Money Markets

The poor invest in airtime to grow income, says study

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Safaricom CEO Bob Collymore distributes free airtime to passengers in a bus to mark the launch of a promotion run by the firm. A new study has shown that poor people would rather cut back on their food and transport budgets to buy airtime. Photo/File

Safaricom CEO Bob Collymore distributes free airtime to passengers in a bus to mark the launch of a promotion run by the firm. A new study has shown that poor people would rather cut back on their food and transport budgets to buy airtime. Photo/File 

By James Kariuki and Mugambi Mutegi

Posted  Thursday, January 24  2013 at  20:24

In Summary

  • Study finds the poor forego basic items in the hope of clinching life-changing deals.
  • Those interviewed revealed that they sometimes failed to buy entire meals – usually lunch - for themselves or their families.
  • The report revealed that individuals also skipped buying body lotion, soap and new clothes although these incidents were less prevalent.

Many of Kenya’s poor would rather go hungry and walk to work than be short of airtime, according to a study commissioned by the World Bank.

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The preference reflects the changes in spending priorities brought about by the use of mobile phones.

The study found that seven out of 10 poor people — referred to as the base of the pyramid in the report — cut down on food expenses to spare money for airtime.

“These substitutions were largely undertaken in order to strengthen the longer-term asset accumulation of micro-enterprises,” said the report titled Mobile Phone Usage at the Kenyan Base of the Pyramid.

It found that 83 per cent of the pyramid base kept aside up to Sh100 from basic needs while 70 per cent sacrificed provisions of between Sh101 and Sh500 while another 83 per cent cut their expenditure by between Sh501 and Sh1,000.

Nine per cent of those polled also admitted to regularly cutting back on bus fare by up to Sh100 while another 10 per cent saved between Sh101 to Sh500.

The amount that respondents saved the most was between Sh10 to Sh250, at least once a week.

“Why not buy credit and forgo bread so that I make more money for daily use than bread for a day’s use,” one of the respondents posed, saying phone credit gave her a higher chance of securing a better job.

Those interviewed revealed that they sometimes failed to buy entire meals – usually lunch - for themselves or their families or budgeted for cheaper meals.

The report revealed that individuals also skipped buying body lotion, soap and new clothes although these incidents were less prevalent.

The research conducted over a period of six months last year was commissioned by infoDev — a global partnership programme within the World Bank — and conducted by iHub Research and Research Solutions Africa.

A similar study in the Philippines found that mobile phone and credit purchases had displaced tobacco consumption while in Uganda women were willing to forego store-bought items to stay connected.

The report found that the sacrifices extended to owning a handset for 60 per cent of the poor, reflecting a changed mindset where mobile phones are no longer deemed a luxury.

Kwame Owino, the chief executive for the Institute of Economic Affairs said the findings were indicative of the importance of phones to Kenyans faced with uncertain economic times.

The poor were making such choices in the hope that having an operational phone could help them land a new income source.

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