It cost two young, bright companies millions to grab a slice of Africa’s hottest telecommunications market. But now they are both limping and left out. What went wrong?
<img loading="lazy" decoding="async" class="alignleft size-large wp-image-316" src="/wp-content/uploads/2017/04/iStock_000018391050Large-1024x680.jpg" alt="" width="474" height="315" />
It was a cold June morning in 2006 and Kenya’s telecommunication sector was buzzing. EM Communications Limited had just been awarded a license as the second local loop operator in Kenya, trading under the name Popote Wireless. The company had just invested almost $6 million in rolling out operations and the mood was ecstatic. Reporters trooped to their glistering headquarters in Nairobi, each angling to interview the company’s managing director, Eric Muthi, in his boardroom overlooking Nairobi National Park.
“We are like this park. It has a lot of opportunity but within it also lurks danger,” he said. It turns out there were more dangers than opportunities.
Local loop operators (LLOs) are small telephone operators with a nationwide license, set up to increase access to fixed lines offered by state-owned Telkom Kenya. The plan was to give callers connections in their own district, but the problem was that if you wanted to call further afield, you had to go back through national operators.
Back then, Telkom Kenya was an inefficient state-owned monopoly that took months, if not years, to connect a subscriber. This led to a long waiting list, keeping telephones away from the masses.
The Communication Commission of Kenya (CCK) thus licensed 24 operators. But of the 24, only Flashcom and Popote started operations. CCK told FORBES AFRICA that others were in the process of being deregistered, after failing to open up shop.
Flashcom invested $3.6 million; Popote $6 million. Initially, business was good. According to the CCK’s 2008 report, subscribers increased from 8,481 in 2006 to 10,312 by March 2008.
The growth was because LLOs had an advantage. While a subscriber could wait for months to get a Telkom line, they could walk into a Flashcom or Popote shop and walk out with one.
But more than five years on, the dangers Muthi warned of emerged snarling from the bush.
“Popote had ceased operations at some point due to internal challenges. However, they are now back, though in a limited scope,” says CCK’s acting director general, Francis Wangusi.
And it is not just Popote Wireless. Flashcom, though still in existence, is limping.
According to its CEO, Julius Kinyua, it has shed half of its more than 4,000 subscribers.
“It has been a rough business environment but we are determined to keep going,” he says with a chuckle. CCK no longer keeps count of LLO subscribers; the last time it did so
was in 2008. The regulator was unable to comment at the time of going to print.
How did two firms go from hot start-ups to examples of what can go wrong in Kenya’s telecommunication market in five years?
The privatization of Telkom Kenya dovetailed to the LLOs’ disadvantage, but other reasons were also at play.
“Inadequate investment, interconnection challenges, unavailability of spectrum, and more importantly, the market preference for GSM mobile communication systems were their undoing,” says Wangusi.
The first hurdle they faced was negotiating interconnect rates with the then fully state-owned operator, Telkom Kenya. According to Kinyua, Telkom considered them competitors; they refused to connect LLOs to other networks, saying that the networks were “not compatible”.
A Flashcom subscriber was thus unable to call other networks. This erased the efficiency advantage they had enjoyed.
“Then the agreed-upon interconnect rate with Telkom was changed to suit it,” says Kinyua. “It meant subscribers would only be able to call within its network and it became ‘an island’.”
For interconnection, LLOs were supposed to charge $0.12, out of which $0.08 would go to Telkom Kenya. The remaining amount, according to Kinyua, was too little to meet their expenses and make a ‘decent’ profit.
Also, the technology that the LLOs got was of higher frequency and thus lesser reach than the ones given to Telkom Kenya. Flashcom got
1 900MHz, while the state company got 800MHz.
“We thus needed more base stations to roll out our services, increasing our costs further in an environment where profit margins were minimal,” he says. To maintain its bases in Nairobi alone costs almost $24,000 a month.
When Telkom Kenya was privatized in 2008, the government ceded 60% of its shareholding to European telecommunication giant France Telecom. This was a bittersweet moment for LLOs. The new management was more open to negotiation and compromise on infrastructure and interconnection rates.
However, the sleeping giant had woken, threatening the LLOs’ business model. The entry of France Telecom injected more capital in Telkom and revitalized the formerly inefficient operator, which was rebranded as Telkom Orange. The days of long waiting lists were coming to an end.
Telkom Orange courted the customer aggressively and at cut prices. Its fixed wireless subscriptions soared from 10,685 in 2006 to 154,161, according to CCK reports.
“LLOs relied too much on Telkom Kenya’s inefficiencies. France Telecom changed all that. They had better change their modus operandi or they’ll sink,” says one telecoms analyst who requested anonymity as he works in one of the major firms.
Then in 2009, intense price wars in Kenya’s telecoms sector destroyed any advantage the LLOs had by halving call rates overnight.
When LLOs realized the tide was turning, they tried to change their business model.
Popote tried to venture into outsourcing but got its fingers burnt.
It was implicated in a fiasco that involved charging potential employees for non-existent jobs, by Kenya’s Business Daily in 2008. The company still holds the LLO license, and hopes for a buyout.
Flashcom, according to Kinyua, is looking beyond the voice and leveraging on the increased demand for data as the future business plan.
The decision by CCK to give telcos a unified license has given the firm a new lease of life and it is now banking on data for growth.
“CDMA (code division multiple access) speeds are like the 2.5G and very good for internet,” says Kinyua. The CEO hopes that advanced CDMA handsets that have modern features like cameras, internet connection and smart phones may turn the tide in the LLOs’ favor. But for now, it needs hope as much as technology to survive.

Wrong Number—The Great Kenyan Telephone Blunder

<h3>Wangari Maathai</h3>
<div id="attachment_231" style="width: 210px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-231" class="wp-image-231 size-medium" src="/wp-content/uploads/2017/04/Wanjira-011-200x300.jpg" alt="" width="200" height="300" />Wangari Maathai in Karura Forest which her mother helped save from bulldozer</div>
<h3>Kenyan Environmental and  Political Activist</h3>
It was Professor Wangari Maathai’s personality, anyway, to linger on the dark side, checking under every rock, determined to know the worst that may happen, so as not to be taken by surprise. This was largely instinctual, developed from years of battling the powerful and the mighty who dared disrespect the environment.
About a year before Wangari Maathai’s death in September 25, 2011 she was diagnosed with an aggressive strain of ovarian cancer, immediately put on medication and chemotherapy with the hope this combination could at least prolong her life. Her daughter, Wanjira Mathai, remembers the professor as a strong woman; a selfless person who was incapable of abandoning her passion, even as the energies of the day were abandoning her.
Speaking to Mathai, it turns out that the woman who convinced thousands to plant trees; blocked forest destruction and inspired millions of African girls to think big, worked during her cancer-ravaged final year as if it were another day at the office.
Chemotherapy would knock Maathai into misery, slow her down, but not deter her. The ecological warrior had a grand dream for the Green Belt Movement (GBM), a body she formed three decades ago to plant trees and help village women make a somewhat decent living.
“She slowed down deliberately because she had to take care of herself. There was an element of taking things a lot easier; resting a lot more and that was important,” says Mathai of her mother, her boss and her colleague at the GBM, where she is the head of international affairs.
Mathai, a holder of two masters degrees in public health and business administration from Emory University, and a close confidant of her mother, knows why she looked fit. Except for doctors, family and a few close friends, few knew she had cancer. Many where suprised when her death was announced on a chilly Monday morning.
“She was gifted,” says Mathai, explaining why her mother looked younger than a 71-year-old. “She had good genes. She was very active—a lot of people may not know that she exercised a lot; she walked a lot and she was very healthy—six in the morning, she was in a gymnasium almost every day.”
As early as April, Wangari Maathai approved a five-year-action-plan for GBM. Despite the cancer, she was very active in its initial implementation, according to GBM employees, who have now vowed to elevate GBM to new heights.
“Our singular plan is to implement that plan. That is what she endorsed; that is what she wanted us to do; and it is really clear it is very strong and basically it can be done by those of us who are there,” says Mathai, the second of the Wangari’s three children.
Since her death, she says: “There is a sense of loss and there also is a sense of resolve. People feel like we have to make her proud. And that we must.”
President Mwai Kibaki announced the plans to launch the Wangari Maathai Institute for Peace and Environmental Studies at the University of Nairobi in 2010.
Since the approval of the action plan, several co-workers said Maathai spent much time organizing meetings with various donor groups—her last international travel, Mathai says, was a trip they made to the French Development Agency conference in Paris.
“She was sick, but still she was fit enough to attend the conference,” Mathai explains in Karura Forest, a 1,400 hectare forest that her mother fought to protect from developers, who, with the government’s blessing, were about to take it.
“Her focus and her passion was the Green Belt Movement and the Wangari Maathai Institute. She spent a lot of time making sure that we had a complete strategic plan; we had a clear direction for the development of the institute. And as you know, in her wishes, she said she wanted the Wangari Maathai Institute to be her final resting place, so her ashes will be interred there when the institute is finished,” says the 40-year-old Mathai.
Millions across the world have come to respect Wangari Maathai and her boundless courage; through her daughter, I discovered a well of kindness and compassion; both for the environment and all those who inhabit it.
“Selflessness is such a rare thing. In leadership you need that; if you are going to make change you have to be selfless; it’s not about you,” ends Mathai.

“If you are going to make change you have to be selfless”

When Sai Ramakrishna Karuturi was looking to start a new business quickly,  East Africa beckoned.
He identified Kenya and Ethiopia for cultivating and exporting roses, bought 311,000 hectares of land, employed 10,000 people and today his company, Karuturi Global Ltd, produces around 555 million stems a year and is widely recognized as the pioneer of cut flower production. Almost its entire produce is exported to high-end markets in Europe, where it has 9% of the market, as well as to North America and Asia.
<div id="attachment_205" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-205" class="size-large wp-image-205" src="/wp-content/uploads/2017/04/94833459-1024x683.jpg" alt="" width="474" height="316" />A woman carries a bucket of roses at Roshanara Roses flower farm in Debre Zeit, Oromia, Ethiopia</div>
“Six years ago I was very dissatisfied with India,” he told FORBES AFRICA from Dar es Salaam, where he was looking for new business.
“Business in India is fragmented and land is expensive. It’s easier to look abroad instead of starting a business from scratch here.”
Several market studies later, Karuturi chose Kenya and Ethiopia as the most cost-competitive countries in which to grow flowers—and it paid off. For six straight years, the company has grown exponentially by 20% a year.
“Ethiopia has a good workforce. Two million people are unemployed and 25% of the population is under the age of 25, which means that there’s a huge supply of labor. Kenya, by comparison, has a smaller population. The cost of labor is less competitive, but it has other advantages like cheaper logistics and better infrastructure.”
Karuturi Global’s other core interest is food processing which, while still being executed in India, has grown fast in Africa.
“It’s an interesting fact that Africa is one of the biggest importers of food in the world. It’s clever to be growing food in Africa because there is a high demand for it. Food is really expensive on the continent. Lands are fertile, which coupled with the huge labor force, make it an ideal destination for agriculture and food production.”
Karuturi advises, though, that one does one’s homework. “You need to be patient. It’s better to take the time to understand the local legislation, as this is where companies fall down by disregarding the law, processes and culture of African countries. Too many people in the business world try to show Africa as a place where it’s difficult to do business and make investments. But it actually provides an ideal opportunity and the returns are very good.”
Bill Levine, managing director of Ecoterra Technologies (ETT), agrees but warns that without a local partner who knows the culture and has contacts with people at the top, it’s difficult to go far.
“We stalled at the beginning because we weren’t talking to the right people. There’s a lot of competition at a local level between governmental agencies, NGOs and investors from the country’s diaspora.
“Ethiopia is far from the usual portrait we see in the media; it’s a country full of opportunities. It has 11% GDP and a large proportion of the population is making money, especially in the cities. They have high mountains, perfect for producing wind energy, a lot of water for hydroelectricity and cows and goats for dairy and meat production. Most of the investors, local and foreign, are interested in bio-fuel energy production and/or infrastructure development like low-cost, eco-smart roads. Compared to countries like America, where the energy sector is already under the control of oil companies and other forms of non-sustainable energies, here you can make a profit.”
But he agrees it takes patience.
“There is no quick fix. You have to build a lot of infrastructure. We just finished building our first road and it went really well. At the moment most investors are locals, which means that the country is ripe for foreign investment—there are many areas without roads and power and where there is no competition.
“I have a sense of urgency that if we don’t turn Africa around, it will be exploited wrongly and all the great potential that comes from the environment and the people will be destroyed. We are looking for investors right now, trying to get them involved, especially in hydro electricity.”
And time is running out for investors to become involved.
The next 10 years are ideal for foreign investment, according to Eliezer Gil Yasu, one of many Ethiopians living abroad.
“Now is the time to invest in Ethiopia. Now you can make business there without needing so much money. But a decade from now, Ethiopia will be like everywhere else and you’ll need lots of money to make any real profit,” he says.
Based in Israel, Yasu is one of the 100,000 Ethiopians who left their country over the past 30 years. He heads the Ethiopian desk of Doron Tikotzky and Co. legal firm while also running a business that exports ceramics from Turkey to Ethiopia.
“There’s a joke where two people arrive in Ethiopia and see that no one has shoes. The one says, ‘No shoes! There’s no opportunity here,’ while the other says, ‘No shoes! There’s great potential here!’ It’s up to you how you see the market.
“If you want to invest in a rich country because people there have money, don’t go to Ethiopia. But if you understand that a place that has nothing is full of opportunities, then this is the country for you.”
Yasu mostly assists clients by putting them in contact with the right people and ministries: “Ethiopian bureaucracy is a nightmare and can take six months to master,” he chuckles.
On the plus side, the government encourages investment by giving incentives such as loans, exemptions from tax for several years, and even providing water if it is needed.
“Politically, the country is stable and security is very good. Ethiopia has developed quickly in the last 10 years. There are a lot of natural resources—gold, iron, gas, aluminum—which bring many opportunities for construction, while the workforce is very cheap and people are motivated to work.”
But Yasu admits there are risks.
“I had a client who wanted to grow hummus seeds and the government gave him a place very close to Sudan. For one year he cultivated the land until the Sudanese government ordered him to leave, saying it was their property.
The Ethiopian government apologized, compensated him and explained they thought it was theirs, but he’d lost money and time.”
Which is why Gideon Peri, a consultant for several daughter companies of one of the largest public companies in Ethiopia, the Endowment Fund For the Rehabilitation of Tigray (EFFORT), warns that while the country is an attractive investment destination, potential investors need to prepare in advance a detailed study on the area in which they wish to invest and always use the services of a local lawyer and partner.
“The difficulties in Ethiopia are the frequent stoppage and failure of power supplies, even in the capital; the frequent failure of communication systems; limitations on imports; government control and regulations; and tough foreign currency control. But the government is well aware of the need for development and appreciates foreign investment as an effective means of bringing in money and knowledge. So the opportunities are there.”

Out Of The Dust  Grow The Roses  Of Success

<h3>When did you realize that you wanted to be music artists?</h3>
Peter: When we were young our music was about dancing, singing and imitating people. We left music to focus on other things such as football and went back by chance when our mother, who is a pastor, invited us to play in the church band. Later, we won a music competition. From this experience we realized that we could take our music to the next level. We formed P’Square and the rest is history.
<h3>How did you go about living your dreams and starting your careers?</h3>
Peter: There was a time when our music was not appealing to the audience. Our dad stopped paying our school fees. We kept doing music and we found ourselves paying the fees. This built us up to stand on our own. Though we were making money, we needed to find a way to save because the music industry is tough. We didn’t want to fail like many other musicians before us. We left Jos to make a name for us in the industry. We were on our own in Lagos with little support and that is why we needed to be careful about how we spent money. Success for us was because of our perseverance and being the best in what we do.
<h3>What was the worst business decision you have taken and how did you overcome it?</h3>
Paul: Four years ago, we did a concert in which we invited an international artist. However, the artist did not show up. We wanted to carry on with the show but we were concerned about the negative impression this could create. At this point crowds were coming through the gates. We did not know how to explain this problem to our audience. We came on stage and performed three songs and immediately announced that everybody with the tag should go to the bank where they bought it and collect their money back. We did that to protect our name because it is more important than the money. With a name you can still make money. But when you lose that name money won’t come. We turned a negative business decision into a positive one.
<div id="attachment_186" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-186" class="size-large wp-image-186" src="/wp-content/uploads/2017/04/IMG_4422-683x1024.jpg" alt="" width="474" height="711" />Paul and Peter Okoye, the duo that is P&#8217;Square</div>
<h3>What were the key challenges when you started your music career?</h3>
Paul: Back then, the money for studio recording was a challenge. I remember when we did our first song—we asked for help from our mother, who paid for the release of our song. She was so impressed with our work that she paid for the release of another song. Unlike other parts of the world where there are avenues to showcase talent, in Africa there are very few places where record labels can spot talent. As an artist you have to put yourselves out there and hope that somebody will recognize and sign you. For us it never came. We decided to do it on our own. Today we are signing artists.
<h3>Has piracy affected your music?</h3>
Paul: It is affecting us but we are not complaining because we sell in large volumes—our latest album sold a million copies five days after release. As a record label we are affected because new artists cannot control distribution. Distributors pay our royalties upfront because in Nigeria there is no monitoring system. Piracy does not end with hard copies though—downloads on social media could be an advantage as well as a disadvantage. On the one hand they help us to gauge the popularity of our music but on the other this is used to pirate our music. We try as much as possible reduce the piracy risk.
<h3>What does it take to be a successful musician in Nigeria and Africa?</h3>
Peter: You have to be business-oriented. As a music artist you need to understand that music is not for life. It might be for life for the likes of Michael Jackson. If you are making money now you need to manage your revenue life in a way that you can survive without music in the future. For us, outside the music industry we are into the real estate business. We don’t buy to sell; we keep most of our property investments.
<h3>Pirates suck blood from gangster turned gospel singer</h3>
<h3>How did a gangster end up making a living as a gospel singer?</h3>
Now Kenya’s Owen Mwatia trying to stop hustlers and pirates from ruining his dream. When the fifth member of his gang was shot dead on the streets of Nairobi, Owen Mwatia—known on stage as Daddy Owen—decided enough was enough. In 2003, he put down the gun and picked up the Bible.
More than eight years on, Mwatia is an award winning gospel singer and one of East Africa’s best musicians. He scooped the Best East African Artiste Award at the 2011 African Gospel Music Awards in London. In 2010, Mwatia was the first gospel musician to win an MTV Africa Music Award.
Life in a gang was tough enough, now his newfound career is being mugged by piracy, poor distribution and new technology.
“The reason why piracy is widespread is because of poor distribution channels. The distributors in Kenya are not doing their work. If you want any type of music, it is readily available through the pirates than the distribution companies. Out of 10 people listening to your music only one has bought your album, or even zero because all 10 just copied from their friends.”
Inefficient management of intellectual property rights, piracy and one-sided contracts have left many East African artists struggling to earn a living. Contracts in Kenya are not dictated by artists. A telecommunication company takes up to 80% while the artist gets 20%.Mwatia is trying to fight back.
“I am doing a digital launch whereby it will be coming from Daddy Owen straight to your phone, your computer or any storage appliance. In between there’s no middle man there’s no distribution company, and it is easy for me to get my money directly from it [digital launch].”
A digital launch is a once-off, where an artist has to cash in because after the launch, music becomes available and can be transferred from one device to another.
Kenya is Africa’s gospel capital and you’ll even find it being played in night clubs. Gospel songs top the charts and play across all television and radio station. Gospel music events in Tanzania and Uganda are dominated by Kenyan artists.
&nbsp;

Two Heads Are Better Than One

It’s been a rotten year for Kenyan rugby—a year soured by defeat and disappointment. On the field, the national team all but gave away the Victoria Cup by losing to Zimbabwe at home and to Uganda away—the latter after leading for most of the game. There was a poor showing in the International Rugby Board (IRB) Sevens, where Kenya finished ninth. Off the pitch, there are more optimistic signs that Kenyans are getting to grips with the game and the money men are not too far behind.
Crowds are growing. In 2007, around 1,000 supporters were watching Kenya play rugby. In July, when Kenya took on Zimbabwe, 6,300 spectators were there. Kenya Rugby Union (KRU) officials said some of the huge interest was a result of sponsorship from an internet service provider—which allowed gate charges to be halved to around $1.
<div id="attachment_114" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-114" class="size-large wp-image-114" src="/wp-content/uploads/2017/04/Kayange-003-683x1024.jpg" alt="" width="474" height="711" />Kayange</div>
There was so much interest that the match had to be moved to the 35,000 capacity Nyayo National Stadium to accommodate the crowd. The player base of around 1,000 players is also widening as more high schools take up the sport. The most prestigious schools trophy, the Prescott Cup, had for long been the preserve of eight elite schools in Nairobi. Now, the league has expanded to accommodate another eight schools in different parts of the country.
Most importantly, more sponsors are willing to offer money to the national team and Kenyan rugby clubs. Kenya Airways, the national carrier, sponsors the Sevens national team; Safaricom, Kenya’s leading mobile phone company, sponsors the Safari Sevens and there are other non-traditional rugby sponsors such as Cadbury and an entertainment group—Homeboyz.
Money is not enough, though. “We should get more of the sponsors to support the grassroots development of the sport,” says Humphrey Kayange, the 29-year-old captain of the national Sevens team. Kayange speaks from experience. He went for trials in South Africa two years ago and didn’t make it, but learned a lot about the country’s system of unearthing young talent.
“We need to get our development right if we are to make it to the next World Cup,” he says. “We need to get consistent wins and maybe play outside our traditional opponents.” The secret could be holding Kenya’s young teams together— something that appears to have worked in the rugby Sevens side. The core of the team, which reached the semifinals of the Rugby World Cup Sevens in Dubai in 2009, had been together for about three years. They included Kayange, Collins Injera, Lavin Asego, Innocent Simiyu and Sidney Ashioya. This policy also helped Kenya climb to 33 in the IRB rankings in 2010.
The money followed. Kenya Harlequins reaped one of the game’s most lucrative sponsorship deals, worth about $40,000. The club ploughed the sponsorship money into increasing the number of players to around 90—the largest pool of any rugby club in Kenya. Undoubtedly, the game is in the hands of those who love it, interest is growing and money is flowing in. Maybe for Kenyans watching Kenyan internationals on TV, fighting for the World Cup in 2015 may not be such a pipe dream, after all.
<div id="attachment_115" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-115" class="size-large wp-image-115" src="/wp-content/uploads/2017/04/Kayange-017-1024x683.jpg" alt="" width="474" height="316" />Humphrey Kayange</div>

Cash Attraction

From a distance, Kariuki Gathitu looks like just another kid you would pass on the street without blinking. He wears jeans, sneakers and a backpack; he sips milkshake and hangs with his friends. But in Gathitu’s backpack are big dreams and a business plan aimed at making him one of Kenya’s first tech billionaires within five years.
Gathitu, a 28-year-old systems architect, is one of East Africa’s new breed of technopreneurs—the hip ones with big ideas who make their fathers’ generation sit up and take notice. They are the whiz kids who command respect. Never before has it been this cool to be a geek. After the international success of Safaricom’s M-PESA, more and more technologists under 35 are mushrooming in Kenya’s large cities. Backed by government-sponsored training, these computer geeks are emerging by the score to build a sunrise industry in what is being called the Silicon Savannah.
<div id="attachment_68" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-68" class="size-large wp-image-68" src="/wp-content/uploads/2017/04/Kariuki-Gathitu-683x1024.jpg" alt="" width="474" height="711" />Kariuki Gathitu</div>
“The world has changed and so has technology. These youngsters see the world from a different perspective and they are constantly seeking ways to make life easier,” says Soud Hyder, an independent technologist based in Nairobi. The recent Pivot 25 conference saw the cream of the IT crop from Kenya, Uganda, Rwanda and Tanzania come together for two days in Nairobi. Few delegates were over 30. Gathitu’s company, Zege Technologies (Zege Tech), was among them with its M-PAYER application. On the company’s first anniversary in July, it was raking in tens of thousands of Kenyan shillings and aims to increase its annual turnover to $2 million in the next five years. The company has prospered through a gap in the mobile money system. Often you have to wait up to 72 hours for money to reflect—a major cause of frustration when paying bills. M-PAYER, however, pays in real time. It took Zege Tech three months to come up with the application and another eight months to tailor it for the business market.
In a highly competitive market, Safaricom and Airtel, Kenya’s largest mobile networks, were quick to buy in. Zege Tech won Best Product in the Young Innovators category at the AITEC banking and technology conference in Nairobi in March and visits to the company’s website increased 400%. Gathitu is one of the few young geeks around the world to turn down a job at Google. “In June, I received a call from their office in Switzerland and was flattered as it has been my dream job for a long time. They said I could choose at which office in the world I would want to work. Unfortunately, I had to turn down the offer as there are still a few projects I am working on that will enable many young people to have an easier chance at doing business,” he says. Gathitu is as humble as he is influential. He has just returned from a trip to Malabo in Equatorial Guinea, where he addressed the heads of state at an African Union summit on youth leadership. “It was a great moment when I could speak to Africa’s big leaders. I wanted to give the older generation goose bumps through what the youth is doing. I hope I succeeded with that.
Afterwards I received many invitations to speak at conferences in Angola and Zambia and Mozambique… I’m starting to wonder when I will find time to work,” he laughs. Gathitu hoped to study aeronautical engineering in Britain, but ended up with a degree in Computer Science from the Kenyatta University in Nairobi. He has been fiddling with computers since he was seven. “It became my default career, but now it feels like a fit.” The mobile money transfer system, M-PESA, has put Kenya on the technology map. It allows the user to over come the headaches of sending money internationally, as well as pay bills and purchase goods and airtime through a mobile phone. It is made for Kenya, a country where fewer than 10 million people out of a population of 39 million have a bank account. According to Q2 2011 data released by the Communications Commission of Kenya, there are more than twice as many mobile subscribers—nearly 25 million— as there are bank account holders.
With the support of the government’s ICT Board andinnovation hubs in Nairobi like iHub, young innovators have a chance. It is part of Vision 2030, the Kenyan government’s plan to transform into a middle income country. Paul Kakubo, CEO of the Kenya ICT Board, calls the young techno warriors the Tandaa Generation (‘Tandaa’ is a Swahili word for ‘spread’). In one of his blogs Kakubo writes: “…the Tandaa Generation is what will deliver a lot of the goodies we are looking for as a country. They can create, they are intellectually curious, they are driven, very exposed thanks to technologically delivered media, they are non-tribal, they are good thinkers; they like to be independent. Technology provides them with the tools. What they now need is capital.” Gathitu is riding the wave. He is sharp and ambitious. His company is eyeing South Africa, Nigeria and French speaking West Africa. It hasn’t always been easy.
“One mistake I have made is to over-value a product based on its technological superiority as opposed to market traction. I now believe that a business needs customers more than cash flow,” he says. The time is ripe and the demand is high. Gathitu believes he is well on his way to becoming a tech billionaire before the age of 35. Like many, he trained hard in the years since the first M-PESA transaction in March 2007, and like the rest of the Tandaa Generation, he is ready to rumble.

Tag: Kenya

FORBES AFRICA SOCIAL MEDIA

Wrong Number—The Great Kenyan Telephone Blunder

“If you are going to make change you have to be selfless”

Out Of The Dust Grow The Roses Of Success

Two Heads Are Better Than One

Cash Attraction

Silicon Savannah Swagger