Kenya’s business environment is ripe for growth

Anyone who follows the markets has noticed that in the past few years, venture capital investments around Africa have surged. Foreign investors have recognised the immense potential for growth across the continent, as internet penetration rises and citizens become more computer savvy. However, most of the new technologies are addressing the rising urban, educated middle class.

While it is not unusual for this sector of society to drive innovation, entrepreneurship and economic growth, it still remains a relatively small segment of our population. High-tech start-ups must be careful not to forget the large rural populations. Coming up with solutions to address the challenges of groups of people disconnected from city life can also be seen as a huge opportunity for creative Kenyans with an entrepreneurial mindset.

Tech companies should make it their responsibility to think about how their new enterprises can benefit people who are typically completely outside of the start-up and venture capital world. President Uhuru Kenyatta has already pushed growth in Kenya’s business environment by opening up our markets to foreign investors. During his tenure we have seen Foreign Direct Investment (FDI) pour in and Kenya’s ranking on the World Bank’s Ease of Doing Business Index improve each year. 

The anti-corruption campaign is also letting business people know that setting up a new company here is a safe bet. 

We have already gained the nickname Silicon Savannah in light of the fact that so many companies have chosen to call Nairobi their home in the past few years. 

One of the main industries that has benefited from this is e-commerce. E-commerce platforms all over Africa have started to provide customers with an easy way to make online purchases, delivered right to their doorsteps. It is changing how Africans do shopping and get the goods they want.

But most African e-commerce platforms cater to urban dwellers, and fail to address the rural citizens that have less access to internet and computers. Many of them also do not have conventional addresses, making deliveries difficult if not impossible.

However, one Kenyan company is doing quite the opposite by focusing on low-income consumers in underserved areas. Copia Global, which is based and operates in Central and Rift Valley, allows customers to make purchases through a local agent - such as a shopkeeper - who places the online order and receives the package delivery.

Copia has developed a network of 5,000 local shopkeepers who earn commission on each purchase and are able to act as an intermediary for people in their communities. This gives rural dwellers better access to cheaper online prices. They are also trusted members of the community, which is important in guaranteeing that those making purchases can be assured that they are not being scammed. These relationships are important to the Kenyan company’s business model.

In the words of Copia CEO Tim Steel, “We built our business on a mobile platform to bring retail services to low to middle income African consumers—consumers who are remote, unbanked, unconnected and who may not have a valid ID or address. Other e-commerce players are focused on the top of the pyramid with middle-class and elite.” Steel says that Copia’s underlying goal is “to make sure that we have technology that’s appropriate to the consumer.”

But by serving consumers from lower socio-economic backgrounds, Copia faces one central challenge. The average order placed through their site is valued at around Sh1,000, while the average on Jumia was around Sh 6,600.

The company has recently raised $26 million in a Series B investment round. This followed a $2 million US investment in the first round. To date, over three million orders have been placed on Copia, serving almost half a million consumers - only through its operations in Central and Rift Valley! Now the company is set to expand across Kenya and beyond, throughout East Africa.

While it seems likely that Copia’s business model can be successfully expanded across Africa, it remains obvious why Steel chose to found his company here. Uhuru has transformed Kenya into becoming by far one of the best environments for new businesses to set up shop and become cash flow positive. It is only natural that innovators will want to mitigate risk by beginning their journey in Kenya.