VISITORS to Kenya’s capital are often horrified by the homicidal minibuses called matatu. They swerve around potholes, seldom signal and use their iffy brakes only at the last second. They are therefore an ideal subject for a video game, which is why Planet Rackus, a Nairobi start-up, released “Ma3Racer” last year. Each player uses his mobile phone to steer a matatu down the street. The (unrealistic) goal is to avoid pedestrians. Within a month, a quarter of a million people in 169 countries had downloaded the game.

Planet Rackus is one of hundreds of start-ups that have sprung up in Nairobi over the past couple of years. They are part of a quiet tech boom in Kenya, a country better known for coffee and safaris. In 2002 Kenya’s exports of technology-related services were a piffling $16m. By 2010 that had exploded to $360m. To its boosters, Nairobi is “Silicon Savannah”.

However, it differs from its silicon sisters in one crucial regard. From the start, its tech firms have designed their products for mobile phones rather than computers. Kenya is still a poor country; few of its people own laptops. But there are 74 mobile phones for every 100 Kenyans, well above the African average of 65. And nearly 99% of internet subscriptions in Kenya are on mobile phones.

Investors are piling in. Nailab, a working space for technology professionals, opened on Nairobi’s Ngong Road in 2011. Down the street is 88mph, a seed fund and incubator that launched earlier this year. Innovation 4 Africa, a similar outfit, shares the space. Two others, Savannah Fund and GrowthHub, started operations in May. Kenya’s biggest bank, Equity Bank, wants a piece of the action. It will also open an “innovation centre” by the end of the year. Most of these funds focus on mobile technology. GSMA, a global association of mobile operators, is about to open an Africa office, also on Ngong Road.

A shilling for your thoughts

Incubators provide start-ups with advice and cheap spaces to work, in exchange for a stake. In Nairobi they have plenty of talent to choose from. In June 25 teams of young men and women pitched their ideas to a panel of investors at Pivot East, an annual contest for start-ups seeking funds. Some 200 teams applied for a spot.

Three factors helped Nairobi to become an African tech hub. The first is a supportive government. In 2005, when Bitange Ndemo was appointed as permanent secretary to the ministry of information and communications technology (ICT), Kenya was a technological backwater. Access to the internet was available only through satellite connections and was wallet-sappingly expensive. In 2009 Mr Ndemo brought the first of four undersea internet cables to the Kenyan coast. Prices plummeted and bandwidth exploded. Just under 12m of the country’s roughly 40m people now use the internet, a number that has trebled since 2009.

Second, Kenya has undergone a revolution since 2007, when M-PESA, a mobile-payments system operated by Safaricom, a phone company, was launched (see chart). Many start-ups at Pivot East use it as a base for their business. One team streamlined the payment of school fees through the service by helping institutions and parents keep track of upcoming and late deposits. Another offered an electronic version of Kenya’s popular informal savings groups. M-PESA has also inspired others. In May Google launched Beba, a pre-paid card for commuters using Nairobi’s local buses. Insiders say that this is a test run for a much larger cashless-payment system. Third, since 2010 Nairobi has had a place, called the iHub, for local techies to get together and exchange ideas. The iHub has expanded to include a consulting arm, a research department and an incubation space called m:lab, which supports start-ups developing mobile applications. Erik Hersman, who founded the iHub, is also a partner in Savannah Fund. Investors are not the only people putting money into Nairobi’s start-ups. The city is brimming with aid agencies, development funds and foreign NGOs eager to shell out shillings. For many young entrepreneurs, seemingly free money beats having to give up a stake in their companies to venture capitalists. But cash from grants comes with strings attached, often in the form of abstract “goals”. At Pivot East, Paul Kukubo, the boss of Kenya’s ICT board, a government body that champions high tech, beseeched the audience to take more risks. “If we continue to make the sector grant-dependent, we will stop entrepreneurs,” he said. Incubators hope that start-ups will see surrendering equity as a fair price for the contacts and training they provide.

Will Nairobi then compete with other emerging tech hubs such as Bangalore and Tel Aviv? Not at once, says Joe Mucheru, head of Google in Kenya. Nairobi has exported two notable innovations: M-PESA (which began life in London) and Ushahidi, a non-profit platform for crowdsourcing information during disasters. But most Kenyan tech firms are coming up with solutions to local problems. A team at Pivot East has built a service to help poultry farmers, who waste hours sitting around watching their chickens, keep track of their brood with text-message alerts. “We need to solve the nitty-gritty first and then we can invent new things,” says Mr Mucheru.

Yet this may ultimately be the key to Kenya’s success. “We have so many problems that can also be opportunities,” says Mr Ndemo. M-Farm, a service that gives farmers access to market prices for the cost of a text message and allows them to group together to buy and sell products, has won several supporters and awards. It is the sort of thing Kenya could export to other poor countries. “You can create mobile apps from anywhere in the world,” says Chris Locke of GSMA, citing the success of Angry Birds, a Finnish phenomenon. Angry matatu drivers could be next.