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Kenya all ears for Hong Kong, the Mainland

  Photo: Mobile freedom in the mass Kenyan market.
  Mobile freedom in the mass Kenyan market.
China-made mobile phones are making major inroads into the Kenyan mass market, with products that are seen as widely affordable and of good quality. They could be in ever greater demand with the development of services centres across the country, as Kenya establishes "county" administrations.

Hong Kong and Mainland-supplied phones are also broadening opportunities in an East African market that's generally seen as one with the greatest potential globally.

In a market that once favoured the affluent, the Chinese mainland-made phones are breaking barriers, bringing consumer mass demand into the mainstream.

This has generated employment for hundreds of thousands of youths in dealer shops and spurred the growth of small businesses, where the handset serves as both mobile office and wallet. "I use it mainly for business contacts," says 22 year-old Eddah Wambui, a trader at the Maasai market in Nairobi.

Photo: Wambui: mobile business.  
Wambui: mobile business.  
A report by the official regulatory body, Communications Commission of Kenya (CCK), indicates that as of last July the mobile phone sector had an average annual growth of 10% over the previous five years, attaining a 75.4% penetration rate in an estimated 40 million population.

One of the biggest challenges is breaking down the marketing and distribution hurdles in a country with growing urban areas but also untamed rural hinterlands.

"We are seeking ways to reach the farthest parts of the country using established outlets and mobile sales vans to reach unserved areas," says Roger Nyaga, Marketing Manager for the Chinese mainland-based Tecno Telecom Limited mobile phone firm.

Also, Mainland firms Ningbo Bird, the mobile producer, and ICT solutions giant Huawei are increasing visibility.

Prices per unit are now as low as US$17.6, down by over half the cost of the same class of handsets five years ago.

The introduction of low-priced, dual subscriber identity module (SIM) card handsets has been particularly well-received, allowing users to have convenient access to two networks in one handset.

Photo: Tecno Telecom customer centre, Nairobi.   Photo: Nyaga: looking to establish outlets.
Tecno Telecom customer centre, Nairobi.   Nyaga: looking to establish outlets.

A campaign between Tecno and Mainland-based StarTimes TV is now broadening the demand base, selling the Tecno TV HD70 set (at US$64.8) and providing mobile TV targeted at a low-income group.

"It has extended the options of mobile telephony among low-income earners by providing them with a sophisticated service that until recently was reserved for the elite," says Ali Kibwana, Dealer and  Development Manager at StarTimes.

Breaking barriers in communication

All this is well-appreciated by the Kenyan government, where it is seen as a great service that breaks barriers in communications.

Assistant Director of ICT at the Ministry of Finance, Government of Kenya is Edward Rutere, who says that the entry of products from Hong Kong and the Chinese mainland has broadened consumer choice, while expanding the user base as a business and as a service.

"It has also helped to bring down the cost on two vital products [handsets and services] and the value addition is good for a vibrant market," said Rutere.

  Photo: Samsung-branded boutique.
  Samsung-branded boutique.

This compliments a fast growing ICT market that is bracing for greater heights in the coming year.

Rutere says the formation of "county governments" after next March's general election will see the transfer of government services to 47 counties all over the country; this will create demand for computers and mobile phone devices in the newly-established services centres.

A survey by the Kenya National Bureau of Statistics (KNBS) in 2010 showed that 9.1% of Kenyans had access to computers or just about 3.5 million computers at the time.

"The figure must be much higher now and is expected to grow," says Christopher Wambua, Communications Manager at CCK.

Taiwan-made Acer computers are the most popular for functions and low pricing, with an average price of US$448 for the AcerM290.

The price on Apple's Mac series is much higher and the iMac 21.5" Core i5 quad-core 2.7 GHz 4GB DDR3 1TB selling at US$1,827.8.

The CCK manager said that once fully implemented the government ICT policy will cover all aspects of communication especially those that are underserved or unserved.

Mobile money transfer

Photo: Mobile banking getting bigger.
 
Mobile banking getting bigger.  
The mobile phone was first marketed in Kenya as a status symbol for the affluent, spurring a culture of replacement in favour of newer sets and the prestige of owning more than one handset.

In time, the "value added", especially the money transfer service, has fuelled demand for mobile phones across the board, making the device both a symbol of style and an essential tool.

A CCK study shows that by July 2012 there were 19.7 million subscriptions among the six money transfer services available in the country, with transactions that hit US$2.1 billion, indicating 4.8% growth over the previous year.

This concept of mobile phone banking has been adapted by the major banks and service providers, encouraging the use of phones to check account balances and pay utility bills (such as water and electricity).

"It offers  the convenience of managing money from a single point," says Catherine Obwino, Retail Banking Manager at the Kenya Commercial Bank, the country's largest institution with networks across East Africa.

Major phone brands are also targeting the youth market, with multimedia sets that provide entertainment, social networking and Internet access.

They include Nokia Asha series (priced at US$94) and Samsung Chat 222 (at US$82.5) popular with urban youth.

  Photo: Muthoni looks for mobile opportunities online.
  Muthoni looks for mobile opportunities online.
"I lookout for large music storage space and social networking capability in deciding on a new handset," says 24 year-old Joy Muthoni, who works as a teacher in Mombasa.

According to a government study, Internet use was at 3.6 million in August 2008 and shot to 14 million last July, directly attributed to the youth market.

The growth in mobile telephony has been realised without strong regulation. That's expected to change soon as the government moves against counterfeits.

This month (30 September) the CCK will switch off an estimated 2.5 million counterfeit handsets in a move to curb unfair business practices.

This is seen as a blessing to China-made phones which have, at times, suffered from a misconception about the status of the country's products.

Indeed, most major brands are setting up customer services centres to instill buyer confidence ahead of the deadline.

The one-year manufacturers' warranty is also a basic requirement as proof of authenticity of the product.

"We have raised the bar to 12+1 months warranty to demonstrate the confidence we have in our brands," says Nyaga of Tecno.

Enter the smart phone and tablet

The new impetus on phone sales has also encouraged transactions for 3G phones and tablets, particularly for the iPad3 from Apple (with the 64GB selling at US$1,000) and Samsung Galaxy 2 (at an average of US$648.5) serving different niche markets.

Huawei has a MediaPad (priced at US$412.7) offered in a deal with Safaricom, the country's leading mobile service provider.

Already, 3G phones are seen as essential work tools for senior and middle corporate managements.

Different government ministries are now being allowed to acquire 3G phones for managers and the type is determined by the specifications and need. "Obviously price is a factor, but individual needs are also taken to account," said Rutere.

For innovative use, Hussein Haji has just completed his studies at a business college in Nairobi and consults his Samsung to revise his notes. He says this concept is popular with students.

There has been a perception that 3G phones would affect computer sales, but so far the trend shows  that each has its own niche.

Laptops continue to attract people working in the field while desktop computers are still the tool of trade for the office.

Rutere sees the next year spurring massive growth in the tech sector, with buyers assured of real value for money. "It is a huge market out there and many are going for it," he says.

from special correspondent John Kariuki, Nairobi

Contact:
Government
Tel/Fax/Email/Web
Communications Commission of Kenya (CCK) Tel: (254) 20-4242000
Fax: (254) 20-4451866, (254) 20-4242207
Email: info@cck.go.ke
Web: http://www.cck.go.ke
Kenya National Bureau of Statistics (KNBS) Tel: (254) 20-317583, (254) 20-317586, (254) 20-317588, (254) 20-317612, (254) 20-317622, (254) 20-317623, (254) 20-317651
Fax: (254) 20-315977
Email: info@knbs.or.ke
Web: http://www.knbs.or.ke
Ministry of Finance, Kenya Tel: (254) 20-2252299
Web: http://www.treasury.go.ke

Content provided by Picture: HKTDC Research
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