Category Archives: SME solutions

MSurvey: Better Data, Better Decisions

Last month, I got introduced MSurvey, a fast simple solution for companies seeking to collect research data, or other information about their products and service from users. They do this using a nifty platform, all mobile, that is free for respondents, as the cost of the SMS/USSD messages are paid for by the customers who are doing the survey.

My 5-minute MSurvey

With MSurvey, it’s also quite quick to set up a questionnaire. This one (attached) took about five minutes to set up, with random questions for farmers and responses came within a minute of it going live from farmers in different parts of the country. Responders are rewarded with airtime prizes, and the process is non-intrusive.

One of their customers is Java House and when you pay for a meal via M-Ppesa, you get to answer a few questions about the service and your experience at whichever restaurant you ate. They are also in the US and Trinidad & Tobago, and some of their other customers are Musoni, (the) Telecommunications Authority of Trinidad & Tobago, Digicell, Safaricom, and Acumen.

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The Youth in Kenya

Yesterday saw the launch of a book entitled “Youth In Kenya: A Ticking Time Bomb” which is co-authored by a friend. The book looks at the challenge and job opportunities for the youth in Kenya, in terms of incentives, appropriate skills, cost of business, and new jobs for the youth, who one guest described as only interested in watching English soccer matches in the villages.

Some excerpts

Kenya’s education system was designed by the British to be a source of raw materials and cheap labour.
Education CS Fred Matiangi: No other sub-Saharan Africa has put the resources in education that Kenya has in 50 years, and with 290 technical education institutions, there will be one in every constituency.
George Njenga: There are over 70,000 skilled Kenyans working in South Africa. It is important to look at the training of teachers, so that they also impact good foundation and lessons to the youth and Strathmore Business School has started on that.
Jonathan Mueke: There have to be standards in the Jua Kali sector – thousands of people produce hoes (jembes) that won’t dig, and which Nakumatt (a large supermarket chain) cannot sell.
FT Nyammo: We have thousands of available jobs to be done in the coffee, tea, and dairy sectors in rural Kenya, but no youth are willing to do them as they consider them to be menial. Also, the Jua Kali sector provides 80% of employment when the economy is good, and the government should channel incentives there to create more Manu Chandarias! (one of Kenya’s most renowned industrial entrepreneurs)

One of the books’ main authors says he was inspired by media stories from last July, which described the Kenya Judiciary and Ports Authority as being were overwhelmed by job applicants; some had received 80,000 applications for 1,000 jobs advertised and even had stampedes at their offices.

The book was published by Longhorn and sells for Kshs 900 ($10). It’s a non-academic book edited for everyone to read.

Aside from this, last week, the KCB (Bank) Group launched “2JIAJIRI”, a KShs. 50 billion job creation program under they committed to “set aside Kshs.10 billion annually in the next five years towards driving this enterprise development programme over the funds which will be used largely to support small and medium businesses run by the youth.” They hope to “reach 500,000 entrepreneurs (both existing and new ones) in 5 years, thereby creating at least 2.5 million direct and indirect jobs.”

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9 Findings on Cashless Payments in Kenya

The future is said to be digital or cashless. So can one live and transact without using paper currency? Nairobi is as good a place as any to try in 2016. And while it’s largely doable, but not quite entirely possible, to get around using a mix of cards (credit/debit) and mobile money (i.e. M-Pesa), it also brings up a lot of interesting findings.

What happens when you try not to pay In cash?

Cash is still king: Cash gives you the flexibility to buy for anything, any time from any vendors. It is the fastest way to pay, and there are still places that only take cash e.g. landlords, matatus, and a Chinese restaurant – no card or no M-Pesa accepted.
Cards are easier to pay with than M-Pesa: By having chip & PIN, there’s no need to even show an ID card. And it takes 4 presses to pay for a transaction while it takes about 25 presses to do an M-Pesa transaction, and even more if you have to draw cash from your phone from another bank account. M-Pesa is not convenient if you’re in a rush, and with so many menus and buttons to press, it’s also easier to make mistakes and send money to the wrong business account. You have to be active and pay attention and also confirm with a staff member, showing them your phone screen, before you commit. Even then, they look at the message generated on your phone and trust that it’s genuine, as they often don’t have access to the business phone where the message confirmation is sent.
M-Pesa needs a reboot: It needs NFC up to a limit – say for purchases of less than Kshs 1,000 ($10) – so you just tap and go. Lipa Na M-Pesa signs are all over, but it some shop staff are not aware of if the payment is to be processed through ‘Paybill’ or ‘Buy Goods’ (two dedicated business payment options inside a phone M-Pesa menu), and some even give the owners M-Pesa number, which makes for a costlier transaction for the business.
Cards Usage is limited: They are generally not accepted for purchases of less than Kshs 1,000 ($10). At some petrol stations, they are not accepted at night, as a fraud prevention precaution.
Paying by card or phone builds business relationships: I got to pay for a week’s worth of newspapers, by M-Pesa. The newspaper vendor gave me free newspapers and I sent him M-Pesa midweek. So in the first part of the week, he was giving me credit, and in the second part, he owed me newspapers. I now know his full name after buying a newspaper from him for 3 years, and only knowing one of his names. I also didn’t know that Java restaurants take M-Pesa, but I’ve been paying for coffee by phone and got pinged by SMS to participate in their customer service surveys – with a possible invitation to coffee tasting event sometime in the future.
Paying by card or phone sucks liquidity from an economy: The transport is very challenging, and I think the celebrated launch of Equity Bank and Google’s Beba Pay failed because of other issues. Digital payments meant that owners jumped to the first in the queue in getting cash, from where they currently are – last! The fares paid by passengers during the day are shared between drivers, conductors, route managers, and policemen, and going digital takes away this easy daily cash; DigItal payments mean formality and more tax collection for the government, but these will be an extra burden for employees.
You become less generous when you go cashless: I give tips several times a day, and that is just not possible without cash. When you pay cash, you can leave a portion of your change as a tip that you hand to the waiter at Java, This is not just for restaurant waiters, but also for people who check your tyre pressure at the petrol station and watchmen who guard your car at night when you park at a public places. Also, Kenya doesn’t have a tipping culture or mechanism like the USA does, and when you can direct a portion of your card payment to a tip for the waiter.
With cards you go into debt, but with M-Pesa, you run out of ‘cash’ quicker: Which is better? Note, if you run out of M-Pesa. You have a few options. One is to link your bank account to M-Pesa so you can load up your phone. Another option is to take a loan from M-Shwari. Approval takes a few minutes and you can borrow almost $150 (Kshs 15,000) that you have to pay back in 30 days with a 7.5% fee. Besides the costs, you can only take one loan at a time before you have to pay it back. So your temptation is to take more than you need, just in case you have another emergency and won’t be able to draw that
There’s no real difference between card and mobile: In fact, they are merging. Uber has shown this – the phone navigates, and is preloaded with the card, which pays.

These findings are from about a week and a half I spent, going cashless, and trying not to use any cash. This was for every day buys like meals, parking, groceries, utilities, and newspapers.

This was inspired by a conversation with Lucy Mbabazi who’s a card payment proponent and also by a previous experiment done at KopoKopo (who had an intern try to go 60 days using M-Pesa, in lieu of cash – but I can’t find a link to their post).

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Yara and the Kenya Fertilizer Market

This week Yara had a lunch meeting in Nairobi to highlight their investments, plans, products and solutions, for Kenyan farmers. Yara Kenya Country Manager, James Craske, also spoke about the global fertilizer environment, including regional markets, production, challenges, and other aspects of the industry.

Excerpts

History: Yara, the largest nitrogen fertilizer producing company in the world (33 million tons in 2014), and has been shipping to Africa since 1929. Yara East Africa has been in Kenya for 20 years, has 20 – 50% market share in most of the sectors they specialize in (e.g they call their CAN fertilizer – Yara Bela Extra). They will be doing a roadshow in the North Rift area, starting in Eldoret-Uasin Gishu area.

Farmer Focused: They are farmer focused on developing farmers and improving farm profitability. They target to increase a farmers earnings by a factor of 4:1 after he or she invests in their fertilizer. They have crop specific guides like for maize, coffee, tea, horticulture variants and other crops, and have trained 55 interns to work with the farmers in Kenya.

Distribution Network: They have 80 distributors and 10,000 stores in Kenya. They also sell directly to large commercial farms of more than 500 hectares. Freight is big cost factor for farmers in Kenya.Craske said they can load a 30,000 ton vessel in Norway and ship the fertilizer to Mombasa for $30 per ton, but it costs another $70 – $80 per ton to get the fertilizer from Mombasa to Eldoret.

Production potential: Countries that have natural gas like Tanzania and Mozambique are natural places to produce fertilizer. But local production may be a challenge as fertilizer components come from many countries e.g. Saudi Arabia, Russia, China and processing is sometimes a dirty process. Kenya is a 500,000 metric ton fertilizer market and Tanzania is a 200,000 one. A urea factory costs about $1 billion and it is expected that a factory will need to produce about 1 million tons per year to break-even so they will have to factor in some exports from Kenya to invest in one here. (There’s a factory that is being built in Uasin Gishu, by Toyota, that may produce fertilizer blends)

Counterfeiting: This is a big concern for Yara and they carefully monitor their products distribution channels to stop contamination and counterfeiting e.g. people re-using their branded bags or people taking other subsidized government fertilizer and selling it in Yara bags – as has happened in Tanzania. It is estimated that 20% of Kenya government subsidized fertilizer may end up in Uganda, and in Kenya, any Yara store found selling open bags is kicked out of their program, and in Asia, every Yara bag has a tracking barcode to discourage counterfeiting.

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M-Kopa Launches Solar TV

Wednesday had M-Kopa launching a solar TV product & service in Nairobi. The 16-inch solar, flat screen, digital TV has 26 free channels and can be paid for at a cost of Kshs 50 per day, that can be spread out over two years.

3-year old M-Kopa, which has over 300,000 customers, and targets to reach 1 million by the end of 2017, uses Safaricom’s M-Pesa to spread out the cost of their solar home equipment to as little as Kshs 40 per day to light homes, and charge phones and radios, effectively extending the hours that some businesses can operate. M-Kopa CEO, Jesse, said their goal is to be below the Kshs 50 per day that rural Kenyan homes spend on kerosene/paraffin.

The company, which is also in Uganda and Tanzania, will for now only have the TV’s sold in Kenya and plans to move a few thousand units every month. Current M-Kopa customers, with good repayment records, will get calls from the sales team, and there will be excellent after sales service for the TV devices that are ready out-of-the-box. The TV is designed to provide homes with 4 hours minimum of TV viewing per day even if it’s rainy or cloudy.

The TV components that M-Kopa uses are sourced in China, while the solar panels are now manufactured in Naivasha, Kenya, as the opportunity to do such manufacturing improved after the government removed an import tax on energy components.

The TV is available in two ways: (i) As a “M-KOPA + TV” upgrade pack for existing M-KOPA customers or (ii) as a larger “M-KOPA 400” 20W home solar system with TV for new customers  Both products made affordable by convenient daily payment plans over M-pesa.

$1 = Kshs 102

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Bankelele

Nairobi writer on Banking, Finance, Technology, and Investments

Category Archives: SME solutions

MSurvey: Better Data, Better Decisions

The Youth in Kenya

9 Findings on Cashless Payments in Kenya

Yara and the Kenya Fertilizer Market

M-Kopa Launches Solar TV