Saturday, October 9, 2010

Potentially Kenya

Running in Nairobi is much like life for the average Kenyan. There are obstacles and risks with every step. Not having sidewalks presents the continuous task of avoiding gaping holes in the black top or feeling the brush of a exhaust spewing vehicle as it passes dangerously close. At roughly a mile above sea level the air contains depleted oxygen levels causing the pulmonary system to labor more intensely. With each exchange the blood is less oxygen enriched then running at lower altitudes.


The average Kenyan appears to work very hard performing daily tasks, constantly presented with obstacles from limited and worn infrastructure. But much like the great Kenyan marathoners who because of intense training at high elevations when finally presented with the opportunity to compete on the world stage, at a major marathon, on a marked and clear course, in air with higher concentrations of oxygen, they excel (Paul Tergat held the world record from 2003 to 2007 and still has the third fastest time in history 2:04:55 ONLY 4min 46sec per mile for 26.2 miles...YES RIDICULOUS). I believe this will be the case for the average Kenyan. Like the potential energy of water in a water tower just needing the opportunity and the infrastructure to be released.

There are however some innovations in place that are unlocking this development and provide tools for the informal economy. Private companies and foreign investment (mainly China) have and are developing infrastructure that could further support a launching platform for Kenya. One of my mates from Ireland sent me an article from the Irish Times (Irish Times Article about M-Pesa) about Safaricom's M-Pesa. Safaricom is Kenya's main mobile telecom provider. Not only is Safaricom affordable, and cheap by western standards, it has an impressive infrastructure to support mobile service and they are a leader in providing innovative services to their customer base. The most widely used and innovative of which is M-Pesa. Safaricom's website states ( Safaricom website M-Pesa) "M-PESA is an innovative mobile transfer solution that enables customers to transfer money." So of course, as all inquiring minds want to know, (this was the motto of the trash tabloid my grandma Stella used to read 'The Inquirer')I wanted to experience it first hand.

Having my phone stolen gave me an opportunity to go back to the Safaricom store to replace it with cheapest phone they had, which the agent tried to tell me was a 2900 bob phone because the cheaper Nokia was out of stock. While standing in line to have my mobile number cloned onto a new SIM card (cost 30 bob about $0.40) I asked another agent for the cheapest phone and she easily found the 1900 bob ($23.64 at 8 October exchange rate) Nokia. Then within minutes I was able to sign up for M-Pesa and deposit 1000bob with the teller. Checking my balance on my new (1900bob-ha) Nokia phone - YOUR BALANCE 1000KSH. Now that I had M-Pesa with 1000KSH on deposit I was eager to find ways to use it...this however took some time.

After inquiring about ways to use M-Pesa with my Kenyan friends I found that they mostly use M-Pesa to pay bills.  I don't have bills so I had to explore other ways to utilize my new tool. The first opportunity came after my Safaricom minutes expired during a conversation with a friend in the States. I quickly jumped at the opportunity to top up my minutes using my M-Pesa account. Mobile service in Kenya is pay as you go and Safaricom credits are as common as tarjetas telefonicas (calling cards that every latino uses to call home) in Baltimore. Every kiosk and establishment sells these little SIM card sized scratch off credits. M-Pesa provides a more convenient method saving a trip to the corner store. Topping up took a matter of seconds, select Safaricom in the phone menu, key in the amount, type in pin code and within seconds a SMS confirmation with my new balance and I was back in business. I found that this is just scratching the surface.

Lunch at Java House (breakfast for at least two members of our party), one of two Kenyan coffee house chains, the other Dormans. Four Americans around a small square table, two wazungu (whites), one China (that is what the Kenyans call every Asian even though Nick is Vietnamese-American), the other Nick who is Indian-American and because he is Indian he really fits in Nairobi. The other mzungu, other than me, is recent acquaintance from ILRI (International Livestock Research Institute), our client. Alan (Alan's blog post), with his logic defying energetic personality (originally from southern Californian), journeyed to Kenya through VSO three years ago and has quickly assimilated to the Kenyan culture. In true Kenyan fashion, Alan boards a 20bob matatu to and from ILRI everyday. Alan has been described by a Swedish colleague of ours as having two passions in life, Linux and Kenya.

Back to the conclusion of Lunch/Breakfast. Alan needed change to pay his portion of the tab but me being ever eager to seize an opportunity to use my M-Pesa account I suggest that he M-Pesa me the 500bob and I would cover his portion. With in seconds he keyed in my mobile number and transfered 500bob into my M-Pesa account. To top off the experience I walked across the lobby of the mall to a Pesa Point ATM where after keying in the number of the ATM I was SMSed a code which I used to withdraw the 500bob from the ATM...seamless and the transaction fee was only 30bob (~$0.40).

I found one other practical use for M-Pesa, paying for change fees on Kenyan Air. Although I found that to avoid the Kenyan Air change fee all together it is best to just walk up to the agent at the airport (I arrived at the front door of Mombasa's Moi International Airport 10 minutes before scheduled departure and still made the flight which is a story for another blog) and the agent will likely complete the change within minutes and free of charge. M-Pesa is not the only service that Safaricom provides, they also provide 3G wireless and even more exciting M-KESHO. M-KESHO is a savings account tied to your mobile account that earns interest. As informed through the Safaricom website:

"This is a bank account introduced by both Equity and Safaricom where customers can earn interest from as little as Ksh1. Customers can withdraw cash from their Equity Bank Account to their M-PESA accounts and customers can also deposit through their M-PESA accounts to their M-KESHO Bank account.

Other features of the account include Micro credit facilities (emergency credit availed through M-PESA), Micro insurance facilities as well as a personal accident cover that translates into a full cover after 1 year. For one to open this account, the person must be an M-PESA subscriber."

M-KESHO has three main services 1) Micro Savings 2) Micro Credit and 3) Micro Insurance. Brilliant, accruing interest on money that is linked to a mobile account and is readily accessible as long as your phone is with you. This is the future of mobile banking and transactions.

There are three other forces that are converging in Kenya that should serve as catalysts to unlock the full potential of the country 1) The new constitution, 2) free enterprise and 3) infrastructure investment (mostly from the Chinese). The first, the government showed the maturity in drafting a new constitution with the goal of rooting out cronyism and corruption and establishing a more efficient, effective and supportive political infrastructure. It will take several years for the Kenyan government to write the new constitutions into policy and law but the new constitution is a huge step in the right direction of providing the Kenyan people what they deserve, a government that supports their growth.

The second force is free enterprise. The primary example, the mobile telecom industry. Kenya seems to support a free market approach to business. Even though Safaricom is a Nairobi-based company there seems to be heavy competition coming from Bharti Airtel's acquisition of Zain. Competition is good for consumers by driving prices down, improves the quality of service and drives innovation.

The final force,physical infrastructure, the Chinese are investing in infrastructure throughout Africa and Kenya is no exception. The Chinese are here in full force investing in super highways that connect the coast to Nairobi and I assume to the rest of east and central Africa. As always their is vested interest. To support China's growth they need access to raw materials and Kenya, like much of Africa, has untouched raw materials. Chinese's President Hu Jintao signed a deal in 2006 to conduct oil and natural gas exploration in Kenya. The state owned CNOOC Ltd. is conducting the exploration and it has been said that they have discovered a large reserve of natural gas in northeastern Kenya. I also read in the Nation ( Lamu Port article) that the Chinese have invested in an ambitious project to develop a port in Lamu that will rival world ports like Dubai. The total cost to develop this port is estimated to be Sh 1.2 trillion (~$15B USD).

However the obstacles still exist. Currently, even though only a small percentage of Kenyans own cars, roads are congested and many of these cars spew dense charcoal hued air polluting exhaust. The government and the police force are marred with corruption and unfortunately prey on the informal economy and small business owners. Everyday I experience the money grasping hands of the corrupt police force as they shake down matatus, taxis and other commercial vehicles (although the same corrupt police force we see every morning and at one point attempted to shake us down, were recently busted by the Kenya Anti Corruption Commission(KACC) ( Corrupt Cops get busted)). Finally, it will take time for the government to enact laws and policies that make the constitution a reality to the average Kenyan. There is a major election coming up in 2012 but in the memories of every Kenyan are the bloody tribal conflicts from the last election in 2007. Kenya is still fragile.

Kenya the land of amazing people, big game, beautiful and various landscape and endless potential.

1 comment:

  1. This is so interesting to read. When I was there just a few years ago, the money transfer thing was just starting with Safaricom-- people could transfer credits/money from phone to phone but obviously the ability to withdraw the cash is a huge next step. Super cool to hear about.

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