Viffa Consult on the investment case for Kenyan start-ups amid COVID-19

In the midst of the pandemic, Viffa Consult has shed light on the promising investment opportunities in Kenyan start-ups. The Managing Director, Victor Othieno, highlighted the significant potential that start-ups hold in both the Kenyan and African markets. With the economy projected to grow at a modest 2%, there is a pressing need for innovative solutions to stimulate economic recovery. While Small and Medium Enterprises (SMEs) have played a vital role in the country's development, they continue to grapple with challenges such as inconsistent pay for employees. According to World Bank forecasts, by 2030, around 24% of the population is expected to remain in poverty, underscoring the urgency for job creation and poverty alleviation efforts. Against this backdrop, start-ups are poised to be the driving force for economic growth in Kenya. This echoes the sentiment of Viffa Consult's previous report on the coconut industry, which garnered significant interest and inquiries from aspiring entrepreneurs looking to venture into new sectors. Start-ups possess a unique advantage over established companies, particularly in their innovative prowess and ability to adapt swiftly to market demands. By leveraging cutting-edge technology, start-ups can deliver novel solutions that resonate with consumers, enabling them to capture greater value compared to conventional companies that rely on incremental improvements. Their agility and flexibility also allow them to pivot rapidly and seize opportunities, outmaneuvering larger competitors entrenched in bureaucratic processes. Despite the nascent state of Kenya's start-up ecosystem, success stories like Twiga Foods and Sendy exemplify the sector's growth potential. These companies have created employment opportunities for over 40,000 individuals, showcasing the transformative impact of start-ups even amidst the challenges posed by the pandemic. The burgeoning start-up landscape has drawn attention from global markets, with countries like Tunisia and Senegal implementing supportive policies to nurture their own start-up communities. Recognizing the need for innovation and entrepreneurship, Kenya is also in the process of enacting legislation to bolster the start-up ecosystem. However, a key concern lies in the involvement of legacy companies in supporting start-ups. While some corporations have initiated accelerator and incubation programs to foster innovation, there is a call for greater organic growth and investment in homegrown start-ups. The reluctance of established firms to fully embrace entrepreneurship culture poses a hindrance to the organic evolution of the start-up ecosystem. Encouraging collaboration between legacy companies and start-ups could facilitate knowledge transfer and drive mutual growth, ultimately benefiting Kenya's economy and fostering a culture of innovation.