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Mobile Telephony in Kenya… is it “Making life better”?
Luca ManicaMichele Vescovi
ICT4SD course – May 2008
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Outline
• Introduction
• ICT and Development Countries
• Mobile Telephony in Kenya
• M-PESA system
• Conclusions
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Why this Topic?
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UNPD Human DevelopmentReport 2001
• direct linksTechnology ↔ Social Development
Economic Growth• Quantifies the growth of the GNP • No information about how the GNP is distributed • No dependence from Social Development?
NO Economic Growth NO Resources for Education, Health, ect.BUT
Economic Growth does not implies Social Development
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BUT ICT are not a magic WAND!
ICT can give opportunities of Social Development:• better life conditions• new jobs• new opportunities of business• more information
New Technologies BE OPTIMISTIC!
The ICT Role
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The Morana’s Mobile PhoneImpact of the new technologies on the Kenyan culture
Economic Impact
Cultural Impact
Poverty
Be like a White
• shame• look rich!
• lost of traditions• political choices
ICT make Mistakes
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Kenya
• 36 million: estimated population (Dec 2006)
• 65% live in rural areas
• more than 50% below the poverty line (1$/day or less)
• 75% arid / semi-arid land(inhabited mainly by pastoralist communities)
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Mobile Telephony
• 70 - 80% population covered (March 2007)
• Mobile penetration: ~ 30% = 11milion Kenyans• 98% prepaid traffic (per second billing)
• 20% geographical area covered(March 2007)
• Coverage is still growing …
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Mobile Operators
• Safaricom (1996)
– ~ 9 milion subscribers– 40% Vodafone (U.K.)
• Celtel (2000)
– ~ 2 milion subscribers– 80% Celtel Int. (Kwait)
• Econet Wireless ?– South African company– In legal battles since 2003– Will it roll out within 2008 ? – Third licenced operator
“The better option”
“Making life better”
“? ? ?”
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Third operator ?
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“Coverage” by Province
# Safaricom’s Base Stations
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Coverage by Operator
What is covered ?
1. Popul. / Business2. Tourism3. Main roads / links4. …
? Development of remote / crisis areas
Safaricom Celtel
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Mobile Network vs Fixed-line
PERIOD 2002/03 2003/04 2004/05 2005/06 2006/07
Wireline Connections 328,358 299,255 278,867 293,364 263,122
Urban Connections 309,070 284,264 264,509 279,079 251,924
Rural Connections 19,288 14,961 14,358 14,285 11,198
Waiters 111,867 109,758 93,192 64,618 26,925 Fix
ed
-lin
e
Traffic to Mobile Networks (minutes) 230,000,000 209,944,354 163,324,095 150,000,000 124,378,826
PERIOD 2002/03 2003/04 2004/05 2005/06 2006/07
Capacity 2,000,000 3,935,000 6,800,000 10,600,000 18,200,000
Connections 1,590,286 2,546,157 4,611,970 6,484,791 9,304,818
Mo
bile
N
etw
ork
SMS - - - 201,445,683 315,557,601
Communication Commission of Kenya (CCK), report 2006/2007
2001:# mobile telephony subscriptionsovertaked # fixed telephony subscriptions
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Mobile market lacks
• Actually a duopoly Safaricom / Celtel– Difficult to enter in the marked for the 3rd operator– Number portability not yet possible/deployed– Prices are still high: ~0.2€/min, ~0.05€/SMS
• High taxes and duties: – 10% direct on mobile usage– 25% impact estimated on total costs
• Handsets and activation cost still expensive
• Electricity tariffs/availability to recharge batteries– walk for miles and use shops– solar panels, car batteries, generators, … (expensive tech.)– 0.4$ on average to recharge a full cellphone battery
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Mobile banking
• Mobile banking… a development opportunity?
• 80% people unbanked in least developed countries (also in Kenya)– Barriers to banking services are:
illiteracy, lack of education, high fees, proximity to bank facilties– Be unbanked means:
cash economy, vulnerability to risks, hard save or borrow money
• Need of transfer money: – bread-winner far from family, run a business, avoid risky travels
• Popular way to transfer money in Kenya: – send it with a relative or friend (risky, slow, …) – use postal services (expensive commissions charged in %)
• Even more adults own (or have access to) a mobile phone, also in rural areas
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M-PESA (intro)• World’s first (2007) mobile bancking system• Vodafone/Safaricom + U.K. gov. initial support
• Cellphone based platform for simple banking services and cash-transfers
• On the Safaricom’s common SIM menu• SMS-based, (personal) PIN-protected
• Kenya: banking infrastructure not well developed • Kenya: large network of air-time dealers, retailers,
shops, oil pumps… candidate M-PESA agents
• 1600 M-PESA agents, more than 500,000 customers
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M-PESA (more details)• Customer:
– M-PESA account distinct w.r.t. personal airtime credit– “Save” up to 50,000 Ksh (~500€)– Deposit and Send up to 35,000 Ksh per time– Free services: registration, deposit cash, buy airtime,
withdraw cash by non M-P user– Charged service: withdraw cash by M-P. user,
send to M-P. user (fixed), send to non M-P. user (variable)– Show balance, change PIN, languages: English or Swahili– Cash operations (deposit, withdraw) need an M-PESA agent
• Low (directly charged) commissions w.r.t. banks (from 30 Ksh up to 400 Ksh)
• All pooled balances held as a unique account (owned by Safaricom) in a Kenyan bank
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M-PESA: Pros (4SD)• Reaches many more people w.r.t. Banks
• To tranfer money is secure, faster, cheaper
• Extends in time the availability of banking services (some are still agent dipendent)
• Opportunity of employment, new business, develop.
• Possible solution to the access issue for “unbanked”... helps to securely store incomes
• Easy to use, even by illiterate
• W.r.t. micro-credit it efficiently overcomes many structural / organizative issues
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M-PESA: Cons• Further addiction to mobile phones and the operator
• To deposit is free , to withdraw is charged, deposited amount doesn’t accrues interests... :-o (Is it “save money”?)
• Cheap w.r.t. banks... but not so much in general (%50 population lives with less than 1$/day)
• Enlarge the gap for whome cannot afford a cellphone + SIM + fees (Is M-PESA-sharing possible?)
• W.r.t. Micro-credit:– No more face-to-face realtion to m-c agent and the m-c community– M-c agent is a “skilled”-economist, often an advisor for families
and enterpreneurs ...is an M-PESA agent too?– In a development perspective m-c companieas reuse the deposited
cash in local projects, loans for the local community... It is not the case of the M-PESA accounted capitals
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M-PESA: Pros (4SV) (for Safaricom/Vodafone)
• New “unmobiled” subscribers attracted by the service
• Affiliation effect for M-PESA customers
• Airtime credit can be easily/transparently bought
• Direct incoming from services commissions
• All pooled accounts accrue interests for Safaricom and can be further invested
• World’ first service, actually limited to Kenya... a good pilot:
– Vodafone plans to extend it to other countries (India, ...) and globally between countries
– It would be the choice for the 500million $ in remittancies sent to Kenya by migrant (earn commissions)
– It would be the choice for the 268billion $ remittancies worldwide (earn commissions)
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Conclusions
• No “Right or Wrong” in ICT
• ICT can give opportunities of development
• Systems developed in “western way”
• Does ICT really change the situation?
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What can we do?
• Recognize the role of the Information
• Customize the project on the context
• Measure the actions on the needs of the population
• Be optimistic
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Thank you!
Questions?