Mobile telephony in Kenya

Growth of the ICT and telecommunication sectors in the emerging and developing economies has been cited as a major factor in the economic development of African countries. In Kenya ICT has been singled out as one of the cornerstones of Vision 2003 and the perceived benefits of telecommunication has led to the belief that mobile telephony has positive and quantifiable economic benefits in terms of GDP growth, poverty reduction and bridging of the digital divide. However the real benefits of the mobile phone to the poor in the society is still a debatable argument in the ICT industry.

In the last 10 years the sector has seen an unprecedented growth in mobile phone ownership and usage. The once priced gadget (used to cost initially USD 3,000 and now costs an average of USD 250) that was a preserve of the politicians and business men is now accessible and owned by the majority of Kenyans. The Kenyan telecommunication sector was liberalized in 1998, which before then the state monopoly was through Telkom Kenya (now Orange).With the liberalization saw the entry of Safaricom (then a subsidiary of Telkom) and Celtel (now Zain ) in 1999 and recently Yu (2008).

The licensees were to initially roll out services in major towns and roads (under their license conditions); and the sector has witnessed growth both in terms of operators, geographical coverage and subscriber base. Currently there are four mobile operators i.e. Zain, Safaricom, Telkom and Yu. The subscriber base has also increased from fewer than 6,000 subscribers in 2000 to over 12 million Kenyans in December 2008 with 77% of the Kenyan population covered. This growth has not been without drivers, among them competition, availability of cheap phones, low tariffs and regulatory intervention at times.

Kenya had an economic growth rate of 6.1% in 2006 and the transport and communication sector was credited with being one of the key drivers of the growth. These statistics give credence to the general consensus that the mobile phone sector adds economic value but the question is what value can be attributed to improvement of domestic income among the poor if any. Kenya currently has an estimated population of 38 million people and it is estimated half of population (17million) lives below the poverty line. Some 70% of the income poverty is used on food related needs and there is need to establish percentage that is used to power the mobile phone companies profits given most of the subscribers are prepaid.

Delloite and GSMA released a study at the end of 2008 and found that mobile telephony accounted for 5.1% of the GDP (Ksh 182,832 million) in the same year. Kenya currently is experiencing unprecedented famine and lack of food, this leads to the question of whether the populace are foregoing some essential expenditure in order to own a mobile phone. Although some people use mobile phones for "beeping", it is surprising that over 50 per cent of Kenyans live on less than a dollar per day yet many are able to purchase and use mobile phones.