IPhone to Kenya

Today will see the official launch of Apple’s i-Phone (3G) into the Kenyan market by Orange mobile. You could say it’s a case of bad timing as Kenyans are going through tough economic times and perhaps entering a recession period.

Recession or not?: With (very) high prices of petrol (until recently), electricity, maize and other foods, a spike in the government deficit, global financial turmoil, fewer tourists, reduced remittance volumes all signs would point to an economic slowdown. Right?

But not the Central Bank of Kenya (CBK): I have been in the past ‘impressed’ (did I say it was the best bank site?) by the volumes of reports published by the Central Bank, mostly because they are timely, though difficult to decipher the message.

The CBK reports have predicted some hardships but remained very optimistic and rosy about the country’s economy. But it appears that the messages are tailored to suit the tone of the day because Kenya’s leading business newspaper has taken note.

Today’s Business Daily has a very harsh critique of the CBK reports (which many banks, funds, government departments use to formulate their policies). The BD editorial laments the consistency of presentation, shifting periods for which data is presented, differences in figures published by KNBS (statistics bureau) and a determination by its authors to manipulate data through a series of omissions and change of periods under review that makes it nearly impossible to keep track of ongoings in the economy.

Former Nairobi Stock Exchange boss Jimnah Mbaru (who’s also a sometime author) thinks Kenya is headed for a recession and has published a column which ran in some newspapers and appears at Capital FM website titled How Kenya can escape recession. He advocates (like US President-elect Obama) that the Kenya Government spend its way back to robustness. Some of the proposals he suggests include reduce interest rates and cash ratio (which have already happened) but also some strange ones like the government should buy Safaricom shares, sell buildings, and mandates that more sewers be built he also says hedge funds cashing out brought down the NSE this year…hmm.

Blog views: In the absence of a Finance Minister, the Government is engaged in a series of Voodoo economics.

i-Phone outlook: Looking around Nairobi with all the Hummers, new Range Rovers, new apartments complexes etc., it is clear that there’s an affluent class that does not feel the pinch of a (possible) recession and despite the tough year it has been, there have been several new entrants in Kenya.

The i-Phone which has been a worldwide smash, and impressed many (not all) its customers, can be expected to do well here also. Like with the Blackberry before it – which was circulating here unlocked/hacked before its official debut, it will now be licensed and supported after the official launch.

29 thoughts on “IPhone to Kenya

  1. coldtusker

    i-Phones are in demand all over the world. It is an affordable luxury (for some… not me) and others buy it for ‘status’…

    All in all… it will give Telkom an image boost. Telkom did upgrade their web access recently in readiness for the i-phone but not 3G yet!

    ka-investor – Not a ‘fad’ coz fads are different. Of course, there will be improvements after all Apple Inc (or RIM) is not a Kenyan Government corporation!

    Unlocked? Unlikely!

  2. MainaT

    Jimnah is making another pt which I think we might be missing. Don’t believe the stats, the economy is in a mess. Mind you, he might have taken some serious losses hence his losing his marbles.
    Iphone and other luxuries will always have a market in Kenya.

  3. Kirima

    50K is too much to pay for a phone even an iphone for that matter, I think Orange just lost an opportunity to connect with the average consumer. I don’t forsee too many corporate bosses willing to fork out that amount of money so that their executives can have a fancy toy. Otherwise it looks like it’s targeting the Status symbol crowd

  4. E-Nyce

    What I love about buyers of status symbols is that they make such easy targets of humor and ridicule! Such buyers rarely understand how the symbol can actually benefit them, other than a way of proclaiming “Look, I’m an Attention Whore!”

    I remember one iPhone-dumbass telling me, “See, I type on the screen, and not on a keyboard.”
    Hmm, now isn’t that special?

    My favorite iPhone ridicule: Hi I’m an iPhone. And I’m a Smartphone.

  5. Maishinski

    It may appear that Jimnah Mbaru is using a combination of Copy/Paste economics + Vodoo economics + Clever Propaganda. Whether this is true or not is subject to interpretation.

    It appears to me that the essense of his article is to try and convince the Government to buy shares and Issue Bonds at NSE. Who would benefit? Stock brokers of course!!!

    This is a clear WARNING SIGNAL from the NSE itself that some brokers could be in trouble. Big trouble! If you still have cash in your brokerage account, this would be a good time to run for your cheque.

    People, look around you! There is NO RECESSION in Kenya to warrant such ridiculous measures. Generally companies are reporting profits, not losses! HOW MANY COMPANIES HAVE GONE UNDER LATELY?

    There will be hard times for the tourist industry – but local tour packages can take care of that. In any case, the benefit will be a reduction in institutionalized RACISM within our very own tourist establishments.

    Mr. Mbaru, In case you did not know, Kenya is grappling with INFLATION – not DEFLATION. Your idea of Gava Purchasing shares in corporations to inject liquidity is a strategy for tackling deflation. We dont need excess liquidity at this time!

    Risk for Kenya is more to do with STAGFLATION. Period of Economic slowdown + runaway inflation. This calls for a different strategy altogether.

    “Shock therapy” for Kenya needs to address these 2 items. Economic growth and inflation. NSSF and parastatals have NO ROLE to play in either!

    For inflation, Temporary price controls or subsidies are welcome if they will rejuvenate the economy e.g. in the Energy sector and Lending Interest Rates to bring down COST OF PRODUCTION. It should be made clear to beneficiaries that such measures are TEMPORARY and would be scrapped if no results are seen each quarter. This gives industry players INCENTIVES for passing on cost reductions to consumers (Win-win-Win outcome).

    My other Radical Measures:

    1. The writing of business articles that appear to have been written under the influence of intoxicating substances should be banned. This is just a general humorous guidleine for business writers and should not be mistaken to imply anything.

    2. I think Jimnah Mbaru to be fired if it can be determined for a fact that he is misusing his status as a “reputable opinion source”.

    3. CMA to consider a law that forces NSE chairmanship to be outsourced to a reputable audit company.

    4. A complete modernisation Local Authority laws/bylaws to make it easier to start and run a business.

    5. Creating duty free zones in idle semi arid areas to encourage foreigners

    6. Creating more business incubation zones in Fibre Optic connected cities for Knowledge businesses like ICT.

    7. Undersea Fibre optic cable to reach Kenya without any further delays.

    8. Decentralizing business locations. Rather than have one CBD, they should have business zones all over Nairobi where similar or compelementary businesses can operate (much like Luthuli avenue).

    9. Progressive politics. Fire all the MPs and lets OUTSOURCE Parliament until the next elections. That would be shock therapy for real. The outsourced parliament to pay tax and have Performance Based salary Packages.

    10. A new constitution that guarantes basic human rights. What gava did to Nyambane on Jamhuri day is nothing strange. It happens to the common mwananchi on a daily basis! I doubt he would have been treated like that if he was a Chomondeley.

    11. Promote a knowledge economy rather than old-school industrial economy. We can export our Knowledge while retaining our brains!

    12. Repackage tourism to make some reserves exclusive (and expensive). Demand Royalties from BBC for filming on our game reserves. They make more money from the Wildlife DVDs than the government makes for tourism (this is Intellectual Property Theft and exploitation) etc. etc.

    I am sure other bloggers have some more radical tips… do share!

  6. MAN143STEPH637

    Banks – I will email you as promised but as a business journalist let me also weigh in on this issue.

    First, I also think Jimnah Mbaru is nuts. I don’t see where he gets off asserting such a serious claim and then failing to even offer credible or tangible evidence to support it. Like Maish has pointed out, we do not have systemic weaknesses in our institutions the way the banks in America and Europe are. In fact some of our banks are literally breaking the bank (equity/KCB) and are headed to report record profits this year. THe non-banking financial sector is equally robust with the insurance (especially Health and Life) also headed for an impressive year. Multi-nationals are stopping over everyday to have a lookin –Monsanto, Dow Chemicals, GE, Intel, EMC just to name a few in the last few weeks. Even the much aligned Kenya Airways, can take pride in being one of very few airlines worldwide that are making money. So Jimnah’s exhortations probably as maish said were in large measure aided by too much alcoholic intake.

    CBK — I agree with you the CBK is putting out good literature much as it also exposes weakness in their strategy. BD shouldn’t have been raising ruckus over timing and shifting statements but MORE ABOUT THE IMPLICATIONS OF WHAT THE CBK was saying.

    For starters, it said it was clearing space for government to borrow for infrastructure. That means there is a DEFINITE BOND coming soon. My sources tell me February for URBAN ROADS not to be confused with a Sh15B REVENUE BOND that Kengen will float around the same time for energy plants. (The revenues will be “ring-fenced”)

    Secondly, CBK intends to regulate the practice of lending for buying shares (MPC statement). Again this has implications given that there was literally no policy guideline during the lending for the Safaricom IPO. I asked Amos Kimunya at the press conference where the allocations were announced whether it was appropriate for banks to lend against volatile assets and do you know what he said “Those are details” So why is the CBK today looking to regulate the practice? I would like to know.

    And did you see that anyone earning less than 23,000 KSh per month will now be classified as low income with middle income extending to Sh126,000 pm and upper income being above that. I wonder what it will mean for taxation.

    BUT WHAT TOOK THE CAKE WAS THE CBK saying it was waiting for proper inflation figures to decide on the appropriate action –WHAT THE HECK? ARE THEY SAYING THEY HAVE BEEN FIRING SHOTS IN THE DARK?

  7. Maishinski

    I think what CBK meant was that they want to use a different method to calculate inflation (e.g. to exlude commodities like food prices).

    My view is that they should maintain the current measure of inflation – so that we can evaluate their progress by comparing like-with-like.

    My guess is that bringing inflation down to around 8-12% within the next 12-18 months would probably be optimal…

  8. bankelele

    FortySouth: 8GB 33k for corp 50k for individuals – with 9hr talk, 800mb downloads, 300 sms, pre or post, sim slot locked

    Jigsawman: what do you think of the prices announced?

    Ka-investor: I know, it’s amazing how fast we go through and discard technology. Patience pays

    Coldtusker: Telkom really shaping up better than I expected,

    KE: thanks

    MainaT: But what does that say about the Guv’nor who keeps publishing these stats – and which a lot of us use in our reports?

    Kirima: I’m sure the price will come down, if one can wait – but I think corporates will exhaust the 10,000 i-phones

    Jbufreshman: hope you get mob offers from here

    E-Nyce: That’s why I’m happy about the approach that Telkom/Orange has taken to educate subscribers on the use of their i-phone. There are so many people like my MP who have expensive, gadget laden phone they can barely use – beyond receiving calls!

    Maishinski: let me digest your comments first
    – Bond lowering brings in the retail crowd
    – Some brokers are not generating sufficient income
    – Tourists and remittances are down, inflation is up – which can be fixed?

    – nice meeting you, keep in touch
    – thanks for the tip on new companies ready to invest here
    – it’s scary of we can’t trust government statistics

  9. Mista

    This is nice!

    I also thot Mbaru is high on something.Even by basic copy/paste definition of recession,we ain’t close.
    That guy ought to know that people act on expectations and could end up accelerating the path to the recession.
    Funny We can LEND Rwanda to buy our goods!someone tell me how that works?

  10. Maishinski

    Lol @ Banks

    Ok that was a rather long post. But its Mbaru’s fault… Here’s the summarized version:

    1. Fix inflation first so that people can have more disposable income (higher consumption + balance is invested at NSE/CBK).

    2. Manage Interest Rates & provide easy credit for viable businesses

    3. Fix the Environment (Laws, Politics & Infratructure)

    4. Refocus from manufacturing to services (ICT/Knowledge/RnD)

    5. Fire Mbaru

  11. ke


    You want the government to manage interest rates? Isn’t that what many advocates of the current U.S. financial crisis are saying is one of the main issues that is exacerbating the problem? If the fundamental structure of the economy is flawed, how will trying to “manipulate” interest rates change anything?

    Refocus from manufacturing? Does kenya really have an efficient manufacturing base to speak of? I think they need both. They need to Increase manufacturing output through automation AND they also need to diversify the economy into new industries like ICT. This is the Indian economic model. You cannot reduce poverty through the redistribution of wealth. You can only do it by creating new avenues of wealth and ICT is one such area for Kenya.

    Fire Mbaru? Isn’t he a private citizen working for a private company?

    Fix inflation? How? In order for people to get disposable income, they first, must have jobs. In order for people to have jobs, companies (or individuals themselves), must increase their productivity levels. If this is not happening, i.e. if not enough jobs are being created because people are not producing, where will the disposable income come from? Actually, where will any income come from?

    In fact, one could argue that during the last 5 years, banks have been irresponsibly loaning people money and artificially creating disposable income that has come, not from production, but rather from excess borrowing.

    The CBK, like most government banks around the world, constantly manipulate the “statistics” to make things look rosier than they are. Don’t forget, these government bankers are hired by politicians. Statistics are not created by God. They’re just numbers put together by the “folks”.


  12. Maishinski

    @ Ke.

    Hmm.. interesting debate. Here’s my response:

    Interest rates:
    Yes, the maximum needs to be controlled. US situation is not the same as Kenyan situation. Copy/paste can’t work. We need to look at the unique weaknesses in our system.

    Kenyan bankers exploit citizens and contribute to wealth inequality. They choke business margins by making credit expensive. When the TB was up, they used it as a benchmark. When it went down, they said it was too volatile to be a benchmark. Who’s fooling who?

    Refocus from manufacturing:
    (i.e. skip INDUSTRIAL economy and go straight to KNOWLEDGE economy) If you want to bridge the poverty gap for the masses, you need to have businesses that have low entry barriers. What does it take to get into Manufacturing? Capital requirement is massive!

    To be a knowledge worker, all you need is your BRAINS and comparatively much less startup capital (especially with gov sponsored incubators). Revenues from knowledge and Intellectual Property can surpass industrial revenues (Microsoft/google/Infosys/Amazon) several times over.

    Mbaru – ok, Lets label him an “economic terrorist” and Nuke him instead. Relax… jokes man… jokes… 🙂

    Fix inflation: Yes I am advocating for some INTELLIGENT price controls as a stimulant to lower the COST OF PRODUCTION. Too much self regulation is what messed up the world economy. We need to learn from other people’s mistakes.

    Lower cost of production results in cheaper goods => more profits => expansion => more jobs => more spending => expansion => more jobs => more spending etc… etc… it’s a positive feedback loop.

    Your Borrowing argument: I disagree. Not in Kenya. How many people in Kibera slums have credit cards? Our banks wont talk to you unless they have a confidence that you can somehow pay back the cash. (This has actually turned out to be a good thing).

    In the US, there are stories of people whose PETS have been offered credity cards!

    Consumer credit is BAD. Strategic Business Leverage is GOOD.


  13. E-Nyce

    Low interest rates are not exacerbating the problem in the US–even Bernanke say this (even Paul Krugman has said this, and he certainly has better creds); lowering rates doesn’t work in this environment because credit freeze is due to lack of confidence in lending. You could set the rate to zero and companies still wouldn’t lend until they are convinced that they will get their (our) money back — with interest, of course. Lack of Confidence and Trust is where we’re all stuck right now.

    The concept of governmental regulation of interest rates (a la a Central Bank) is one of the fundamental structures of a national economy–and that concept is very much sound (poor Johnny McC. just couldn’t explain it right)–> IF the Reserve is INDEPENDENT of political influences AND staffed be people who actually understand fiscal policy, applied financial systems and :gasp: economics.

    Sadly, the US Treasury Dept and the Reserve suffered from, as Krugman put it best, a “FEMA-ization” during the Bush regime: meaning political cronies where hired (instead of technocrats), they chased away those who could effectively challenge the White House inane fiscal policies, and left the place with no one who would be prepared when disaster struck. Goodbye New Orleans, Hello Global Economy.

    Krugman said that Bernanke is one of the best people he knows to handled the current situation, few have studied and analyzed The Great Depression, and overall what makes national economies work, as much as Bernanke. BUT…he’s trying to fix a problem that started, grew, and rotted before he got there. We want to start casting stones, let’s start with Greenspan.

    But let’s talk Kenya…

    Despite Maishanki’s constant zealousness (those stories about PETS offered credit cards, are from the same people who worship Elvis!), I agree that Kenya’s not in Recession and you don’t have a credit crisis. You DO have a Central Bank AND national govt just as incompetent as the US, and that will not help you in this environment. Investors local and foreign don’t trust the numbers anymore–they know it’s all rubbish! Instead they are going to rely on their confidence of institutions that have consistently shown good and responsible past performance.

    Now, where do we think that leaves Kenya?

  14. Maishinski

    Chase Manhattan issued a platinum Visa card to “Clifford J. Dawg” in 2004. In this instance, the owner of the dog had signed up for a free e-mail account in his pet’s name and later received a pre-approved offer of credit for “Clifford J. Dawg.”

    The owner found this humorous and responded to the pre-approved offer, listing nine zeros for the dog’s Social Security number, the “Pupperoni Factory” as employer, and “Pugsy Malone” as the mother’s maiden name. The owner also wrote on the approval: “You are sending an application to a dog! Ha ha ha.”

    The card ARRIVED three weeks later.[13] Credit has been offered and issued to other dogs, including Monty, a Shih-Tzu who was extended a $24,600 credit line.

    The slip ups also occur with humans. Credit has been granted to children and BABIES and young teenagers.

    Source: http://epic.org/privacy/idtheft/mdstate11.21.05.html

    Newsflash (2003): “A dog in Greater Manchester has been offered a gold credit card with a spending limit of £10,000 and the chance to earn air miles.”

    Source: http://news.bbc.co.uk/2/hi/uk_news/england/manchester/3104839.stm

    Hmm… BBC worships Elvis? Explains a lot… hahaha Just kiddin.


  15. MainaT

    On ideas, we need to start with the basics. 65%+ of the population still ekes a living from agriculture. Agriculture is not as exciting as ordering goats via the internet, but until we get it right, it’ll be like trying to climb a very slippery slope while carrying a sack of potatoes.

    This 65% is not even feeding Kenya. And there is a multiplier effect because inadequate agricultural supplies have been a key driver of inflation this yr. Incentivize farmers and you also fix another problem. Increasing urban population (mainly in slums) that is feeder for rising crime.

    On CBK-le professor is I’m sure a nice clever chap. But clearly better at talking exogenous growth rational expectation and another fun-economic terms that as a dynamic CBK governor. CBK needs to start rebuilding its creditability

    A knowledge/ICT-driven economy is possible, but how many know that Seacom will be landing its fibre optic cable in June and what are capabilities are they building ahead of this date? Where are research institutes to churn out programmers by the cartload?

  16. E-Nyce

    Maishinski, you’re great! But it’s not BBC but the pet owners that are ‘Elvis-ians’! haha

    Try a HTML tutorial like this one. The blog software doesn’t recognize all the codes but most will work.

  17. Anonymous

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  18. Anonymous


    So how has the i-phone market in Kenya shaped up so far? Are the prices any lower? How much popularity do these phones have and who is using them?

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