Building ICT Entrepreneurship Ecosystems in Resource-Scarce Contexts: Learnings from Kenya’s “Silicon Savannah”

Abstract

Establishing information and communications technology (ICT) entrepreneurship ecosystems in resource-scarce contexts is difficult because these contexts lack important preconditions, such as financial resources, established ICT sectors, and relevant human capital. Current theoretical perspectives and policy prescriptions about them stem mainly from the Global North and provide little insight into how to establish these conditions “from scratch.” In 2016, numerous African countries are looking toward the continent’s ICT vanguard, Kenya, and its gradually maturing “Silicon Savannah,” asking themselves, “How did they do it?”This chapter will shed light on the evolution of Kenya’s ICT ecosystem and explore the barriers and subsequent enabling processes encountered when growing an ICT ecosystem in a resource-scarce context. The insights offered here were developed over three years of doctoral research and especially through four months of qualitative research in Nairobi in 2013. The chapter provides a holistic perspective on the barriers and enablers encountered in the areas of culture, human capital, finance, policy, entrepreneurial support systems, and markets. Together with relevant theory on how ecosystems emerge and develop, these insights will be used to propose a model that explains how ICT ecosystems can emerge in resource-scarce contexts. The model shows how locally available enabling processes can be drawn on to substitute and establish the missing condition factors. Entrepreneurship support institutions, for example, emerged as pivotal enablers that can kick-start industry emergence processes, train human capital, and help establish conducive sociocultural norms. Further, the creation of initial market demand through developmental stakeholders and the inflow of expatriate entrepreneurs also emerged as enablers. The chapter ends with a call for critically needed research and specific recommendations for development stakeholders, governments, and practitioners in tackling current barriers in order to help develop ecosystems in resource-scarce countries beyond their nascent phase.

Local competence building and international venture capital in low-income countries

“…Together with increasing quality and quantity of general university (Gudo et al, 2011), and particularly ICT-related education (Kinuthia, 2009) in urban Kenya, this seems to have led to a critical mass of knowledge and capabilities for such sectors to emerge. Our intuition -supported by a growing body of literature (Bramann, 2017;Drouillard et al, 2014;Gathigi and Waititu, 2012;Kelly and Firestone, 2016;Marchant, 2015;World Bank, 2016) -is that recent developments within ICT have begun to enable African entrepreneurs to come up with sophisticated technological solutions to problems their societies are facing. This makes these solutions attractive for the world market as they can be used contextindependently -"If it can work in Africa -It can work anywhere" [14].…”

“…It has been highlighted (e.g. Zavatta, 2008) that when turning this competences into practice, Kenyan start-ups and SMEs -particularly in the ICT sector -face high barriers in raising capital (Bramann, 2017). Traditional banks are wary of lending to SMEs and demand heavy securitization of personal assets in risky and not fully understood sectors, while newer financial instruments such as microfinance usually offer small amounts of capital and target other sectors.…”

“…These developments are described by a growing body of literature under the heading "Digital Entrepreneurship in Africa" (e.g. Bramann, 2017;Drouillard et al, 2014), which also recognizes the current emergence of supportive entrepreneurial ecosystems, including the role of the government, non-governmental organizations (NGOs), universities, tech hubs (Kelly and Firestone, 2016;Park et al, 2017a), and investors . This paper focuses on the characteristics of the latter.…”

“…Besides offering profit opportunities for global investors, investments in such innovation also create huge potentials for economic development in their country of origin. It has been argued that instead of falling in the trap of dependence on social investments, which ultimately maintain the status quo by creating either non-capacity building or poor performing and economically unsustainable results (Bramann, 2017), such investments help create profitable and scalable innovations aimed at resolving the needs of large underserved segments (Christensen et al, 2006). Also, production processes are usually geared toward being efficient with the resources and infrastructure at hand, contrasting with western resource-intensive and infrastructure reliant large-scale production.…”

“…Among others, the privatization of the telecommunication sector in Kenya (cf. Zavatta, 2008) has attracted international investments (Ernest and Young, 2014) in establishing mobile and internet infrastructures, but also spurred domestic entrepreneurial activity (Bramann, 2017). Figure 2 shows the constantly growing number of internet users, particularly in Kenya and Nigeria, which not only suggests increasing tech-competence in the population but also indicates a growing market 450 JSBED 25,3 potential for domestically developed technology-intensive solutions.…”