Is Kenya losing the IT battle to Mauritius?

Kenya has become a byword in IT innovations, including online start-ups and apps, and has rightfully claimed the title of ‘Silicon Savannah’. But does the recent decision of accommodation site, SleepOut, to migrate to Mauritius, portend an increasing trend to relocate to the more business-friendly island nation? Aamera Jiwaji has been finding out.

There was a palpable sense of excitement among Kenya’s IT community at the start of 2014 when it seemed East Africa’s largest economy may overtake South Africa’s and become home to the continent’s largest ICT sector.

Innovative products from Kenyan developers were partly responsible for the country’s growing reputation as the continent’s ICT hub. These include the celebrated mobile money service M-Pesa, crowd-sourcing platform Ushahidi and apps that have achieved pan-African reach, such as M-Farm and iCow.

IBM’s decision to open its first Africa-based research lab in Nairobi in December 2013 simply underlined the emergence of what is being called a Silicon Savannah in Nairobi.

But despite the richness of the local developer scene, there were doubts about whether Kenya offered an environment that was conducive for online business, and the recent decision by accommodation site SleepOut to move the bulk of its operations to Mauritius, has revived these concerns.

SleepOut was established in June 2012 and, based on the success of its service offering, quickly catapulted to international recognition. In January 2014, it was listed as ‘one of 15 African start-ups to watch’ by CNN.

The company offers an online portal to make reservations at over 4,000 accommodation listings in 43 countries, including 16 private islands, with the price per night ranging from a budget friendly KSh850 ($10) to a secluded and luxurious KSh290,700 ($3,400).

Some of its most coveted destinations include Laragai House in Laikipia, North Island in Seychelles, Tsara Komba Lodge in Madagascar, and Ile des Deux Cocos in Mauritius.

Undoubtedly, SleepOut benefited from the experience of its sister organisation, Kenya’s online restaurant guide and booking service EatOut, which pioneered the business model in Kenya’s online market.

But both sites stood out as beacons for how online businesses in Kenya could monetise and become financially sustainable in a short period of time. Not an easy feat in a country where e-commerce companies like Myjobseye, Kenyacarbazaar, Dealfish, Kalahari and Mocality had failed dismally.