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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:
kenya is just great. all this about mobilephones is true. in a country with a population of 38million people, there is a connectivity of 22million active lines. hows that for a small third world country? mind you uncle sam is not subsidising this!
Sorry ,you need filling in,Those peple cant even feed their selves,if OBAMA wasnt giving them several billion a year,, Thy would never see a cell phone---THATS YOUR TAX MONEY ,,YOU SHOULD PROTEST LIKE HELLL
Ignorance is bliss, for someone who has likely never traveled outside the united states perpetuating yet another myth founded in age old racist stereotypes that foolishly perpetuate the theme that any other country or non-conforming race outside the western hemisphere is incapable of achievement, advancement or self sufficiency. As such ignoramuses abound, the rest of the world is moving ahead while the US of A continues in a steady decline.
The reason americans have to do with out Obama gives billions to KENYA.Foks thats ypur tax money ,,why dont to protest like helll
You really cannot be that ignorant...Learn to spell; or are you illiterate because of the money Obama spends to pay for Kenyans' education?
@WW2 VET...thank you for your service (respectfully) BUT please go find something else to complain about than bringing Obama into this...that is old news...yawn...
Your ignorance is numbing. The truth is that Obama has been least generous to Africa of all modern presidents. The same reason that has kept him from helping blacks in the USA has also kept him from giving aid to Africa. He is afraid that idiots like you will use it against him. His election is only a point of pride for the African-American people.
In terms of tangible benefits, the rich white male has gotten richer under Obama than under Bush. Black unemplyment has increased because he has not had the courage to do anything special for blacks. Keep on deceiving yourself. African countries know Obama's dilemma and are not looking for help from the USA. The fact is that George W Bush (not even Clinton) has been the best aid-giver to African initiatives in the last 30 years. Bush committed $15 billion to AIDS and other tropical diseases. Obama cannot do that for fear of runts like you.
One more thing: you are not a veteran of any army. Army evetrans who have seen the world are usually reluctant to engage in your kind of nonsense, because they've seen the color red and know that it isn't a good one.
Crawl back into your hole of stupidity and help us mourn the day your idiotic parents did the deed that produced your moronic eminence.
Isn't Obama running for the Presidency of Kenya? Oh yeah I forgot he can't put his name into the hat until he officially leaves his current office. Well don't worry Kenya you will have your favorite son back later this year when he gets his ass handed to him.....Here's hoping for some real change in 2012
@wayback2012...WOW such a class act! you totally forgot that this article wasn't about Obama..."IT WAS ABOUT HOW TECHNOLOGY IS CATCHING UP IN KENYA" but because you cant fathom the idea of how a 3rd world country is moving on with their lives and don't need your $ 25cts charity since that's all people from YOUR country are exhorting money from you ...LOL..you're in denial because all you see on TV is a hungry child and now all you're reading from this article is how okay the people of Kenya are doing and now you are going to steal their thunder by bringing OBAMA into this...YOU chose OBAMA and by you i mean your fellow country man..NOW LIVE WITH IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
bytor104 you missed the point. Its not how much one makes is how life is with whatever one makes. Here is America we make lots of money and guess what, most of the money goes to the corporations that own this country. High rents, unaffordable mortgages, high mobile phone bills, high bank fees, and the list goes on. Maybe they make very little in Kenya, and yet they may live a happy lives than us here in America.I am a white male, educated and I say it as I see it. I'm not afraid to say that white men who control this country are very greedy and we have to find a way to let them know that we are not going to take it anymore. the way I see it, I'm not going to be rich no matter how hard I work. Everything I make goes to make some white man rich who doesn't care about us. They want airplanes, second and third homes, and money in foreign countries while we suffer here in America. Why are there more white men at my age living from pay check to pay check when a few are getting richer and richer - the so-called 1%. They don't care about us and will take the clothes on my back if I let them. Why are they foreclosing many of our homes when the values of these home are less than the mortgage. Why can't these folks reduce the principles of out mortgages when the values of our homes are less then the mortgages?
Some of these white men make millions of dollars for doing what? They get executive information systems from their staffs and all they do is to look at the information and make decisions. My dog can do that and no one is wealth millions of dollars in compensations. That's is the problem in America. We have to find a way to chase these men.. there are a couple of females, but mostly white men who are nothing but thieves. They rake the corporate bank accounts for their own. This has to stop.
Educated - are you certain? The reason America is so great is because you can become wealthy by working very hard. It is a shame more people do not believe in/take advantage of the endless opportunity.
P.S. Stop buying stuff from "white men" and you should be better off - yes? ;)
i am a Kenyan and i live there.some guys are negative not about this article but the Kenyan people and generally about 3rdworld countries.while i acknowledge that we are a little behind in terms of development, i want to let you know that we(Kenyans) made our mark in the mobile phone industry and technology as well. we simply do everything with our phone. M-pesa for example has made us not to go to banks to withdraw or deposit money. we pay our bills using our phones from buying groceries to buying a flat screen in the supermarket. there are so many things that we enjoy that unfortunately our friends in the developed world lack but we don't brag about it. in fact you people should be humble and maybe we would not hesitate helping you.
Come get your village idiot.
That's the only help we want from you.
lol to "be humble" part of your comment.
Am surprised at how ignorant some people are. Some comments have glaring inaccurate facts; like Kenyans dont have access to the latest phones technologies like android. We do and I can buy an S III at the same price as you developed folks (Just check online). Some years ago the govt here zero-rated computers and phones. We dont live in trees (as some of you have been made to believe) and even if we do we can afford to call, surf and pay for our beer through our phones and get clear signal. Ask your Google, IBM and your other big corporations why they are running to set shop!
911: This is emergency. How can I help you?
Caller: There's huge lion following me.
911: Just stand down. We'll send in the police. Oh, and is the lion black or white?
..
This is great !!
Now Obama's brother can just call Obama for assistance.
Wait, can he really afford a cell phone on $2 per day ??
..
Booooooooooooooooooo....boring..the obama jokes are getting old..next.
Can they use it to suck buttwheat back to his hut?
Now THAT would be a great phone!
@Blonde Coyote...WOW such a class act! you totally forgot that this article wasn't about Obama..."IT WAS ABOUT HOW TECHNOLOGY IS CATCHING UP IN KENYA" but because you cant fathom the idea of how a 3rd world country is moving on with their lives and don't need your $ 25cts charity since that's all people from YOUR country are exhorting money from you ...LOL..you're in denial because all you see on TV is a hungry child and now all you're reading from this article is how okay the people of Kenya are doing and now you are going to steal their thunder by bringing OBAMA into this...YOU chose OBAMA and by you i mean your fellow country man..NOW LIVE WITH IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
I am from Kenya and have lived in the US for more than 20 years. I enjoy the convenience of having easy access to ATMs, Cable TV, Satellite TV, high speed internet and banking institutions just about anywhere I travel to in the US.
In Kenya, majority of the population can't afford to even open bank accounts or have a credit card, which would allow for easy exchange of money among interested parties. This shortcoming has mitigated itself in Kenya through the use of cellphones. Most people now, can easily wire money to family, friends and businesses, they can get paid for services and products through the use of cellphones. For this infrastructure to continue growing, the price of owning and operating a cellphone needs to go down so that more people and more businesses can interact. Africa is where the "last mile" of new technologies based on wireless communication will thrive. Cabling services such as modems and cable phoning systems have their place but financially, only a few people can afford them, businesses are able to afford them, at least for now in probably in a long while to come.
I just got back from Kenya about two weeks ago and true enough there's a range of cellphones the cheap ones from even 8 to 9 years ago to the top of the line. I got a Samsung Champ from a local dealer in Kenya, it worked great but I found the applications lacking in functionality that I am used to here in the US. Of course the cost of calls was cheap but being of the phone calling up all my friends both locally and abroad, I found myself using about $12 every two days for a total between $126 - $150 in the three weeks I was there. My phone usage and costs would probably have been a lot lower if I didn't have to communicate with family and friends locally and in the US.
@Martin Muli you dont need money to open a bank account. Ask Dr. James Mwangi and he'l tell you all you need is ID/ Passport. No need to go to the ATM or use your card because you have your phone & through your mobile banking platform you can access your bank account. Get your facts right chump
Jon Def-chess, I was actually saying the same thing you are saying, in short that cellphone banking works well for the majority of the unbanked population in Kenya and Africa in general.
Good innovation and approach for lower cellphone charges.
But my question is why isn't SAFARICOM buy or partly own the property right to M-PESA since it is working jointly with VODAFONE?
Unless SAFARICOM is only used as affiliation to attract the Kenyan market, but still i think it should work on owning property right to this innovation that 90% of Kenyans are now using according to this artcle.
Africa, own your future please. Think ahead. From your brother MLOZ of TOGO.
Lozel, unfortunately the technology and initial focus for cellphone banking in Kenya was funded by Vodafone in partnership with SAFARICOM. The focus was entirely different from what it now but after several refocuses, M-PESA emerged with Vodafone right there in the fore front of the awakening. If you've watched the show 'Fish Tank' you might have better perspective of where Vodafone fits in this whole picture, which might explain why it's not as easy as it might sound to shrug off such a formidable partner. I don't see anyone walking away from such a lucrative venture without causing some real damaging impact to the whole operation. If you've heard the saying "Don't bite the hand that feeds you" you will understand what I mean.
@Martin. i understand what you are saying, but this is the same way of conducting business that got the African continent poorer, much more in debt in not developping as it should.
I don't know the agreement terms between these two companies, but as a pan-African and a young person interested in the advancement of my continent, if i was SAFARICOM, i will make sure that i have a say in decisions making,which means having a sort of entitlement to the property right. Just like any partnership contract i know of. Partnership means both parties are involved.
The bottom line is in years when this technology or innovation expands,this property can be sold at a very high price; may be $billions and guess what SAFARICOM gets nothing.
Regarding the saying"don't bite the hand that feeds you", this is my opinion on that: if the hand that feeds only thinks of its interest, then you need to strategically think of yours too. Even if it means finding a better hand to feed you if you are incapble to feed yourself at the moment. But all this is temporary because i believe in being independant or less dependent as much as possible.
I think i said enough. Martin, add me on Facebook so we can exchange ideas on topics regarding Africa progression. the name here is my FB name.
Lozel, I meant "Shark Tank" rather than "Fish Tank"
Do you remember which episode?
All episodes are the same, it's a bunch of very "fat" sharks (rich and influential) preying on some desolate soul seeking to forge ahead.
Makes Obama homesick.
Gotnorice = you're a coward..that's why you wouldn't leave your comment open for a response because you know you are absolutely wrong!
"Very few there have devices that are up to par with the typical Android or iPhone you see in the US." this is completely false..IF you've never been to Kenyan, then you cant talk about what you think is available and what is not..there's a lot of people who have Android/Iphones in Kenya and are enjoying them a lot! and may i mention- with the CHEAP services they're getting from the phone companies.
"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." you're wrong again!!! just got back from Kenya vacation in the most remote location you can imagine and then phone that i bought super cheap..i mean $10 cheap worked like magic. so please stop hating and admit that you're being ripped off by your cellphone provider and you're probably stuck on a a 2 year contract. hahaha....
To close...Kenya still has a long way to go to catch to countries like USA or Europe but life is made so much easier that the Kenyans don't even for one moment think they're lacking (which they're not) in their they own right because it's the best that they have.
@ Bytor104. Its incorrect to assume that Kenyan money is worth nothing. Statistics indicate that the monthly transactions made by the MPesa (in Kenya) surpasses what Western Union makes globally in an entire year! Yes in dollars . How is that?
Secondly the phones are cheap from as little as 2 dollars to 400 dollars. The choice of course will be determined by your pocket. No contracts. You only register your SIM card with official documents (Passport or National ID) the moment you buy it.
Thirdly the phone operators are competing for clients. The customer is the King. So there are no subsidies whatsoever. Customers can move from one operator to the other at will.
Lets just say we Kenyans are using the cell phones innovatively besides surfing and calling!
After reading the above comments, I can only conclude that there is something pretty wrong with the American education system.
My 2 cents worth.
Yes there is and you nailed it - In America - the education effort has been to make everyone a winner and unfortunately that effort has backfired and in a sense is making everyone a loser. Competition in the education system would do wonders for this country
USA #1!
Perfect example , cut government fees and regulation and the free market works . we could learn a thing or two from the Kenyans exception being our sorry president
Brad, actually your suggestions are exactly what The Economist recommends in a 2005 article titled "Mobile phones Somalia calling An unlikely success story."
Just because you think its a 3rd world country don't mean and that the money has no value does not make you right. How many people do you see in USA living from hand to mouth, begging for money at streets or even at entrances to large shopping centers...the issue at hand is cell phones, and yes being from Kenya and in the USA, you would be right if you say Kenya jumped the landline stage directly to cellphones. Most Kenyans have more than one functioning cell phones at the same time, and YES the phones are of latest technology. Androids and Iphones to all high end cell phones and any cellphone you would think of cheap or expensive. The best thing would be for the doubting peeps and those who are talking without the knowledge to visit Kenya and see for themselves that is if they can afford the air ticket and accommodation and to come back to your apartment without and eviction notice...
Actually Kenyan phone tariffs pales when compared with what war torn Somalis pay. Check your facts please. The cheapest phone costs in Africa are are available only in Somalia. And these include internet, sms, local and long distance.
From the comments that I have read so far, I can tell that most of you have not even made it past the city limits in the State you live in. Most of us Americans are so narrow minded and connot even appreciate how far cell phone technology has developed everywhere around the world except the U.S.
If you did not get what the article said let me cut and paste the reason why they become affordable, "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."
The GOVT REGULATIORS" cut the rates and allowed ccompetition rather than "DEREGULATION" which we are famous for. Most of our cellphone companies have formed mergers thus discouraging innovation and competition.
Lets face it a 3rd world country GOVT has done what we have not been able to do. The same with healthcare and even education. The average American High Schooler cannot even compete with the average Kenyan High Schooler. Third world countries are providing universal healthcare for their citizens which we cannot afford to do. It may be basic healthcare mostly tailored towards prevention but they are doing it.
Kenya's cell phone services are far superior to USA - at least for the pocketbook- one does not have to pay monthly for services they rarely if ever use - and can choose to use or not use as the budget demands - MPESA has saved people an enormous amount of money.! In the past to send money, pay a bill or purchase goods meant time, public transportation costs and occasionally food and accommodation costs. MPESA will pay for goods and public or private transport will ship them at nominal fees. Texting is practically free and internet charges are manageable though package purchases. HMM I sound like a commercial but don't you think it strange that most Kenyans can afford a cellphone but many Americans can't. It's in the "plan" not the technology.
Beverley, If you had said American high school students cannot match their Asian counterparts I would agree - just look at the top students competing in the Harvard - MITT maths Tournament. But Kenya? I actually went to high school in Kenya before coming here for further education. American high school students are no pushovers even though they do not follow the rigorous education of Kenyans. The difference is that in Kenyan the primary and high school education system is seen more as a matter of privilege and therefore private schools win since they are better equipped to help train or cram as much facts to become number one - while in America it is emphasized on learning what is important for one's career. I have seen many a K.C.S.E. "A" student from Kenya struggle to maintain their full scholarships in my university. Likewise there are American students who can barely pass the GED to go on and become Doctors. Sure, many American exams are open book - yes the book (s) are there to help with answers - but if one has not read the book one cannot pass because of time limit and of course this also discourages cheating or exam leaking, Kenya National Exam Council's number one headache. That is why Kenyans are now trying to change their education system rather than blaming victims of the education system by cancelling the exam results.
Thank you, Said,,,Kenyan. Well Reported! Your Sanity is Very Welcome here (sincerely). May Goog Fortune follow you Always!
Thanx, Said,,Kenyan! Sanity. A Relief to Know it CAN Still be found (sincerely). May your future be full of Joy & Wealth!