NAIROBI, Kenya – In an Olympic summer, the first thing people probably associate with Kenya are its distance runners.  When I was recently in Kenya, only days before the London 2012 opening ceremonies, expectations for the Kenyan track team were running high – almost as high, incongruously, as expectations for the next big technology in Kenya.

From Kibera, the largest slum in Kenya, to Karen, the Nairobi equivalent of Manhattan’s Upper East Side, conversations often turned to cell phone banking, the Kenyan government’s embrace of “open data,” and whether or not a Silicon Savannah could ever be a reality.  

In an effort to understand what that future might look like, I sought out Dr. Bitange Ndemo, Permanent Secretary in Kenya’s Ministry of Information and Communications.  

Impressive stats
According to the World Bank, Kenya’s recent headline technology statistics are impressive.  In the 18 months from June 2010 to December 2011, cell phone usage rose by 25 percent and Internet usage rose by 60 percent.

Today, in 2012, Kenyan mobile phone usage exceeds 70 percent – there are now more mobile subscribers than adults in Kenya; and Internet usage exceeds 35 percent, according to the Communication Commission of Kenya.  There are now more Internet users in Kenya than in South Africa – even though South Africa has 25 percent more people and its GDP is ten times that of Kenya’s, according to the World Bank.  

More interesting than the headline statistics is what that technology explosion has enabled.  In 2011, Kenyan cell phone users accounted for more than 50 percent of all the money transferred via cell phones globally – or more than $11billion, according to Ndemo.

Today, M-PESA, the dominant money-transfer service in Kenya run by Safaricom, counts more than 17,000 agents throughout Kenya enabling banking to reach rural areas not served by one of Kenya’s approximately 800 bank branches, according to The Economist.

M-PESA is easy to use. Customers register at an M-PESA agent and deposit cash that is credited to a mobile-money account / cell phone number known as an “e-float.” Then, that e-float can be transferred to another M-PESA user by SMS. Fewer than 10 percent of Kenyans had a bank account four years ago, according to Ndemo.  Today, because of M-PESA, Ndemo says close to 60 percent of Kenyans effectively have a bank account, even if their “bank” is their cell phone company and they never walk into a traditional bank branch. Indeed, today, Kenyans use ‘e-float’ via cell phones for everything from buying groceries to paying rent.

I asked Ndemo whether credit was the next frontier for M-PESA and cell phone banking broadly– whether or not Kenyans would soon be able to apply for and receive small loans via SMS. 

“Yes,” Ndemo said with a smile. He added that he and the Ministry of Information were already working with the Ministry of Finance on a framework to enable M-PESA and other mobile platforms to assess the credit worthiness of their subscribers and then to make loans to them, hopefully by the end of 2012.  

Kenyans use cell phones for everything from buying groceries to paying rent

An increase in more widely available loans would enable more people in more places throughout Kenya, including rural areas, to start their own small businesses.  If SMS-lending becomes a reality, Kenya will again be in the vanguard of mobile technology.  While M-PESA was the world’s first large-scale SMS money transfer system; today, there are more than 60 such platforms across the world, according to The Economist. 

Ndemo believes microcredit via SMS has the potential to “completely change the livelihood of many [Kenyans] and create wealth where it was never to be found.”

Silicon Savannah
We also discussed another dream of Ndemo’s: building a Silicon Valley in the Savannah. His dream is to build a technology hub for all of Kenya and East Africa, a vision dubbed Konza Technology City.  

Perhaps surprisingly, Ndemo does not want Kenya to compete with India for outsourcing jobs – quite the contrary: “India went outside, we looked inside.” He explained that Kenya decided to take a different tack. “Kenya would outsource to itself and create efficiencies,” for the government and eventually the private sector. 

Ndemo said there were already more than enough young, well-educated Kenyans to work for General Electric or Accenture. But what he believes is missing in Kenya is a place for those companies to work – a place with enough clean water, offices and housing up to United States’ standards and a density of technology companies to make it worth individual companies moving to the 5,000-acre planned site.

Even though Konza City has not broken ground – Ndemo hopes to begin building this year. Kenya’s technology sector is growing by 20 percent a year, outstripping the rest of the nation’s industries.  Already, more than 3,000 people – predominately Kenyans – work in Nairobi’s iHub technological center, according to The Financial Times.  Ndemo said the government is partnering with multinationals like Nokia and Samsung to do research in Kenya on next generation mobile platforms.

Using technology to create greater transparency
Ndemo offered two big examples of how greater technology efficiency could help transform Kenya.  The first example was tax collection – currently, Kenya collects less than 30 percent of potential tax revenue. If Kenya could get to 50 percent of tax revenue, “We may not need aid from any other country, including the United States,” he said.  

The second was around government procurement. Ndemo freely acknowledged corruption is still a big problem in Kenya – and often manifests itself in government procurement. 

He gave an example of a pen that might cost $2 in a store in Nairobi, but that the government would pay $20. (It reminded me of the 2011 audit that found $16 muffins at a U.S. Justice Department conference).  Ndemo believes an electronic platform on which contractors have to submit open bids will minimize corruption by making it more difficult for government employees to game the system and easier for the public to hold the government accountable.

One of the major catalysts for the technology sector is the Kenyan government’s demand to support its own transparency initiatives. Ndemo and the Kenya government have already embraced transparency in a way few governments have –in Africa or anywhere in the world.  KENYA Open Data  is the government’s online open government portal. 

Initiated only a year ago, in July 2011, the Kenyan government has now put hundreds of different data sets online – including everything from health and education statistics by county.  The government has also created and now supports dozens of applications to help users navigate the data.  One application allows users to track budget expenditure by individual members of parliament at the county levels.  Users can view the data in different, user-friendly formats including charts and graphs, as well as in English or Swahili.  The government also solicits, on an on-going basis, requests for data and applications that Kenyan citizens or the media want to access or utilize to make raw data more useful. 

I confess I felt a twinge of jealousy – the United States’ Data.gov site has hundreds of thousands of data sets compared to Kenya’s hundreds – but there is not the same technological collaboration between government and citizens. The U.S. government doesn’t ask people to create apps that it may then put online for all to use.

Ndemo believes this type of online citizen engagement and widespread Internet use is “critical” to ensure that Kenya’s next general election in 2013 does not spark a repeat of the 2007-2008 election violence. In the aftermath of the widely-disputed 2007 elections, hundreds of Kenyans were killed and thousands displaced because of violent clashes between different tribes and political parties. 

But Ndemo is confident 2013 would be different because of Kenya’s new constitution and hate speech regulations Kenya adopted in the interim. Ultimately he believes, “Kenyans themselves do not want to go there.”   Only time will tell whether his optimism is well-founded.

Looking to leapfrog ahead
Looking beyond 2013, Ndemo sees Kenya taking its place among the world’s emerging economies, and he believes technology is key to helping Kenya leapfrog its way there in the next decade. 

When I asked him what challenges technology and open data do not solve, he said good governance. He believes ultimately people running for office and holding office “have to have integrity.”

When I talked to different people in Kenya about Ndemo, not everyone had heard of him, but those who had viewed him as someone who had just that – integrity. 

When I asked Ndemo about his future, he said he’s likely “done with government” after the next election and that he couldn’t see himself ever running for office. 

Instead, he says, in 2013 he’ll return to his life as an academic and advocate. He said he has “many opportunities to play a big role in [Kenya], but not as a politician.” 

That may be the right answer for Ndemo but it may be a pity for Kenya. It is often impatient visionaries who do the leapfrogging Ndemo sees in his country’s potential future.

Chelsea Clinton is an NBC News Special Correspondent. She was recently on assignment in Kenya. See another recent story from her: 'Building Tomorrow' - one school at a time

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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?