Why Smartphones Matter for Economic Growth » Capital News

By Kevin Michuki

The numbers are in, and once again, they appear to paint a sorry picture of the state of the growing digital divide in Kenya.

Wondering about the numbers I’m talking about? The Communications Authority of Kenya’s Third Quarter Sector Statistics Report for the Financial Year 2024/2025 (January 1st–March 31st, 2025) is now available, presenting a bleak picture of slow growth in smartphone acquisitions.

According to the numbers, 32.5 million Kenyans are still accessing mobile telephony services on feature phones, thereby denying them access to a wide range of essential services that smartphones can offer via internet connectivity.

A few years ago, access to a smartphone may not have counted for much beyond basic telephony, particularly as an essential development parameter. Today, we must, however, face the reality and work towards clearing barriers that limit access to smartphones, including credit access.

While you and I can afford multiple smartphone devices and therefore count among the current 42.3 million Kenyans who own this device, the reality is that nearly 33-million of our compatriots operate in an internet-dark world.

Try picturing a scenario where you have no access to E-government solutions, such as E-Citizen, and cannot enjoy the benefits of social media platforms, quickly search the internet for that nagging question, or find your way using simple internet navigation tools. A world where it takes an intermediary to register for the Social Health Authority (SHA), and where you cannot easily share family moments from Birthdays to graduations, as a feature phone cannot host WhatsApp.

A world that revolves around accessing financial services via the nearly obsolete USSD options, thus limiting your financial inclusivity options, and where information reaches you only via SMS.

Sadly, that’s the life that nearly 33 million Kenyans are currently leading, even as the rest of us rush towards a 5G world with immediate access to information, education, and entertainment at our fingertips.

According to the recently released CA report, feature phones increased to 32,573,748, up from 30,579,714 in the quarter under review, representing a 6.5% growth. On the other hand, Smartphones grew to 42,349,405, up from 41,477,527, representing a 2.1% increase.

In a growing country like Kenya, the number of feature phones should be slowing down to nearly zero, with a faster acceleration towards Smartphones. However, this hasn’t been possible primarily due to economic factors, with an average entry-level smartphone priced at more than Kshs 15,000, thus, way out of the affordability bracket for many.

To handle such barriers, Kenya is, however, actively taking the trailblazer position among many other developing countries through the provision of alternative financing solutions to aid smartphone acquisition.

Financing solutions, such as the Buy Now, Pay Later products offered by Watu Simu, are today powering more than 2 million customers, primarily involved in the gig economy. Many of these clients are the typical ride-hailing, delivery, online, and related workers who rely 100% on quality smartphones to earn a living.

Players in the gig economy cannot afford to deliver their daily bread or even meet their signed-up corporate obligations, such as with Uber, WeGo, Bolt, Glovo, among others, without a functional smartphone. According to publicly available data sources, the Kenya Revenue Authority collected Kshs 16 billion in revenue from digital taxi-hailing and digital delivery services firms, suggesting that this is a trillion-plus formal market.

Without access to smartphones, these enterprises would, however, not be in a position to power our economy and make such significant revenue contributions to our exchequer.

Time is therefore ripe for a multi-stakeholder conversation and affirmative action to ensure that we reverse the growing trend of feature phones and instead accelerate the growth of smartphones.

While firms like Watu Simu provide credit access options, firms such as Samsung Mobile are providing quality devices that fuel economic growth. Each smartphone handset in the hands of a Kenyan contributes to positive economic development, and national efforts must be applied to bridge this digital divide.

Kevin Michuki is the Head of Growth, Watu Simu Kenya.