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SOFTWARE DEVELOPMENT
Kenya’s softwa≥e develope≥s sto≥m onto global stage
Investors hunting for fresh that have boosted the country’s profile interna-
tionally. They come from America, Finland and
insights are visiting in the even Qatar with a single mission: finding ways
to tap into the fastest growing ICT market on the
hope of landing the next continent. In October last year, a group of 20 in-
vestors from the US arrived in Nairobi in search
M-Pesa or Ushahidi of start-up businesses to invest in. The Savanna
East Africa Small Equity Initiative partnered with
the Kenya ICT Board to expose IT start-up com-
Programming panies in Kenya to funding opportunities in the
BY KUI KINYANJUI USA Entrepreneurial Finance Seminar.
L
ast week, Silas Magare heard the words Reverse mergers
every university student longs to hear: The seminar focused on providing entrepreneurs
You’re hired. with education and training on the capital for-
But this was no normal interview. mation options available to entrepreneurs in
In an unusual twist, the young graduate heard East Africa through reverse mergers and PIPEs
the words soon after he showcased his software (Private Investment in Public Equity) in the
creation — an application that allows mobile users over-the-counter market in the US. They were
to back up their SMSes on a remote server. Growth in leaps and bounds followed in March by a delegation of investors
His new employer, Mr Bob Collymore, the CEO 2009 was the tipping point for Kenya’s budding The iHub lab in Nairobi. Kenya has immense po- from Qatari Diar, a subsidiary company of Qatar
of Safaricom, made the offer as the two posed software industry. tential for the technology business. FREDRICK ONYANGO Investment Authority, who visited the Ministry
for a photo opportunity during the graduation Revenue earned from Kenyan developers topped a of Information with the aim of surveying and
ceremony of the inaugural class of the Safaricom record Sh500 million that year. as a potential revenue earner for the country as mapping investment opportunities in the areas
Academy, a collaboration between the telco and By the end of 2010 the amount was anticipated it turns to services to drive the economy. of technology and real estate.
Strathmore University. The snapshot moment to have topped the Sh1 billion mark. Extending on the gains reaped from close Soon after, seven Finnish companies jetted
adequately captures Kenya’s software develop- collaboration at university level, the interest into the country scouting for opportunities to
ment aspirations: where large and established levels of multinationals in our local universities ride on to penetrate the African market. The firms
companies such as Safaricom hunt for develop- now matches that seen in educational facilities were participants in a project that will be funded
ers right out of university in the hope of netting abroad. For the most part, the interest is evident by the World Bank and mobile giant Nokia, itself
the country’s next innovator. in competitions, which light-heartedly invite both a Finland-based company, that aims at increasing
“Programming has come to Africa like a desert graduates and mature developers to create new foreign investment in key ICT emerging markets
storm. What few thought possible in 2004 of Ken- solutions for local use. around the world. “Kenya is an economic pow-
ya has not only become a reality, but market lead- But behind the publicity and in some cases, erhouse in East Africa and its mobile telephone
ing, mind boggling and world news,” said David cash rewards, that the initiatives invite, the seeds market is ranked as one of the most competitive
Svarrer of the Digital Age Institute. the relatively rigid structure of Microsoft’s soft- of strategic interests are being formed. Africa in Africa. This, combined with the high penetra-
Like many analysts, Mr Svarrer tips 2009 as ware setup, where users are unable to tweak forms a frontier market with immense potential tion of mobile phones among Kenyans, makes
the tipping point for Kenya’s budding software the software to suit their needs, to the more for the technology business. it a place of interest to Finnish companies,” said
industry. According to government data, that is collaborative Linus system which is a software Eeva Nuutinen, Finpro Project Manager.
the year that revenues earned from Kenyan soft- that is built using almost continuous input from Fertile field for investment For the handful of local developers who have
ware developers — in earnings from creating cus- developers. With its rapid uptake of mobile services and an in- been developing software, the situation is a
tomised solutions for companies and individuals From there, analysts say, it was a small leap to creasing number of the population coming online, complete reversal of opinion from perceptions
— topped a record Sh500 million. examining how other platforms could be tweaked thanks to increased fibre connectivity, the conti- 10 or more years ago, when local solutions were
The fact that the figure easily outpaced earn- to produce local solutions. A new question is form- nent provides a fertile field for investment. shunned in favour of international software.
ings from the much publicised outsourcing in- ing in newly empowered African minds: “What The names for the competitions being hosted “When we started out, people did not believe
dustry — which netted Sh400 million in the same can I do with this? (Referring to the Internet, lo- by international software conjure up images of in local software solutions. In order to overcome
period — was not lost on observers. cation based services, rich media, mobile money, fantasy and imagination, ranging from Micro- this, we created prototypes and presented them
The amount, said to be grossly under-reported, mobile search, mobile music, near field commu- soft’s Imagine Cup to Nokia’s Idea Storm, but to different businesses and in one year’s time
has since doubled, and by the end of 2010 was an- nication).” Or “What can this do for me?” “This they serve a serious purpose; possible access to we gained ground,” said Jyoti Mukehrjee, whose
ticipated to have topped the Sh1 billion mark. “The is a potent question when asked by one billion the next big idea in the software world. Business software development house— Software Tech-
year 2009 was a turning point. Microsoft ham- Africans all with different daily challenges and has not been left out of the rush on Kenya’s bud- nologies — has been creating solutions for local
mered all the illegal cyber cafes to the ground by aspirations,” said Moses Sitati, a development ding Silicon Savannah. companies for the last 19 years. Ms Mukherjee,
use of anti piracy units, and within a few days, the economist at Nokia Research Centre. With a In a reversal of the rush for Africa during the who plans to take STL through an IPO at Nairobi
majority of all cyber cafes had swapped to Linux. growing number of scalable solutions being lo- colonial era, investors hunting for fresh insights Stock Exchange in the near future, said Kenya
Furthermore, more corporates followed in cally developed, heightened interest in the sector into software are visiting our shores in the hope was ripe to become a hub for software develop-
the footsteps, and either introduced Linux or has drawn the attention of large multi-nationals of landing the next M-Pesa or Ushahidi — the ment in the region.
swapped to Linux,” said Mr Svarrer. like Microsoft, Google, and Nokia, and the gov- mobile money transfer product and the crowd-
These dynamics set the stage for a shift from ernment has been quick to ear-mark the sector sourcing tool that form the two software products mkinyanjui@ke.nationmedia.com
16 BUSINESS DAILY | Friday March 18, 2011
Technology Quarterly
IT gu≥us scale new heights with unique innovations
In the last two years, a string of initiatives have been launched, aiming to position Kenya as a global software hub,
hoping to tackle industry challenges such as how to get financing for ideas and creating links between companies
and individual developers. But as this happens, there are already people who have made their mark, putting Kenya
on the world map. These individuals — too many to number — form the nexus of the country’s growing software
developers pool. Below, PAUL WAFULA profiles an older developer alongside a newer player in the field
Tuvitu Mobile Application CompuLynx Limited
Company formed by Steve Mutinda, a 29 A Kenya Top 100 midsized companies which
year old Computer Science graduate from develops point of sale solutions for the retail
the University of Nairobi. sector has also made a mark in the country’s
software industry
C
urrently I’m part of Shimba Tech-
nologies Limited, a mobile software
T
company that provides channel devel- he company which boasts of an annual
opment, information dissemination turnover of Sh400 million in software
and transaction processing of key content. Our exports has developed retail manage-
business objective is the development of tailor ment software solutions for retailers.
made corporate mobile related solutions as well Leading firms such as Nakumatt Holdings,
as products for the wider mass market. Shimba Ukwala Supermarkets, Armed Forces Canteen
Technologies has several partners who bring Organisation (AFCO), Eastmatt Supermarkets,
necessary skills such as business development Woolmatt Supermarkets, Innscor Africa Ltd, Bar-
and technical skills. clays Bank of Kenya, and Equity Bank are powered
by CompuLynx developed solutions.
When did your interest in software devel- Other organisations powered by CompuLynx
opment start, and why? include De la Rue, Kenyatta University, KCA Uni-
It all started when I was completing my sec- versity, United States International University-Af-
ondary school education at Lenana School. I rica, Moi University, Twiga Stationers, Blowplast
immediately applied for a computer science Ltd, Hypermart Ltd, Premier Foods Ltd, Meru
course. The country was rapidly adopting in- Mwalimu Sacco, and Nyeri Farmers Sacco.
formation technology. It was something new With thousands of corner shops and retail
and exciting. outlets evolving into small-scale supermarkets,
Mr Steve Mutinda, the Tuvitu Mobile Application CompuLynx recently unveiled iSMART Lite for Mr Silesh Savani, the CompuLynx chief executive
Why did you get engaged to Nokia? executive officer. FREDRICK ONYANGO fledgling retailers. officer. FREDRICK ONYANGO
Nokia partners with software developers so as to Developed and customised by local software
promote local applications and content on their _______________________________________ engineers, iSMART Lite is an offshoot of its flag-
Ovi store. They are strategic partners in develop- What are some of the main challenges of a ship enterprise solution iSMART, which caters As pa≥t of ou≥ co≥po≥ate st≥ategy, we shall
ers’ efforts to distribute their applications in the young software developer today? for medium and large retailers.
continue to launch p≥oducts that cove≥ all
local market. Nokia also provides testing services The main challenge is monetisation. Software iSMART Lite is targeted at retailers with less
for devices. This is crucial for mass market prod- developers need ease of integration to monetisa- than three outlets. Retailers who are using this segments of the ma≥ket
ucts. Developers do not always have the ability tion platforms possible through mobile operators system are Consolata Missionaries, Rahisi Mini
to afford all these devices for testing. who would ideally have a layer of secure standard Supermarkets, Pick & Carry Supermarket, and
services for local developers to utilise. Seven to Seven Supermarkets.
Describe how your app works, how you cre- Another challenge is marketing of products. Competitively priced to suit modest budgets,
ated it, and its motivation and features Mass market products are many, but the ones the iSMART Lite is loaded with features that are nancial services, insurance, transportation, hos-
My application is Tuvitu (www.tuvitu.com), a that win either have some sort of viral adoption essential for a growing retailer to run a business pitality, and tourism sectors. The introduction of
mobile platform that leverages local mobile or need a major marketing budget. Developers more efficiently and increase profitability. e-governance and e-commerce has also made the
internet content with a focus on utilities that also lack research for market needs. “iSMART Lite comes packaged with features government, which is moving its core activities
will see day to day engagement with the plat- that are essential for a small retailer to run busi- to the IT infrastructure, the firm’s target.
form such as news, classifieds, social network- How do you make money with your appli- ness more efficiently and profitably,” said Mr The firm is currently in the middle of its three-
ing (e.g. Twitter & Facebook), stocks, traffic up- cation? Sailesh Savani, the CompuLynx chief execu- year business growth plan, geared to spreading its
dates, jokes etc. Tuvitu generates revenue from advertisements tive officer. wings further into the region. The plan, dubbed
The platform allows the consumer to fine- and premium content. The platform is generally the CompuLynx Vision 2012, will feature four
tune their content experience and personalise free save some widgets which will need subscrip- Larger retailer pillars aimed at steering expansion across its
the content by aggregating what they like, giv- tions from the consumer at a very tiny charge. “As part of our corporate strategy, we shall con- business area.
ing a good user experience. Our goal is to get 200,000 users and more on tinue to launch products that cover all segments To achieve this, the software firm has part-
Content providers and aggregators can pub- the platform. of the market, particularly in the retail and finan- nered with multinational IT companies like Or-
lish their content for mobile (adapted for local cial services sector,” said Mr Savani. acle, IBM, Datacard, and Microsoft to provide
market and allows look and feel branding with Can young Software developers make a liv- “As the small retail organisation grows into various retail products and solutions to govern-
logos etc). The concept is that of a mall with small ing from this trade? a larger retailer, the user will have the option ments and the private sector. CompuLynx has also
stalls that allow for content owners to advertise Yes. Developers can make a living, and a very of upgrading to the “enterprise” versions of the started offering consultancy services.
and sell their products. These “stalls” are what we rewarding one. Statistics show that upcoming software and perform more complex business “The firm made a decision to adopt a strategic
call widgets (mini-applications) within Tuvitu. middle companies are mostly software. Develop- activities that are required in larger retail busi- plan to guide the business through the current
Widgets can be added constantly on the Tuvitu ers simply need a mind for business, entrepre- nesses,” he said. growth phase with a turnover target of Sh1 bil-
stores for consumers to find and add. neurship skills and a good business plan. The company also has products targeting fi- lion ahead of 2012,” said Mr Savani.
Friday March 18, 2011 | BUSINESS DAILY 17
Technology Quarterly
Ignorance has seen inventors lose their creations to corporations with deep pockets, resulting in lengthy court cases
Weak laws expose geeks
to theft of inventions
Intellectual Property
BY OKUTTAH MARK
Intellectual property
L
ack of awareness on intellectual prop- Inventors make their inventions public before
erty rights and a weak legal environment they secure patents and then cry foul when large
are exposing young ICT innovators to companies own and launch the innovation
risks of losing ownership rights over It takes at least 18 months and Sh17,000 to
their creations. patent an innovation, during which time the idea
This has in turn resulted in protracted legal can be snapped up
battles against them with a number of large cor-
porations such as Nokia and Equity Bank over
products they have recently launched in the mar-
ket, but whose ownership is being contested by has been working with University students on ICT Mr Njuguna alleges that M-Kesho is a regis-
smaller firms. innovation, the students have lost some of their tered trademark that Equity Bank got to know of
At the centre of the court cases are claims that innovations to multinational companies. four years ago when he presented the mobile bank-
the two firms released into the market products He gives an example of a bicycle charger over ing concept to them but the meetings stopped
whose intellectual property they did not own which two University of Nairobi students, Pascal without any deal being struck. Though not in the
and that they had not paid royalties to the in- Katana and Jeremiah Murimi, have taken Nokia original suit, Safaricom has recently been enjoined
ventors. to court. “We have lost several ideas because of in the suit as an interested party.
The build-up of intellectual property cases lack of a proper Intellectual Property (IP) man- Most intellectual property cases involve claims
has been seen to reflect the raised awareness agement structure and capacity at KIPI coupled over trade names, ideas or products whose owner-
among Kenyans that there is money to be made with lack of awareness among the young innova- ship by way of legal registered rights are unclear.
from having good ideas with some relevance to tors” said Mr Desai. Commercial lawyers say informal sector artisans
the market economy. Director of Engineering at Centurion Sys- are, for instance, losing the opportunity to sell
tems , Mr Kevit Desai. FREDERICK OMONDI Unauthorized exploitation their intellectual property assets, for failing to
Patenting an idea The two students accuse Nokia of unauthorized patent or register their inventions.
Some experts, however, see the court battles as the exploitation of the product that involves use of For example, an artisan who develops a ma-
product of a weak legal environment that takes the agency responsible for the registration of pat- bicycles to charge phones for commercial gain, chine for dispensing sugar must patent it and then
long and demands an arm and a leg to recognise ents, says it has been almost impossible to stand without compensating them. license other people who want to make similar
the intellectual property rights of ordinary inven- with the inventors in their fights against large Mr Njuguna however said that there isn’t lack equipment or agree on royalty or profit sharing.
tors. Patenting an idea is a process that takes at corporations over intellectual rights because most of capacity at KIPI saying other than the local “We receive about 150 applications annually and
least 18 months at a cost of Sh17,000, that is paid rush to make their ideas public before securing staff the organization also relies on expertise from register at least 70,” said Mr Njuguna of kipi, add-
in staggered amounts of Sh3,000 over a speci- them through registration. other regional and global bodies such as World ing that there has been a huge awareness gap on
fied period. During this period the intellectual “The biggest problem is people go public or Intellectual Property Organization (WIPO). the benefits of a patent, especially among arti-
property agencies are required to verify with disclose the full details of their innovation before Equity Bank and Safaricom are facing a simi- sans. Generally, ideas and products that qualify
their global partners whether the idea is origi- patenting which brings lots of challenges as a re- lar court battle against businessman Hoswell for patenting must have the qualities of novelty or
nal and has never been patented else where in the sult of an individual’s own actions,” said David Mbugua Njuguna, who wants the two corporate newness, be applicable in industrial use, and must
World. Application for patent, however does not Njuguna, the chief patent examiner at KIPI. Kevit giants blocked from using M-Kesho, the mobile add value compared to existing solutions.
give an automatic guarantee of the patent. Desai, a director of Engineering at Centurion Sys- banking platform that they launched in May and Innovators seeking legal redress must prove
The Kenya Industrial Property Institute (KIPI), tems says over the last eleven years that the firm which has more than 600,000 users. that they actually applied for the patent.
TECH PROFILE
LINDA KAMAU Raising Af≥ica’s IT p≥ofile
L
inda is a 24-year-old web and mobile civil society to report on electoral offences such may be sometime in the future even re-write
applications developer with a passion as intimidation, hate speech, vote buying, poll- PHP code!
for her job. She’s a PHP freak with a ing clerk bias, voting mis-information and the Linda believes that in order for Africa to posi-
degree in Business Information Tech- likes. The reports are then sent to the electoral tion itself to become a part of the global soft-
nology from Limkokwing University of Crea- authorities or security personnel for action. ware development market, it must up the qual-
tive Technology. Linda took computer studies in high school. As ity of applications and services. She says there
Linda is the lead developer for Ushahidi and per the curriculum she had to work on a project is a need to develop products and fresh ideas
is also leading the development of the Java ap- which had to involve a high level language. She that can compete with those from developed
plication for the Ushahidi platform. Ushahidi got fascinated by the fact that one could come countries. Essentially killing the thought that
is a non-profit tech company that specializes in up with a system in a language other than the ‘imported’ is better than ‘home-made’. Applica-
developing free and open-source software for usual English or Swahili. With this a seed was tions like Ushahidi are a testimony that Afri-
information collection, visualization and inter- planted and for it to grow, she pursued a com- can innovations can be used anywhere in the
active mapping in Kenya. She is also currently puting course in college where she got to do a world. Developers also need to utilize facilities
working on http://uchaguzi.co.ke. Uchaguzi is lot of reading, research and networking with like the ihub, Nairobi’s innovation hub, where
a technology platform that allows citizens and people already in the IT industry. they would be able to network with other like-
civil society to monitor and report incidences In the future, Linda is determined to build minded developers and tech-preneurs. That
around the electoral process. It provides web systems that are scalable worldwide, just like way we have better placement in the global
and mobile-based channels for citizens and Ushahidi, without re-inventing the wheel and software development market.
18 BUSINESS DAILY�| Friday March 18, 2011
Technology Quarterly
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IT Developments
Mr John Waibochi, CEO, Virtual City.
������������
BY MUGAMBI MUTEGI
A
FREDERICK OMONDI
s use of smartphones and TALENT
Internet grows, develop- BY RAWLINGS OTINI
ers are in a race to launch
T
softwares. But for the Ken- echnology giants are turn-
yan developers what is holding them ing to university students to
back is lack of finances. Many rely develop softwares to help
on luck to win cash in competitions fight poverty.
sponsored by giant technology com- Microsoft, Samsung and Nokia are
panies or use their savings. tapping local talent from in search
A recent Strategic Business Advi- of technology solutions to real-life
sors Limited report on ICT invest- challenges.
ment in Africa showed most finan- Microsoft this week launched a re-
ciers and investors shy away from cruitment drive for student software
the sector saying it is too risky. But developers in Kenya to take part in a
economists say this is the sector to global Imagine Cup competition.
watch with earnings in 2010 expected “What begins with a burst of in-
to grow to Sh1 billion. spiration and a lot of hard work can
Most developers have to go source become a future software break-
for start-up capital from personal sav- through, a jump-start for a career,
ings, investment groups or assistance or a flourishing new industry, “said
from friends. Vincent Mugambi, developer and
Web Tribe, a software develop- platform manager at Microsoft, East
ment company based in Kenya with and Southern Africa.
operations across East Africa spe- Winning entry “The Imagine Cup invites students
cialising in payments systems and John Waibochi received a cash to learn, collaborate and change the
integrations, is an example of those pay out of $1 million. world by applying their imagina-
that started off on their own, but later ca Fund and TBL The developer’s company Virtual tion, passion and creativity to tech-
sought external financing. Mirror Fund are City won Nokia’s Growth Economy nology innovations. The competition
examples of firms Venture . brings students together, motivates
Banks sceptical who fund various In September last year, Akira the competitors to give it their all,
“Software development companies small and medium- Chicks — won Sh1 million for their and provides opportunities to form
have a huge human resource cost sized companies includ- application, M-Farm developed to friendships that last well beyond the
followed closely by equipment and ing ICT start-ups in Kenya. assist farmers access the market competition itself, ” he said.
infrastructure set-up. It is possible The three have set aside $55 million, for updates on prices and product The technology firm said it is tar-
for a software development company $25 million and $11 million respec- requirements. geting solutions to challenges such as
to grow naturally without requiring tively to finance businesses. blindness and hearing .
external financing where the business Venture capitalists usually have a
model is build and sold, but market- threshold limit with some like Grofin Humanitarian issues
ing and accelerated growth requires East Africa setting Sh4 million as the contracting consultants to assist the been another channel through which The winners will walk away with prize
sustained financing”, the Web Tribe’s minimum amount they can advance entrepreneur at various stages when developers get their funds. money totalling more than $300,000
CEO Danson Muchemi said. as loan. But Strategic Business Advi- the need arises.” Other internal contests are already with individual prizes of up to $25,000
Banks are sceptical on financ- sors Limited report says there are still Another unorthodox mode of fi- in the pipeline with Pivot25 which is including opportunities for internship
ing software developers. Kahenya a limited number of venture capital- nancing that has gained popularity in co-sponsored by Nokia set to com- at Microsoft Research Labs and other
Kamunyu, a web application devel- ists and private equity investors who Kenya and has of late attracted spon- mence next month. perks.
oper says banks need to understand understand the sector and willing to sors like multinational companies like But analysts say this is a one-off “Competing at the Global Imagine
the dynamics of software develop- fund ICT start-ups. Nokia and Microsoft is competition- affair with critics saying training cup contest has aroused in us a pas-
ment to open credit lines for this based funding. The companies invite should get higher preference as op- sion to envision a company that would
budding sector. Competitions funded developers to showcase their products posed to cash rewards. help rural population and Africa as a
“I gave up on financial institutions A source at TBL Mirror Fund who re- and winners get cash prizes which “I don’t see the viability in compe- whole”, said Arnold Ogolla, a former
a long time ago and prefer self-financ- quested anonymity said that whereas they use as seed capital. titions leading to a sustainable plan student at Strathmore University.
ing my business. Their processes are software development is viewed as a John Waibochi received a cash that actually works well for the com- In 2010, the Imagine Cup brought
complicated and banks honestly have high risk investment, it has equally lu- pay out of $1 million and thrusted pany since it only assists a limited few. together more than 325,000 talented
good loans officers who just don’t un- crative returns and thus the increased Kenya and its talent onto the world It’s not just about money, but should students from over 120 countries to
derstand digital businesses”, Mr Ka- interest by funds. stage. The developer’s company Vir- be complemented by offering mentor- take on the world’s toughest prob-
munyu said. “We provide equity financing as tual City won Nokia’s Growth Econ- ing skills that allow for people to grow lems.
But it is not all gloom and doom. opposed to loans and only redeem our omy Venture for his software crea- their skills thus making it a long-term For the first time, this year hu-
In recent months, Kenyan soft- investments at the exit point either tion. In September last year, an-all plan”, Mr Kahenya said. manitarian organisations have been
ware developers have caught the through sale of shares and initial pub- female group — Akira Chicks — won Software developers can also invited to submit real problems to
eyes of venture capitalists that are lic offers. This is usually five to seven Sh1 million for their application, M- access credit from the government for the students to consider for their
injecting seed money into start-ups years after setting up the business”, Farm developed to assist farmers ac- controlled fund. In June last year, projects through a new programme
or promising companies and in ex- the source said. cess the market for updates on prices the Kenya ICT Board launched a local called Imagine Cup Solve This.
change get a stake in the firm and “To prevent possible collapse of and product requirements as well as Sh312 million grant for digital con- Microsoft created the Imagine
play a considerable role in decision the venture, we employ a hands-on weather updates. tent and software developers. Cup nine years ago with the idea
making. approach in the business by taking Such contests are gaining popu- that students can and will change
Fanisi Capital, Grofin East Afri- part in decision making as well as larity in the country with have also pmutegi@ke.nationmedia.com the world.
