Article has been updated to include a response from M-Kopa
For a long time – while we had our number listed on Google Business – we would receive calls from people confusing Techish Kenya for M-Kopa. This is thanks to the article I wrote early 2020 on the M-Kopa devices one can buy. Those devices have since changed, but the article remains popular. Check out the comments’ section.
In that article, I outlined how M-Kopa was making a killing money-wise by selling normal devices at very high prices to people who can’t afford the devices in one go. They’re essentially a hire purchase firm. If you can’t raise KES 2000 for a device, they will happily sell it to you for KES 4000. Here’s how: you’ll give them a deposit of KES 400. And then you will pay them KES 60 every day for 2 months.
It is a business model that gives the company in certain instances over 200% in profits. And the crazy part is the fact that it is targeted at poor people. People who according to a 2015 Bloomberg article cannot raise $2 a day.
M-Kopa doesn’t only sell phones. They started by offering home lighting through solar panels. They then brought in TVs and Fridges, and later on smartphones. A small fridge – normally between KES 12,000 and KES 18,000 – according to data from last year would cost approximately KES 99,999 through M-Kopa.
Currently, the website doesn’t list details on payment plans, or how to calculate the full amount one will be required to pay eventually. For that data, it seems one has to directly contact M-Kopa, and then do the math.
So why is M-Kopa still so popular:
It is simple. For many people, raising KES 60 bob a day is easier than saving the little daily income for a long time to raise KES 5000. It is because many of M-Kopa’s customers live hand to mouth. Their little daily income is only enough for that day. They don’t have savings accounts, neither do they have insurance and whathaveyou. So making them pay a fraction of what they make to own a fridge, or a smartphone sounds like a great deal.
Every day when I see a new comment, or email, or phone call inquiring about M-Kopa I wonder why M-Kopa devices have to be that expensive. Why do the markups have to be so high when the company offers nothing else. I mean, they don’t include any voice or data bundles with the smartphones. They don’t have any insurance, so if you lose the device before your payment term ends, you are forced to continue paying. They also don’t have any repair facilities to repair or replace damaged devices. It is crazy! Why have such high markups without offering anything extra?
One can argue that the markups cater for defaulters, or for the software they put in the devices to remotely lock it, or for the staff they have to pay, and all that. However, in my eyes, it is a venture whose whole business strategy is offering as little as possible to the poor, while cleverly charging them as much as possible.
Last year, Safaricom announced Lipa Mdogo Mdogo where interested parties can acquire a 4G smartphone for KES 20 a day. From calculations, there is only a KES 580 difference in the price of the phone if you buy it in one go, and the price if you pay the KES 20 per day for 9 months. Safaricom’s plan – though closed out for many Kenyans – feels much better, and less like venture built to prey on the poor.
Hopefully in future we will have legislation that requires businesses to clearly state the before and after prices when having hire purchase terms. That seems to be the only way we will deter people from extremely unfair companies.
M-KOPA provides asset financing to customers who are largely unbanked and unable to pay a lump sum for a device. Our approach enables an inclusive offering which allows as many people as possible to have access to a smartphone.
M-KOPA is servicing customers who are otherwise marginalised by restrictions due to their income and popularity stems from the ability to both a) own devices which provide enhancing benefits to their standard of living and b) customers who pay off their product well build a credit score with M-KOPA and access additional products at lower prices.
Strong customer protection – customers that are struggling with payments can return the phone within 30 days and get a full deposit refund, or within 30 – 90 days for a 50% deposit refund. If it exceeds the 90 days, the phone can still be returned without a penalty and no further financial obligation. This is quite unique and very few, if any financing providers in the market have a mechanism for customers to walk away at any point, risk free.
M-KOPA partners with accredited service partners for the phone brands sold, and customers can return their device to our shops and we manage the servicing on their behalf. In addition, we enable customers to pay for any out of warranty repair costs through a financing plan.
M-KOPA continues to work closely with our partners to provide additional value-added services for our customers and look forward to launching more services this year.