Understanding the current trends, opportunities, and hurdles is crucial for entering Kenya’s tech ecosystem. In 2024, Kenya secured the top position in Africa for startup funding, raising $638 million, and has been the most-funded startup nation for the past two years. East Africa has attracted one-third of all startup investments on the continent.
Kenya’s tech boom is primarily attributed to the launch of M-Pesa, a mobile payment platform by the country’s largest telecommunications company, Safaricom, in 2007. This foundation, along with low financial exclusion, high mobile/internet penetration, and government subsidies, has fueled fintech growth in Kenya and across East Africa. M-Pesa boasts 34 million subscribers, commands a 91% market share, and processed $364.8 billion in transactions in 2023 alone. This success has spurred a vibrant tech scene and a growing base of tech-savvy consumers.
Similarly, government initiatives like Huduma Namba 2.0 have increased access to government services through digital infrastructure. However, challenges remain, including the digital divide between rural and urban areas and cybersecurity threats.
Concerns and Developments
Tech companies, especially foreign ones, have been criticized for exploiting Kenyan workers. Data workers training AI systems have faced trauma and underpayment, leading to legal action against some companies.
Kenya is also witnessing tech startups focusing on artificial intelligence and climate change, following a trend of fintech and e-commerce investment. Nairobi-based Leta secured $5 million for its AI-powered logistics platform, while BasiGo raised $42 million for electric buses in East Africa, and Octavia obtained $3.9 million for carbon removal technology.
Kenya ranks fifth in Africa for AI readiness but faced a setback when its Robotics and AI Bill 2023 was rejected due to a lack of stakeholder consultation and overly strict controls. The bill proposed fines of up to KES 1 million ($6,250) and imprisonment for up to two years for unlicensed AI/robotics businesses. However, Kenya is promoting AI education and innovation through initiatives like the Nairobi School of AI at the University of Nairobi.
Key Regulations and Cybersecurity
Key ICT legislations include the Data Protection Act 2019 and the Cybersecurity Act 2018, with proposals such as the Technopolis Bill, ICT Authority Bill 2024, and Virtual Asset Service Providers Bill 2025.
Rising global cyber threats have impacted Kenya, with 2.76 billion threats recorded in the first nine months of 2024. Despite a 49% drop in Q3 2024, threats remain high, and a recent data breach of a government agency highlights the need for stronger cybersecurity measures.
Closing Note
TechPR Africa has the expertise and resources to help your business expand into the African market. With our local market insights and understanding of the unique challenges businesses face when entering new markets, we can provide you with the support you need to succeed. We can help you gain a strategic foothold in Kenya, overcome operational challenges, and potentially expand to other African countries. Schedule a discovery call with us today, and let’s discuss how we can facilitate your tech expansion in Africa.
Image©: Patrick Meinhardt/Bloomberg
