Software gave Kenya its first breakthrough. Hardware will keep it in the game.

Kenya’s technology story has always been one of ambition, creativity, and global recognition. Almost two decades ago, the arrival of mobile money changed not only how people paid for services or transferred funds, but also how the world saw Kenya. M-Pesa became more than a financial tool; it was a symbol of possibility, proof that African innovation could solve uniquely African challenges in ways that even Silicon Valley had not imagined. That success did more than just solve a local problem. It attracted international attention, drew in capital, and reshaped how education, policy, and investment would orient themselves.

The model that emerged was unambiguous: software held a dominant position. Universities rushed to expand ICT programs, hubs and accelerators sprouted up across Nairobi and beyond, and funding poured into app-driven startups. The global tide seemed to affirm the decision. Across the world, software was being celebrated as the fastest path to scale. Investors, accustomed to the success stories of Silicon Valley, were comfortable backing platforms that required little more than a promising idea, some coding talent, and a laptop. The costs of entry were low compared to industries dependent on heavy infrastructure or advanced manufacturing. In that environment, Kenya’s software-first approach was not only logical but also necessary.

For years, this model worked. The Silicon Savannah narrative became self-reinforcing, generating cycles of attention, funding, and success stories. Learning to code became the ticket to opportunity, inspiring young people to become developers, and apps almost became synonymous with innovation. Yet beneath the surface, the global dynamics that once favoured software were already beginning to change.

Today, the conditions that once made investing in software seem like the obvious choice have changed. Artificial intelligence can now automate tasks that once required entire teams of skilled programmers. No-code platforms allow non-developers to design and launch fully functional applications in days. What once took months or years of specialized effort can now be replicated in weeks at a fraction of the cost. The barriers that once protected software companies have dissolved. For investors, this has changed the calculation. The focus is shifting toward industries where defensibility comes from intellectual property, integrated systems, and physical assets rather than lines of code. In other words, the momentum has swung back to hardware, deep tech, and advanced manufacturing.

In Kenya, however, the picture still seems bright on the surface. The startup ecosystem looks lively, brimming with hackathons, accelerator programs, and venture-backed founders. Foreign capital and donor funding, often framed as employment creation rather than pure commercial viability, sustain much of this energy. This creates a dangerous illusion of sustainability. Ironically, just as Kenya’s software sector is beginning to look mature locally, the global cycle that made it viable is already turning. What feels like takeoff here may actually be the tail end of a global boom.If global investors are moving toward hardware-intensive industries, Kenya cannot afford to remain overexposed to a software model whose logic is steadily eroding. The risk lies in the lag. By the time the shift becomes undeniable locally, Kenya may find itself with skills, policies, and support systems still tuned to an outdated model, while the world has already moved on.

The types of innovations drawing long-term investment today are those that cannot be copied easily. Proprietary technologies, energy systems, specialized medical devices, precision agriculture equipment, and marine technology are examples. Hardware sits at the centre of this shift. Unlike software, which can be reproduced endlessly at negligible cost, hardware requires control over design, materials, production, and distribution. But hardware is not just the physical object at the end of that process. It is a value chain in itself from research and development to sourcing and engineering to production, marketing, and after-sales service. Each layer depends on the others, and without that integration, prototypes never mature into industries. It is slower to build, but once established, it is far harder to dislodge.

This is where Kenya faces both a challenge and an opportunity. The country currently lacks the layered infrastructure that hardware development requires. Research and development are fragmented, supply chains remain fragile, and few systems exist to connect innovative prototypes to large-scale production. Too often, Kenyan startups skip the slow, iterative process of prototyping, testing, and refining, eager instead to leap directly to scaling. Yet this unglamorous middle stage is precisely what transforms clever ideas into industries. Without it, Kenya risks remaining a land of promising pilots that never mature into global products.

And yet, this absence of entrenched manufacturing systems may be Kenya’s greatest advantage. Without legacy industries to dismantle, the country has the rare opportunity to build fresh, from scratch, with new technologies and modern processes. This is also an opportunity for TVETs to go back to their core mandate as technical institutions taking the lead in hardware development and manufacturing. If Kenya can anchor value locally—holding onto design, intellectual property, and production—then it can capture benefits that many other countries lost to outsourcing decades ago.

This does not mean turning away from software. Digitizing sectors, streamlining public services, and creating platforms that support local industries still require a significant amount of work. But the future cannot be built on apps alone. Hardware, deep tech, and advanced manufacturing must grow alongside software. Achieving this requires different kinds of capital—patient, long-term investment—along with new partnerships and a deeper alignment between universities, industry, and government.

There are already hints of what such a future could look like. Kenya’s renewable energy and electric mobility sectors are sprouting promising innovations. Thousands of electric motorbikes are already on Kenyan roads, assembled by young entrepreneurs who piece together steel, rubber, plastics, microchips, and lithium compounds. Yet these efforts remain scattered, lacking the strategic alignment with research institutions and technical colleges that could turn them into robust industries. For instance, Dedan Kimathi University produces microchips independently of any EV bike manufacturers. With proper support, the innovators building EV bikes today could be the ones leading local microchip production tomorrow—not only for transport, but also for appliances and consumer electronics.

Global examples reinforce this trajectory. Nvidia, now central to artificial intelligence, did not begin as an AI giant. It started by building graphics processing units for gaming and visualization. Years of iteration in hardware laid the foundation for its later dominance in AI applications. The lesson is clear: building strong foundational hardware capabilities can open doors to industries not yet imagined.

For Kenya, the next steps must be deliberate. Policymakers need to broaden their lens, moving beyond celebrating hackathons and app launches to developing industrial strategies that support hardware ecosystems. Universities and colleges must expand their focus from coding and ICT to applied sciences, engineering, and manufacturing. Investors, meanwhile, need to be encouraged to fund ventures with longer timelines, recognizing that while hardware may take longer to build, the resilience and defensibility it provides make it a stronger bet in the long run.

The cost of inaction is high. If Kenya clings too tightly to a software-only model, it risks producing skills mismatched to future demand and missing out on the flow of global capital into hardware-driven innovation. Innovation is no longer just about writing codes. It is about owning the systems on which that code runs and the intellectual property that makes those systems irreplaceable.

Kenya has shown the world before that it can lead in technology. The leap into mobile money redefined global conversations around financial inclusion. Now, the country has a chance to lead again, this time by building the hardware and advanced manufacturing capacity that will define the next era of innovation. It will not be easy. It will take patience, collaboration, and a willingness to embrace the slower, messier work of industrial growth. But the rewards could be profound: resilient industries, high-quality jobs, and a future where Kenya not only puts itself on the map but also ensures it stays there.

The article was co-authored by Liesbeth Bakker of CASBI - Centre for Applied Sciences & Business Innovation.