Clear The Way For SMEs: Lessons From Nairobi

By Jonathan Zuck

Penye nia, pana njia. A Swahili proverb for “when there’s a will, there’s a way,” this might well be the motto for innovative entrepreneurs the world over. Whether they’re based in Nairobi, Brussels or Silicon Valley, what matters the most to entrepreneurs is the success of their businesses. Of course, what’s “in the way” of that success can vary considerably.

It is widely recognized that bottom-up entrepreneurship is one of the most sustainable drivers of socioeconomic development. It is also indisputable that internet access offers unique opportunities for aspiring entrepreneurs. However, much of the success enjoyed by innovative enterprises is a function of the environment in which they work. There are market factors such as access to capital and talent as well as regulatory factors such as policies governing intellectual property (IP) protection, privacy, data security, trade, taxation, and employment. Internet governance sits at the centre.

The key question innovative entrepreneurs from all over the world were trying to address at the Internet Governance Forum gathering this week in Nairobi was what aspects of internet governance help an entrepreneur’s chance to succeed. It may come as a surprise to policy-makers, but SME [small and medium-sized enterprise]-specific policies isn’t one of them. What they want is a better business environment in general.

While individual entrepreneurs may face individual challenges in the internet environment – for example, the lack of gTLDs [generic top-level internet domains] with IDN [internationalized] capability in non-Latin script; or regulatory regimes that make it virtually impossible to develop cloud solutions – they also have common challenges.

In this context, SMEs look for two things generally: either a niche market for which they can develop a very specific business solution or, to compete with their bigger brethren, an equalizer. Equalizers include IP as well as simplified, cost effective, access to markets.

Strong IP is necessary to justify investment in innovation and protection from bigger competitors, access to capital and an exit strategy. A large available market gives leverage to innovative entrepreneurs. To get there, they need free flow of data to take advantage of the cloud, labour mobility, a simplified tax environment and harmonised regulations to facilitate cross-border expansion.

Indeed, market fragmentation is one of the top concerns of innovative entrepreneurs. Take the example of Europe. Despite the existence – in paper – of a single market, SMEs still need to spend a large amount of time and resources to cope with disparate regulatory regimes and requirements. In order to be able to easily set up a business and gain access to a large single market, one of our members moved to Oregon in the United States where he created a prosperous software applications business. Others, who persevered in Europe, are often faced with the need to create multiple subsidiaries to be able to do business beyond their country of origin or having to file (and protect) multiple patent applications in various European jurisdictions. These are very concrete obstacles preventing entrepreneurs from taking advantage of the possibilities that the internet offers for cross-border business development.

Today, Kenya is a very exciting place to be an innovative entrepreneur, especially in the mobile internet space. Creativity is endless, talent is abounding and lots of applications are being built. Cost to market entry is decreasing, but more importantly, there is capital available to support entrepreneurship. Taking in the experience from the rest of the world, the best way for policy-makers in Kenya, as in other emerging countries, to help innovative entrepreneurs is to just get “out of the way”.

[Editor’s Note: the UN-led Internet Governance Forum (IGF) took place in Nairobi from 27-30 September.]

Jonathan Zuck is President of the Association for Competitive Technology (ACT) and a software developer with more than 15 years experience. Prior to ACT, he was director at Spectrum Technology Group, Washington DC, specialising in client/server development and data warehousing. In 1988, Jonathan founded IT consulting company User Friendly, followed by the setting up of U.S. operations for a French software firm, building it into an $11 million business. In 1996, Jonathan joined Financial Dynamics, focused on innovation in technical architecture, career management and employee empowerment.