Naftal Nyabuto’s first step into entrepreneurship was not in technology but in fashion. In 2008, the trained computer scientist opened a retail clothing boutique, sourcing stock from wholesalers while keeping his formal job. The venture barely made it to its second year before collapsing.

“The people I had running the business for me as I focused on my employment were not trustworthy,” he tells BDLife.

He tried again in 2010, this time opening a pharmacy after friends convinced him the sector was lucrative. Two years later, he shut it down.

“I realised that it is a highly specialised field and I could not understand it as a computer scientist. I was in it just because my friends had convinced me it was lucrative.”

In 2013, Mr Nyabuto turned to farming, trying his hand at quail, wheat, tomatoes, chicken and capsicum. But the same problem persisted: he was attempting to run a hands-on business remotely from Nairobi, and it just didn’t work.

“Farming is a hands-on business, and doing it from afar ended up being financially draining,” he says.

The failures eventually pushed him towards technology, a sector where his training and professional experience gave him a stronger foundation.

He resigned from employment in 2014 to become a full-time entrepreneur, thinking he had done enough planning. He had savings in the bank, rented an office in Nairobi’s Westlands area, furnished it, hired six staff and launched a technology consulting firm called Tally International.

But eight months into 2014, the firm collapsed. “I had no real business experience. I made a mistake by resigning and moving directly to entrepreneurship without growing skills like business development and networking.”

Mr Nyabuto had spent about Sh5 million of his savings on the tech firm.

“The business could not sustain itself. We couldn’t afford the cost of marketing and the engineering perspective of the technologies.”
Additionally, his lack of sales skills compounded the problem.

“As an entrepreneur, the first salesperson for your business is yourself,” he says. “I didn’t have the right sales and business development skills, which were very important when you are a single entrepreneur.”

Looking back, he says he had though about entrepreneurship to transition from the NGO world, where he had spent years managing donor-funded UNDP and UNEP projects.

“In an NGO, you are used to spending the money rather than looking for the money,” Mr Nyabuto says.

Networking was also another blind spot. “You might not be able to have the right networks, but you need to learn how to make the right networks.”

His existing network was largely built around the NGO sector, yet Tally was targeting corporate customers.

The failure taught him that entrepreneurs should start from areas they understand. “Your opportunities first start from what is known and where you think you have a bit of understanding of the sector.”

So he shut down Tally after burning his savings and returned to formal employment at the end of 2014. But instead of abandoning entrepreneurship altogether, Mr Nyabuto says he decided to treat the failure as business school.

He joined IT and business consulting firm Eurotech Africa as general manager, where he spent about two years learning how to build relationships with corporate clients, negotiate contracts and understand how businesses buy technology.

The experience would prove crucial when he returned to entrepreneurship. Together with co-founder Michael Karume, he launched a technology startup called M-Zawadi in 2015.

The opportunity emerged from an observation about customer loyalty. At the time, loyalty programmes were largely the preserve of large retail chains with sophisticated IT systems.

“M-Zawadi started with a question of why only supermarkets have reward programmes for their customers?” says Mr Nyabuto. “The mama mboga or kiosk owner didn’t have a mechanism of rewarding buyers or creating incentives for them.”

The founders built an Android-based platform that allowed small businesses to create customer loyalty programmes on a mobile phone.

Customers buying groceries could earn points through SMS notifications, while traders could keep customer records, run promotions and encourage repeat purchases.

But while it was an elegant idea, it proved commercially difficult. “The engineering cost was very high,” he says.

Mr Nyabuto estimates he spent about Sh3 million on the technology infrastructure, including cloud services, software developers and other requirements needed to build the platform.

“Customer-to-customer businesses also require huge advertising and marketing budgets, which self-funded startups like ours simply cannot afford,” he says.

A conservative monthly advertising budget for a consumer-facing startup could reach about Sh500,000, an amount the young company could not comfortably sustain.

About two years after launch, M-Zawadi abandoned the consumer market and reinvented itself as an enterprise software business.

Instead of selling loyalty programmes to retailers, the company began building them for manufacturers, banks and insurance companies.

M-Zawadi designed an incentive programme that links distributors, wholesalers and retailers and rewards performance throughout the supply chain.

Insurance companies presented another opportunity. The startup developed what it calls an experiential loyalty programme.

A telematics device installed in a customer’s vehicle monitors driving habits such as acceleration, braking and cornering. Drivers who maintain safe habits accumulate points that can later be redeemed for rewards such as a coffee voucher.

“The loyalty programme becomes a behaviour change tool,” Mr Nyabuto says.

Banks adopted similar concepts, rewarding customers for using credit cards more frequently, conducting more transactions or referring new clients.

M-Zawadi continued expanding its product portfolio and in 2020, it introduced eZawadi, initially through partnerships with international gifting companies. The platform converted loyalty points into digital gift vouchers redeemable at more than 70,000 outlets across Europe and the US, including brands such as Starbucks, Amazon and Zara.

M-Zawadi Group Chief Executive Officer (CEO) Naftal Nyabuto poses for a photo during an interview in Nairobi on August 3, 2026.

Photo credit: Dennis Oonsongo | Nation Media Group

Locally, M-Zawadi partnered with Safaricom allowing gift vouchers to be redeemed at more than 700,000 paybill and till number outlets across Kenya.

Recipients can buy groceries, pay school fees, purchase medicine or spend it at virtually any business accepting M-Pesa.

The platform has since evolved further through a partnership with Visa and Absa Bank that allows vouchers to be redeemed anywhere Visa is accepted.

The platform is free for companies to join, with M-Zawadi charging a 3.5 percent transaction fee on the value of vouchers issued.

More than 110 corporates, including Heritage Insurance, Jubilee, Absa Bank, British American Tobacco and Kenafric, now use the platform.

M-Zawadi processes transactions worth between $3 million (Sh388 million) and $4 million (Sh517 million) annually.

While gifting became one growth engine, cloud computing became another. Many Kenyan SMEs are priced out of international cloud providers such as Amazon Web Services and Microsoft Azure, so the company built its own locally hosted cloud platform called Cloud9.

Hosted at PAIX’s Nairobi data centre, the service offers IT students cloud hosting for Sh500 a month and MSMEs from Sh1,000 monthly.

“We’ve been focusing on solutions for MSMEs that simply cannot afford many of these technologies,” he says.

Two years ago, M-Zawadi launched Shoshin, an innovation arm targeting agriculture, climate and the blue economy sectors. Its first project focused on fish cage farmers in Lake Victoria.

A single cage can cost about Sh1.5 million to establish, yet an entire harvest can be wiped out overnight by deteriorating water quality.
Mr Nyabuto’s team partnered with the Kenya Fisheries Research Institute to deploy floating Internet-of-Things sensors that continuously monitor oxygen levels, pH, chlorophyll levels and water temperature.

Artificial intelligence analyses the readings in real time and automatically sends warning text messages to farmers whenever dangerous conditions emerge.

For independent cage farmers in Kisumu’s Dunga Beach, the system is being commercialised through dashboards costing about Sh3,000 per month.

More recently, the startup studio ventured into the creator economy through UrbanTok, a platform Mr Nyabuto describes as a blend of YouTube and TikTok.

Unlike conventional video-sharing platforms, UrbanTok allows creators to earn directly through premium content, pay-per-view videos, digital gifting, merchandise sales and advertising revenue hosted on their own pages.

Mr Nyabuto says the platform already has about 5,000 creators.

The growing portfolio reflects his philosophy of building a startup studio rather than a single-product technology company.

To date, he has founded 12 startups, seven of which remain operational and profitable under the M-Zawadi fold.

“There is this perception that you need to specialise. I don’t buy into that concept,” he says. “We are not in markets where one specialised solution automatically becomes a big business. Different industries perform differently at different times, and developing different innovations has been our survival.”

“For us, it is better risk mitigation. The risk is usually in terms of spreading yourself thin.”

For someone who has tried his hand in over five sectors, how does he identify new opportunities?

“It’s all based on the market trends,” Mr Nyabuto says, “The more you meet, interact with people, interact with organisations, then you find the problem where it is, and that is what informs exactly what the opportunities are.”

His approach to financing has also been unconventional. Kenya is one of Africa’s top startup funding destinations, attracting $984 million (Sh127.3 billion) from venture capitalists and angel investors last year alone.

Yet Mr Nyabuto deliberately chose not to spend years pitching venture capital investors when starting M-Zawadi. “We have never even looked for investors,” he says, arguing that fundraising can become a distraction.

“It becomes a full-time job, and you stop focusing on building the company and start focusing on the investment.” Instead, he kept costs painfully low.

“There was no fancy office. I worked from home. I didn’t recruit full-time engineers in the beginning. We started with just two staffers, and they were salespeople.”

Winning customers, not investors, became the company’s growth strategy. M-Zawadi turned profitable five years after launching. Its valuation has since risen to about $4.5 million (Sh582 million), from about $500,000 (Sh64.7 million) in 2018.

The company now employs 35 people and has expanded into Uganda, Tanzania and Zambia, powering services ranging from MTN Uganda’s loyalty programmes to Tanzania’s standard-gauge railway and Bus Rapid Transit smart cards, as well as value-added services for the Zambian telco Zamtel.

The business growth has also changed Mr Nyabuto’s attitude towards outside capital.

“Now that our business is profitable, we are in a state where I can negotiate confidently with external investors,” he says.

The self-funded approach proved particularly valuable during the Covid-19 pandemic, when many firms were forced to scale down operations and lay off staff.

M-Zawadi had grown to about 10 employees by then. It avoided layoffs, instead developing digital products such as online cashback and coupon platforms as companies shifted their marketing online.

For Mr Nyabuto, however, the biggest lesson from 14 years in entrepreneurship has been the value of collaboration.

“When you are small, you have to collaborate with the big boys in the market,” he says. “You end up looking small if you don’t collaborate more.”

Partnerships, he says, can give a young company access to markets, technology and networks that would otherwise take years and significant amounts of capital to build.

Today, if forced to start again with no money, Mr Nyabuto says he would still choose technology and focus on artificial intelligence, Internet of Things and cybersecurity.

“The scalability of it is faster,” he says. “You can basically scale to any country without needing a lot of capital investment.”

→ dmusau@ke.nationmedia.com