• According to the report, grants are the main source of funding for startups below three years while advanced startups receive credit.
• Even though equity is the most sustainable funding mechanism in an innovation ecosystem, such funding is extremely limited.
Image: FILE
Out of the 200 innovation centres mapped in 47 counties in Kenya, 46% of them are in Nairobi.
This is according to a new report launched by the United Nations Development Programme (UNDP) during the launch of virtual desktops at Kabete National Polytechnic on Tuesday.
The report calls for an urgent need to decentralize and increase young people’s access to spaces that advance their development and provide an opportunity to develop and test their ideas.
UNDP Kenya Resident Representative Anthony Ngororano said that the country must address the obvious drawbacks to unlock the immense potential of its innovation landscape.
“Infrastructure, funding, skills gap and gender disparity are some of the issues that stakeholders need to address,” he said.
Dubbed ‘Mapping of the Kenyan Innovations Ecosystem’, the report emphasizes that Kenya has to carry out robust steps to harness the immense technological innovation opportunities that promise significant and sustainable economic gains.
The report was produced in partnership with Konza Technopolis Development Authority (KoTDA), the African Centre for Technology Studies (ACTS) and the Association of Countrywide Innovation Hubs.
The Kenyan innovation space saw a significant rise in investments secured and the number of startups between 2017 and 2021.
The number of start-ups that attracted funding doubled from 40 to 86, while investments increased from $40 million to $280 million.
According to the report, grants are the main source of funding for startups below three years while advanced startups receive credit.
Even though equity is the most sustainable funding mechanism in an innovation ecosystem, such funding is extremely limited.
The report indicates that only 31% of the start-ups in Kenya have received funding, mainly grants (59%) and loans (41%).
“Unlike creditors, equity investors are highly valuable since they are more tolerant to risk and invest for the long term without expecting immediate payments, a key incentive for start-ups to grow and scale up,” Ngororano said.
For the innovation ecosystem to thrive, the report recommends a synergistic collaboration between capital firms, policymakers, innovators, the research community, academia and the private sector
They need to collectively invest towards robust infrastructure, capacity, incentives, and investor readiness.
This deliberate support will unlock development barriers, reduce unemployment, enhance incomes per capita, and contribute to the realization of Sustainable Development Goals.
UNDP’s head of exploration Caroline Kiarie said that the country needs to work together to create an environment that allows youth and women to thrive.
“Women empowerment in the innovation space should not be a cliché. Data has proven that they face several barriers that they must overcome to succeed in business,” she said.
Kiarie also said that the promotion of women innovators and the creation of inventions and technologies that meet their needs is a sure way to accelerate Kenya’s promising innovation ecosystem.