Low-income Markets: A Phenomenal Opportunity for Business

Published on 3rd July 2019

Safaricom is a leading communications company in Kenya with the widest and strongest coverage. It is also home of the famous Mobile Money service - M-PESA. Safaricom tapped into Kenya’s peculiar calling habits to be the giant that it is today. During its inception, most mainstream banks could only serve a specific few who they considered to be viable customers. Some banks had started to deregister the accounts of clients with ‘petty’ monies on the grounds that they were not feasible.  The corporate business fraternity’s perception of poverty then masked the fact that the poor represent resilient entrepreneurs and value-conscious consumers, and that what was needed was a partnership with them to innovate and achieve sustainable win–win scenarios.

Safaricom filled this gap and not only controls over 70 per cent of SME banking in Kenya, but it is also a giant in data, security and communication sectors of Kenya. At its inception, a mobile phone handset cost around Kshs 275 000 while a line cost about Kshs 500.  Handsets are now available at Kshs 500 while lines can be obtained at Kshs 100. It is not clear why transaction costs have not reduced by a similar margin.

Jacques Mallet du Pan, the Genevan-French journalist who took up the Royalist cause during the French Revolution once said that a revolution devours its children. It is important that service providers be put under check so that they when they become monopolies, they do not cannibalise the poor. Above all, low-income markets present a phenomenal opportunity for business. Africa should nurture and tap into these markets for continental growth and win-win solutions.

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