Edward Mungai is the Chief Executive Officer of the Kenya Climate Innovation Center (KCIC), an initiative supported by the World Bank’s infoDev program and funded by the United Kingdom’s UK Aid and the Danish Ministry of Foreign Affairs. Founded in 2012, KCIC aims to provide incubation services to small and medium enterprises that focus on creating innovative solutions to climate change challenges in Kenya. The Kenya Center was the first of its kind and there are now CICs in Ethiopia, Ghana, South Africa, Vietnam, and the Caribbean.
I caught up with Edward Mungai during a recent visit to Nairobi, and talked with him about entrepreneurship in Kenya.
In the last five years with the Kenya Climate Innovation Center, you have met with many entrepreneurs. What distinguishes a star entrepreneur from others?
Most star entrepreneurs have the drive, the persistence and the grit. We see them grow as an entrepreneur but also as a person during the period of incubation and acceleration. They usually come into the Center thinking “Ok, let’s try this”, but often they are not here for their business acumen and skills. As we work with them, you can see them transforming. Another thing that distinguishes the most successful entrepreneurs is the ‘local’ factor: Kenyans are developing solutions for their own country.
The cumulative effect of these three factors — the individual drive, the ability to grow and the locally developed solutions, lead to star entrepreneurs growing their business in terms of revenue, raising capital and creating impact.
Tell us about one of your star entrepreneurs.
Let’s take Peter Chege, the entrepreneur behind Hydropronics Kenya, who has developed a technology for growing crops with less soil. His solution also reduces the need for water by about 70% and provides fodder for animals.
The company has received a grant from the United States Agency for International Development (USAID) as well as funding from the Kenya Climate Ventures. They have started with a small revenue base and have later expanded to Uganda and Rwanda. They are now starting to get orders from Tanzania and even Somalia. I have always seen the drive in Peter Chege, and I have also seen him grow as a person. He is a local entrepreneur developing solutions for our country’s needs. To me, that makes him a star.
Several of your companies are in the agriculture sector. Tell us a bit more about their climate-related impacts.
Apart from Hydroponics, we also have Azuri Foods and Miyonga, two companies who work on solar drying techniques. Azuri focuses mainly on fruits, while Miyonga focuses on horticultural crops. The activities of both companies lead to lower wastage of food and increase farmer incomes, which is very important in a region that is vulnerable to climate change.
Tell us about companies in other sectors.
We have several companies that supply biomass briquettes manufactured from waste as a substitute for firewood in boilers and for cooking. This is a big issue in Kenya as it relates to deforestation and drought.
One great example is Festus Ngugi, the founder of Kings Biofuel. He is a retired government officer who decided to start his own business five years ago. His revenues are now growing and he has signed up several schools as customers. He is an example of persistence; he went from being a retiree to somebody with great business acumen. And again, he is a local Kenyan.
How do you define the success of an incubator?
I look at success from three different perspectives; the first perspective is the entrepreneur, the second perspective is the impact that the entrepreneurs create, and the third is that of the incubator itself.
From the entrepreneur perspective, the most important parameters are the revenue growth, the funding raised and the number of connections made. Then to measure the impact on society, we look at the jobs created, the number of people who have no access to clean energy and water, the emissions mitigations and so on.
From the perspective of the incubator itself, we should look at the sources of funding. There are two main questions here: diversity and sustainability. Are we dependent on one donor only or multiple donors? Are we raising money from only one source or do we have a mix of government, private sector, academia and civil society. Finally, is the incubator dependent only on grants or is it able to raise money through services offered?
One recent win for us at KCIC is the support that we have received from Autodesk Foundation to pilot early-stage funding. This will enable us to reach out to other global foundations. More importantly, the early-stage financing in the form of loans or equity would enable KCIC to have a skin in the game, and it would help companies too, as there is nobody else providing this type of financing. It would enable companies to go from a proven technology to customer proofpoint, and should then generate the interest of other investors.
Moving away from successes, let us talk about failures and challenges.
Of course, we have seen our share. In KCIC we have incubated about 180 entrepreneurs and about half of them I would say have been successful. The other half has struggled and it really comes down to drive. Entrepreneurs need the perseverance to iterate their business model.
But entrepreneurial failure is also often the function of the enabling environment. For example, we have an interesting biogas project but there are no standards for selling biogas in Kenya. Companies which have products often are unable to sell them in the market, and this lack of the enabling environment is an important problem.
What characterises the local ecosystem?
Most of the money invested in this sector comes from outside the continent. We really need to get local Kenyan investors interested in this asset class. We need to showcase deals to local investors and help build angel networks. Then we need to be creative in helping them make the first move.
What is your personal ambition?
I would like to lead the next stage of sustainability in Africa. I would specifically like to work with young people because they are active, innovative and vibrant. Working with them in the areas of innovation, entrepreneurship and leadership, will help in developing the sustainable leaders for tomorrow who can show us better methods of production and consumption. Only Africans can come up with solutions to our own problems. The rest of the world can support us with some financing but the solutions for Africa must come from Africa by Africans.
Interview by Sanjoy Sanyal, Founder of Regain Paradise
This article was published in The Beam #6 — Subscribe now for more