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Jim Craven/ NBC News
Margaret Wambui speaks on her cell phone outside her
NAIROBI, Kenya – Imagine paying just $20 for a fancy cell phone with a good calling plan. Or how about working with a cell phone company that won’t obligate you to sign one of those tricky multiyear contracts with deceptive pricing plans detailed in tiny print that skyrocket with every added feature? How about calls to anywhere in the country costing less than 3 cents a minute and most international calls costing just a penny more?
Sound too good to be true, especially for American cell phone users? Not in Kenya. I’m on assignment in Kenya and am astonished at how little people pay for cell phone calls.
The phones work, calls are cheap, and the country is using cell phone technology innovative ways – beyond simple telephone calls to personal banking.
In addition to having us beat, cell phone tariffs here are the lowest in Africa.
Competition frees up market
A call over Kenya’s Safaricom network, for example, costs about one-third the price of making a call from anywhere else on the continent.
And those low prices apply to downloading data as well. No one blinks an eye at surfing the web for hours at a time on their phones.
But Kenya wasn’t always so consumer-friendly.
A Canadian businessman told me that just six years ago, he was paying more than $1,000 a month to connect to the Internet via modem in Kenya.
And a photographer told me about how he used to trudge across Nairobi to a five-star hotel to connect a few times a week. “Those days, there was just a handful of cyber cafes and they charged somewhere near the equivalent of $5 an hour, pretty pricey for the average user,” he said.
During those years, hairdresser Janet Muoki said she only carried her cell phone for emergencies. Now she said she calls her brother living in the U.S. and her best friend in South Africa a few times a week.
While cell phone prices have been steadily dropping in Kenya since 2008, last August the government regulator introduced new rules that sparked a fierce price war between carriers. It all started when the Communications Commission of Kenya cut mobile phone termination rates, namely how much mobile operators can charge for connecting your call to another network.
That fee was often blamed for bloating phone bills. Small companies trying to break into the cell phone business characterized the fee as a big-bully tactic of the larger cell phone networks—arguing that the higher the termination fee, the more expensive it becomes to operate their less popular networks.
Jim Craven/ NBC News
Margaret Wambui works with a customer at her
But on July 1 Kenya’s termination rate was slashed again and now you don’t hear consumers complaining. Robert Kabata admitted that he loves seeing the cell phone companies fighting for his business. In the past, making a call was a big deal that required some thought; now he doesn’t think twice before making a call.
To prove his point, Kabata said just that morning he went out to meet a friend. Before he reached their agreed rendezvous point, he sat down on a bench and called his buddy to tell him to walk around the corner.
“I know, it’s decadent,” he admitted with a grin.
Cell phone banking
His wife, Margaret Wambui, makes her living from another modern feature of the Kenyan cell phone – a mobile banking platform called “M-Pesa.” A joint venture between Safaricom and Vodaphone, the “M” stands for mobile and “Pesa” means money in Swahili. Many Kenyans say the mobile-phone-based money service has helped turn their mobile devices into mobile banks.
With the ease of a text message, “M-Pesa” allows millions of Kenyans to buy groceries, pay their rent and utility bills or transfer money without the need to maintain a bank account, visit the bank or even carry cash.
All consumers need to do is register with a national ID card or passport and then they can go to any licensed “M-Pesa” customer booth, like Margaret’s booth next to her women’s clothing boutique, deposit the contents of their paychecks into accounts run from their cell phones or withdraw cash.
These days, Margaret says she earns up to five times more from “M-Pesa” commissions than she does selling women’s clothing and jewelry.
Kenyans also use “M-Pesa” to send money to relatives hundreds of miles away, living in the remotest corners of the country.
All the other person needs is an “M-Pesa” feature on their cell phone too. They then take their phone to an authorized agent, like Margaret, and with a push of a button they pick up their cash.
For giant telecom Vodaphone, which owns the “M-Pesa” property rights, the innovation earned $15.6 million last year for the giant British telecom.
Nationwide, some $11 billion moved over the mobile network in 2011.
“M-Pesa” has transformed the way average Kenyans conduct business. It has been especially innovative for the 90 percent of the population who previously never had a bank account.
Now, about 60 percent of Kenyans rely on “M-Pesa” to shop, pay all their bills and generally move their money around.
No need to lug around credit cards or wads of cash. Who needs to waste time on a long bank line or at an ATM machine? Just a simple cell phone and a PIN number gets you through the day.
Who would argue that Kenyans haven’t re-invented the idea of a “smart” phone?
Leave a Comment:
Mary, that is because their money is worth nothing. Most of the people who live in Kenya are lucky to make 10 bucks a week.....NBC News Fail.
The point of the article is...how can all these people in a 3rd world country all have great cell phones, while us rich Americans pay through the nose for limited service?
You = Fail
Seems like their government did something right and the people benefited. Our legislators just do what the corporations tell them.
Quit drinking the "American Exceptional ism" kool aid.
Free market economy is what did it. When the companies could freely compete, prices came down.
P.S. I noticed they didn't say anything concerning safety issues. That would concern me.
Requiring to have a "National ID card or passport" to register ? Where is the OUTRAGE from Al Sharpton, Jesse Jackson, and the Liberals ?
Might as well make HAVING a National ID or passport an International Issue through the United Nations.
what do you expect from the home's of our founding father's ?.
Oh and you do know that part of our cell phone bill pays for the "free" Obamaphones being given away to the "poor?" Too much govt., not enough common sense.
The cell-phones they are using look like models that were popular in the US 5+ years ago. Very few there have devices that are up to par with the typical Android or iPhone you see in the US. In fact, there are many companies that buy old phones here in the US just to they can re-sell them in these kinds of countries. Our old trash cell phones are their new treasure.
Kenya is also a lot smaller than the United States. The main thing that has always limited cellphone adoption is the cost of operating and maintaining cell-phone towers. There are far fewer towers for a given area in Kenya, since it's still true that less people have phones and the ones who do still use them less. People in the article are talking about making calls a few times per week. People in the US are on their phones all day long. People in Kenya probably won't be up-in-arms if they get a weak signal because the cell company went cheap with the towers - they will just be glad to get a signal at all.
ldo: you are so funny. We already have national ID's. It's called your Social Security Number.
willowbrook
"Free market economy is what did it. When the companies could freely compete, prices came down."
Bwaaahahahahahaha! That's the funniest thing I've heard in a long time... now crawl back into your Fox hole!
Yeah, TODDDY, then the illegal Mexicans (LOL) will say you're a racist because you require a card to have a cell phone! Because the only votes that count are big business and those that make them rich (illegals) in Amerika Neo facists regime. (oh, or if you are gay or Hate God or like abortion as birth control you are OK too)
@Wakehead
I couldn't agree more. The US Congress, due to the political influence of corporate money, is moving away from rather than toward the standardization of critical technologies which make universal applications for cellular smart phones in Kenya possible.
Unlike Kenya, in the US we have a hodge-podge of incompatible networks and proprietary carrier service technologies; and of course "locked" cell phones. All of this incompatibility works for the benefit of the corporations -- preventing serious phone rates competition to attract their subscribers to other carriers and service providers -- rather than universal services and compatibility for the American end users.
Replying to your observation regarding the propensity of some to subscribe to the presumption of "American Exceptional ism", all Americans should remember that the word "exceptional" cuts both ways.
Our nation can make exceptionally visionary decisions, and act on them with exceptionally bipartisan support to make our dreams into realities; .... or we can continue to act in an exceptionally short-sighted and exceptionally partisan manner, and make no forward motion to address our growing problems and needs as a nation. And our technologies and innovation will languish along with our economy and our options.
"American Exceptional ism" is presently a phrase requiring an asterisk and a context footnote. Fortunately it doesn't HAVE TO be this way. But reversing the present trend will require exceptional political courage (placing country before political party).
Based on what I am seeing, ...I am not exceptionally hopeful. :-(
Todd Jolley
"ldo: you are so funny. We already have national ID's. It's called your Social Security Number."
It's not a national ID. It can only be required fora listed number of purposes, mostly those that report income and other tax events, You do not have to provide it to everyone who asks for it, cell phone providers in particular. And there are few requirement to get one. It does no identify one uniquely and securely enough to be call a national ID. Try to cash a check with just that.
I recently visited Kenya and this is purely a fantastic country! From lodgings located amidst roaming wild animals to the beautiful crystal white sand beaches!!
Cell phones are all over the place, and I mean all over. Internet access is very inexpensive. I later learned that Kenya has built fiber optic cables connecting the country to Asia. I went to a cell phone store that was selling hardware that I have seen here in the USA and new models found elsewhere e.g. Samsung Galaxy S II, Lots of Nokias, Blackberry, HTC's, Androids, etc.
Kenya is also constructing very modern highways and super highways equivalent to Kuala Lumpur's. The Chinese presence is very evident in Kenya, especially after discovery of huge and major oil deposits. Google has also moved in Nairobi with a vengeance. There are i hubs (Infrastructure Hub) already established by techie investors. This is a country for serious investors.
there is no competation here in USA. wireless network is dominated by few large companies ATT, Verizon ,Tmobile and Sprint. their prices are almost the same. It appears that the pricing is "fixed".
In Kenya, their goverment eliminated or decresed the connection charges that is why small provider thrived. Maybe USA should also do the same to encourage small provider and thereby bring down the price.
again, Americans are being screwed by the 1%.
@james 418...........which of our founding fathers was from Kenya??? And don't bother to hand me the Obama" birther" propaganda crap! If you don't like it here.........STFU or.......leave!
So much trash written on this thread, I wouldn't know where to begin...
If you pay Verizon, AT&T or any of the other big players, you're crazy. I pay $65/month for unlimited calls, text messages, internet and OVERSEAS CALLS - including tax. Month to month - no contract. I still use an old Palm phone that does everything I need. Oops, it broke? $40 for another one on ebay.
Vote with your dollars.
willowbrook: Obamaphones? That fee was started in 1984 so they would be Reaganphones. Another thing: A Mexico-based wireless company, known in America as Tracfone, is currently the major provider of a U.S. government-subsidized program called SafeLink. SafeLink provides free wireless service to the poor. Tracfone is owned by billionaire Carlos Slim’s America Movil. Since 1984, via Congressional mandate, “Lifeline” telephone service has been offered to low income Americans.
The Kenyan government created regulations that prevented the BIG cellphone companies from charging the upstarts back breaking fees to connect to their equipment. When those regulations made those fees cost + reasonable mark-up, true competition was unleashed.
SafeLink and LifeLine offer only a few free minutes/month to low income residents (enough to make a couple of calls to make doctors appointments and to call in late on a job a couple of times, about 10 minutes. 911 calls are supposed to always be free.). Once those few minutes are used up, SafeLink and LifeLine recipients must purchase any additional minutes they use that month.
It is so interesting reading comments about Kenya. A few things:
Githeko ....Just tell them the whole trueth.
Most of the world is ahead of the US in mobile phone technology. In Europe I buy metro tickets on my phone via SMS and calls here (in one of the wealthiest countries in the world) cost a fraction of what they do in the US or Europe. In Sudan connecting to the internet is $50/mo for unlimited data.
The Third World never really had good land lines so wireless and mobile is generally very new and full of features.
National ID. What a concept. We can't even get voter ID.
Hey, cheap cell phone plans! I don't know about you guys but that's all I need. I'm packing my bags for Narobi as I type!
id bet ovomits brother owns the cell phone companies!!!!
No, I don't. But there's a thought...
This is a global economy right? Global Minimum Wage:) Trickle down does not work...been there, tried that. Let's try the opposite direction now. A global minimum wage would protect every country's jobs and lead to more self sufficient and sustainable economies. Create the legislation in the UN, and do NO business with those who don't sign it. No longer should people have to work more than one crappy, no health insurance, no 401, no paid vacation job that doesn't even pay enough to provide the basic necessities for life (food, water, shelter). I bet if people around you aren't hungry, they are less likely steal from you...I bet if people around you aren't sick, you are less likely to be sick. Helping others helps yourself as well. Altruism is the glue of communities...and our community is falling apart.
Overpopulation and the growth of the poor population via welfare and handouts is the root cause of increased poverty and low wages. Feeding the poor and allowing them to breed and increase thier numbers helps no one in end.
That's BS. It has been well documented that helping people out of poverty lowers the birth rate, increases education and literacy, and increases a country's GNP and the living standard for all citizens.
It is mostly the devaluation of the U.S. dollar which makes Americans look like they make a lot of money. It takes roughly $24 today to buy what it took $1 to buy back in 1913. The "rich American" is mostly an illusion today caused by the massive devaluation of the U.S. dollar.
Less likely to steal from you as you pay for their healthcare, retirement , vacations, food, water and shelter don't worry they'll come up with something else that you've earned and want it while they sit on their rumps! Look at the communities that earn their living and the ones that are given theirs. Where do you prefer to live? Look back over the history of this country some choose, yes I said choose, to live in the slums and others work their way out!
A lack of 'Crony Capitalism'.........hmmmmmmmm, may be its worth a try?? Oh, I keep forgeting, that would be un-American.
I sure am tired of the monthly scr*wing I get from Verizon! Be nice if we could be treated fairly by any cell phone company in this country. I've had overbilling and had to pay for them just to keep my service on. Have had AT&T as well, they were no better.
Wouldn't it be nice if the crooked cell phone providers in this crooked country we live in would actually bring their rip off rates for everything back down to a managable level so we could actually afford the dang things.
But that will never happen as long as the phone companies continue to pay off our corrupt congressional members who no longer represent the american people, the only thing congress and this senate represent are their personal bank accounts and how much fatter they get from companies like cell phone rip offs.
aw c'mon folks....our welfare folks get phones for free...IF we all go on welfare we'll be WAY ahead of africa!
mr. prezidont...get crackin' on this! huh? Oh, you already are...sorry!
The telecom industry in the US may not seem like it but its is a monopoly. Prices will never get that low, they own most of the infrastructure and there's basically little to no competition.
I was in Nairobi, Kenya(I went to Amboseli National Park) last year May through the beginning of June and they have mobile phone to do everything including sending money to the villages. You buy a phone, get it activated and viola, you can call the United States for 2 shilling per minute - no stupid contract. Now remember that a dollar is 85 Kenya shillings. The problem in America is greed. Too many white men are controlling the country and all they care about is "Money" how big a 3rd house they can build in Florida, how much they can accumulate and send their money to tax heaven like the Cayman Islands like Mitt Romney.
You haven't seen anything yet. Let Mitt Romney become president and all hell will break lose in America. There will be a very few folks who will be very very rich and the rest of us will continue to get poorer and poorer, hence no middle class anymore. But you know.. we are so stupid that we will all go to the polls and vote for such a selfish idiot who will enrich his friends there will be supper 1 percent, and 99% poor people in America. We voted for George Bush twice even when we knew he and Dick Cheney Lied to us about Iraqi. Obama inherited tons of financial issues from George Bush who started two wars and still gave tax cuts to the 1%
How can a 3rd world country that produces nothing except income from tourism have a super mobile technology, charges little for the usage and yet we in a so-called first class country can't even use our mobile phone to call Europe?
Everyday I get up I feel for our beloved country. It seems to be going down while Brazil, China, India and many countries are booming.
You're right Taylor. The fact is this country has continued to "bask in it's limelight" while a good portion of the rest of the world has been ever progressing. The new "American way" is if a bank, investment firm, or speculator finds you have some money, or some property, they feel they are somehow entitled to it. That it's somehow their money, not yours. Kind of like the report elsewhere today that a fellow had to pay $37,000.00 plus attorney fees and ongoing interest to save his home from a investment speculator who bought his $140.00 tax lein. The evil of all that is the "have's" in this country would argue that it's only business, nothing personal --- as they send your money off to the Caymen Islands.
...and yes, as per reports, apparently about 1/2 the good folk of our country is prepared to vote in favor of their own doom & give a solid green light to the Republinut party and their mouthpiece.
its called ovomit!!!!!!
get more facts Taylor>
Get your head out of the FOX behind-hole. O' Rye'lee is gloating about how Canadians are better than Americans now. Yes the mean average Canadian is doing much better than the mean average American. America on the other hand has the most billionaires on the planet. They are happy that the poor in America has gotten worse under Obama. Yet it is the Socialistic means trap that Canada and Europe has implemented has kept their middle-class better off, are disbanded as evil in America. If trickle down works so well, where has been the trickle over the Bush Economy. I know. Blown up in Iraq and Afghanistan with credit to China. That's the Trick of the Trickle.
@willowbrook: the key here is indeed a free market-- as opposed to a pro-business market.
The two are very different, yet in the US we associate them together. Here, the Kenyan government came in and basically took an anti-trust regulatory action. Through government regulation, the market became more competitive and free-- and thus more efficient.
Government regulations can also be bad and industry-destroying-- for example, the government could have said that phone companies had to be subject to onerous licensing or tower-placement requirements, or that they had to pay a tax per tower, which would have killed the industry. But government regulations can also make markets freer. Too often in America we focus on the amount of regulation we have rather than whether it's good or bad regulation, but that's really what matters.
Great. B.O. phone home.
Gotnorice,
Kenya is very much a head in Technology. Talk of the newest Ipads, Androids, i7 computers. All that you see here in the US is already in Kenya. Mind you, there are tech who repair these devices too. So your attitude is misguided.
Gotnorice,
Kenya is very much a head in Technology. Talk of the newest Ipads, Androids, i7 computers. All that you see here in the US is already in Kenya. Mind you there are techs too who repair these devices.
Sell Celeron PCs in Kenya and no one will buy them. They know that they are junk machines while I see guys in US buying them all the time and bringing them to my shop for repair. Who is wiser here? So your attitude is misguided.
Gotnorice,
Kenya is very much a head in Technology. Talk of the newest Ipads, Androids, i7 computers. All that you see here in the US is already in Kenya. Mind you there are techs too who repair these devices.
Sell Celeron PCs in Kenya and no one will buy them. They know that they are junk machines while I see guys in US buying them all the time and bringing them to my shop for repair. Who is wiser here? So your attitude is misguided.
Good for them, if they all have cell phones they dont need our handout.
This is a classic example of where government interference created an environment for business to compete with each other fairly. As result prices fell. I have also been to india and I just marveled at how cheap cell phone usage is there. No contracts or barely any locked phones.
Someone is most likely subsidizing this. Probably the USA or the European Union through Vodaphone.
Have you read Vodafone's annual reports to understand that Vodafone is earning significant revenue running in the tens of millions of dollars from its 40% shareholding in Safaricom - a Kenyan company?
Vodafone owns 45% of Verizon Wireless, is the EU or Vodafone subsidizing American cell phone bills? Such is the nature of your warped logic. Why would the likes of Citibank, JP Morgan, Goldman Sachs have been scrambling as bidders to handle the Safaricom IPO if subsidies were involved or why was the IPO oversubscribed by over 500% by local and international investors if its in the business of charity and receiving subsidies.
While the skeptics and peddlers of myopic stereotypes revel in ignorance, the rest of the world is moving along reveling in new found opportunities, high growth opportunities that no longer exist in the US and EU.
Vodafone is a for profit corporation, it is not in the business of charity. The notion that nothing can be successful without a western handout or subsidy is rather silly, not when Safaricom's profitability as of May 2012 bears witness:
Net income fell 4 percent to 12.6 billion shillings ($151 million) or 32 cents a share, in the 12 months through March, Chief Executive Officer Bob Collymore told reporters today in Kenya’s capital. The average estimate of five analysts surveyed by Bloomberg was a profit 10.4 billion shillings. Safaricom said it plans to pay a dividend of 22 cents per share.
Most Americans have never been overseas, don't know what's out there, holed up in their little world, and think that we have the best of everything. Ignorance is bliss.
what is it with @!$%#s and phones?
I'm Kenyan and the facts in the artical are correct. I live in the US so I'm familiar with the cellphone companies operations and their ridiculously high cost. As for clarity of the call, you may find this to believe, but when I call folks at home from the US, sometimes the calls get dropped.. Not so when they call me. And the cost is a fraction of what I pay calling from the US.
In BC Canada if you use your cell phone as they do in kenya after pay your cell phone bill you would not aford to buy groceries==coyote