Pesa account.

3. Transferring Money: To send money, users simply select the "Send Money" option on their mobile phone, enter the recipient's phone number and the amount to be sent, and confirm the transaction with a secure PIN. The recipient receives a text notification of the transaction and can withdraw the money at any M-Pesa agent.

4. Paying for Goods and Services: M-Pesa users can pay for a variety of services, including utilities, school fees, and goods from participating merchants, directly from their mobile phone.

5. Withdrawing Money: To withdraw money, users visit an M-Pesa agent, who gives them cash in exchange for a reduction in their electronic balance.

6. Additional Services: M-Pesa also offers savings and loan services (such as M-Shwari), international money transfers, and integration with online payment platforms like PayPal.

So what is the difference between M-pesa (mobile money) and regular credit card payments?

• It’s linked to the user's phone number, no bank account needed.

• Works without internet, uses SMS/USSD.

• Accessible through a network of local agents for cash deposits/withdrawals.

• Low transaction fees, especially for small amounts.

• Secured with a PIN, designed for basic mobile phones.

• Ideal for everyday transactions and financial inclusion.

M-Pesa is one of the reason why Kenya became a startup hub in Africa (it’s often called “Silicon Savannah”).

Safaricom provides open APIs for developers, enabling startups to integrate M-Pesa into their apps and services.

That has created opportunities for innovation in areas like e-commerce, fintech, and logistics.

I’m very excited to be meeting with some of Kenyan’s successful startups next week.

Stay tuned 👀