Taming Digital Lenders in Kenya: Are We Close?

Dr Patrick Njoroge, CBK Governor Photo|The Standard

As app developers in Kenya, we do not just create loans apps. We care about the experience and welfare of the users. Like many Kenyans, we are concerned about the rates the digital lenders charge.

Kenyans have been complaining about instant loan apps for quite a while. However, a suicide case in 2019 caused a stir.

A man borrowed from a digital lender and defaulted on his loan. The lender resulted in what many have termed as “harassment.”

We told you how lenders ask for access to private data such as contacts or phone gallery. Here is the purpose. The lenders will contact everyone on your phonebook if they cannot recover funds from you.

Such was the predicament of this man who resulted in suicide. The lender started sending messages to his contacts, including his mother and grandmother.

What would you do if all your friends and family members start receiving messages about a loan you cannot pay?

Some have termed this as cyber shaming. The suicide provoked CBK to move to action.

Borrowers, on the other hand, started sharing their horrific stories of the means that digital lenders use to demand their loans.

The digital lenders’ side of the story

Every time Kenyans talk about interest rates on mobile loans, the digital lenders come out to defend their case.

Is this a case of misinformation? Do borrowers know how the process works?

In a recent interview on Citizen TV, the Digital Lenders’ Association spokesman, Kevin Mutiso explained how they end up with high interest rates.

Some will call it exorbitant but the lenders call it fair pricing.

Digital lenders in Kenya access funds from banks and other financiers. At the moment, the lenders in the Kenyan market cannot get funds from local banks.

The result has been borrowing money from venture capitalists from the US, China, Poland, and other countries.   

The lenders talk of a high cost of borrowing the funds. The capitalists charge between 18% and 22 % as an interest rate.

Think about it. Who pays for this interest rate? You! And every other Kenyan looking for a thousand or two from a loan app.

Remember we have not yet factored in other costs like developing a loan app, operational costs, taxes, and fixed costs. The lenders still have to make reasonable profits to stay in business above all costs.

When they add their price to the cost of borrowing, the instant loan becomes expensive.

Also Read: 10 Ways to Identify Fake Loan Apps in Kenya

Digital lenders also talk about the high risk of the business. With millions of Kenyans listed on CRB as defaulters, the lenders understand the risk in the market.

Loan apps lend to people that local banks will instantly turn away. When you hear or read that you can get a loan with a poor credit score, understand that you will pay a premium for that risk.

Again, not all digital lenders are predatory. Some are committed to helping small business owners grow their businesses.

Small business owners like mama mboga cannot wait for 30 to 45 days of a business cycle to buy new goods. They must go to the market almost every day to keep the business running.

Loan apps came in to cover this market segment.

Should the government regulate the market?

It is easy to shout and demand that the government steps in to regulate digital lenders. Borrowers would expect that interest rates would come down.

Digital lenders are open to government regulation. CBK can protect both lenders and borrowers by setting standards to govern their operations.

For instance, digital lenders should be required to be transparent about the price of their loan products. Honesty and ethical procedures in collecting funds from borrowers are equally important.

However, capping the interest rates would harm the market, as it is with any other market.

A loan is a commodity that is subject to demand and supply forces. At least the digital lenders view it that way.

From your basic economics class, you know that the price of any commodity goes up whenever the demand exceeds supply.

Unfortunately, this is the case in the Kenyan market for instant mobile loans.

We have a good example from the Kenyan government’s move to cap interest rates for local banks. The bank owners, in response, introduced digital lending platforms that operate as other private loan apps.

The interest rates are nearly the same. However, most local banks are ethical in their practices and are strict about controlling the risk of lending to defaulters.

The financial crisis of 2008-2009 is another perfect example of the long-term effects of government interference in a market.

The way forward

We clearly need order in the digital lending space.  The government through CBK should create rules and regulation for digital lenders in Kenya.

Whether we call it cyber shaming or harassment, dealing with defaulters must be ethical and fair. We do not need to lose another life because of a small loan.

While talking about lenders, we need to look at the real issues as Kenyans. What is pushing Kenyans to digital lenders?

Why are we willing to trade our private data for a loan of Ksh. 1,000?

Most people do not borrow for luxury but for basic needs. Unfortunately, the needs are recurrent and with no sustainable income, the inevitable happens.

Kenyans are desperate for an economic shift that will increase their real income to match the ever-increasing rate of inflation.

The income of the borrowers that loan apps target does not match with the cost of living, especially in the urban setting.

Hence, beyond asking the government for regulation, we need to demand systems and institutions that work for the citizens. Corruption is still a sad case in Kenya where people borrow to eat.

When the government fails to do its job well, the citizens suffer.

Finally, we need to make equal noise about savings as we do digital loans.

As app developers in Kenya, we have heard all manner of arguments and complaints about instant apps yet the demand for the same is still increasing.

However, noise about apps or platforms that help you save consistently is rare.

We need to cultivate the saving culture while we demand ethical and fair practices from lenders and accountability from the government.

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Samsung Unpacked 2020: Here Is Everything You Missed

Samsung holds a popular event every year dabbed “Samsung Unpacked.” In the event, the company reveals its latest devices before they hit the market. This year’s event was held on February 11, 2020.

The popularity and performance of Samsung devices in the global market make the event popular. If you do not have the time to go back and watch the live stream of the event, here is a summary of what may interest you.

Galaxy Z Flip

The rumours about the return of the Samsung flip phone started last year after the Galaxy Fold was introduced. Tech analysts noticed that manufacturers were going back to old designs and reintroducing them with new functions.

Some images leaked of the predicted flip phone. However, you cannot be sure until the manufacturer makes an official announcement.

Well, the flip phone is back with the following features:

– It has a 6.7 inches OLED screen

– The display when folded shows new notifications and battery level

– You can take quick selfies when folded

– The device has a “flex mode,” which a halfway unfold that resembles a laptop-mode

– The flex mode is ideal for hands-free video calls and selfies as well. It clicks at around 120 degrees on the hinge

Galaxy Z Flip: PHOTO|COURTESY

– The three-stop hinge has a layer of fibers that protects the device from dust and debris

– Galaxy Z Flip will start shipping on February 14, 2020 at an introductory price of $1, 380 in black and purple variants. Samsung will release the gold version later.

– The flip phone folds and unfolds more like the Motorola Razr

– It closes to a smaller square compared to its previous version that was released in the 2000s

– The device is 183 grams with 256GB storage, 8GB RAM, and Snapdragon 855 Plus processor

– The estimated shelf life of its Infinity Flex Display is 200,000 folds.

– Galaxy Z Flip has three cameras for photo lovers; a 10-megapixel f/2.4 selfie camera at the front, a 12-megapixel ultrawide camera at the back, and a 12-megapixel regular camera.

– It is has a custom UI that gives a different view of images and videos

– The device has multi-view window support to enable multitasking or using multiple apps

-Galaxy Z Flip is different but it feels and functions like a better foldable design of the Samsung Galaxy Fold that was officially launched in 2019.

Read Also: Samsung Galaxy Fold is finally in Kenya: Why Is Everyone Talking about it?

Galaxy S20

Samsung announced the Galaxy S20 at the event, which comes in three series. The company seems to have been building up to the new decade for the past three years.

In 2018, the phone manufacturer released the Galaxy S9. Last year (2019), the Galaxy S10 hit the market. Many expected  S11 this year but Samsung skipped all the way to S20, perhaps to mark the new year and decade.

Here is what you need to know about the new S20 series:

– The phone comes in three variants that include S20, S20+ and S20 ultra.

– The recommended retail price for S20 starts at $999, S20+ at $1,199 and S20 ultra at $1,399

– The three variants support the 5G network

– The phones have different display sizes that include 6.2 inches,  6.7 inches and 6.9 inches for S20, S20+ and S20 ultra respectively.

– Samsung has gone all out with the cameras of the three devices. S2O has 3 cameras while S20+ and S20 ultra have four cameras.

– The largest cameras in both S20 and S20+ are 64-megapixel. S20 ultra has a 108MP wide angle camera.

– S20 and S20 + have a 3x hybrid optic zoom and up to 30x super-resolution

– S20 ultra has  a 10x hybrid optic zoom and up to 100x super-resolution

– The front selfie camera is 10MP in the S20 and S20 + and 40MP in S20 Ultra

– You can shoot 8k videos with any of three devices

– S20+ and S20 Ultra have a depth sensor that improves the quality of images and videos for the users

– The series comes with the “Single Take” option for videos, which allows you to take a short video and get different versions. You can share the video in looping clips, boomerangs, and AI-enhanced versions among others.

– You can start ordering for the S20 devices from February 21, 2020, but Samsung will release them officially into the market on March 6, 2020

Galaxy Buds +

You may need new buds to go with the new devices. Samsung thought of it and announced the new Galaxy Buds + alongside the new mobile devices. Expect the same quality sound with the buds as it is with the original Buds.

Here is what to expect with the new Buds +

– A dual-driver system in place of the single driver system in the previous make

– The Buds can run up to 11 hours on a full charge

– Samsung sells a charging case alongside the Buds that provides addition with a single pinch that can last for another 11 hours

– The Buds+ can charge wirelessly with the “PowerShare” feature as long as you have a compatible Samsung device. The Company introduced this feature in some of its latest devices in 2019

– You can charge the Buds wirelessly within 3-4 minutes to get enough charge that will last for at least 1 hour

– The Buds + will retail at $149 starting February 14, 2020

Final remarks

Samsung is already shaping the decade with its new range of devices. The capabilities get better in every new device that the Company releases into the market. You can be sure that there will be a new series before competitors can copy the outlined features.

As tech giants shape the future, what are you doing about the technology in your startup? Are you stuck in outdated systems and technologies that slow your business down? Talk to Muva if you want an upgrade or to keep up with the latest technologies in this new decade.

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Kenyan Logistics Gains Huge as Sendy Closes $20 Million


The on-demand logistics space in Kenya is about to scale to a new height following Sendy’s announcement. The logistics start-up announced the successful series B round that raised $20 million. Atlantica Ventures led this round backed by Toyota Tsusho Corporation.

Atlantica Ventures is a venture capital fund with a focus on tech start-ups in Africa. The fund started in 2019 and is still new in the African logistics space. The Japanese automotive firm, Toyota provides capital funding to start-ups through its investment arm, Toyota Tsusho Corporation.

Other participants in the Series B round included Sunu Capital, Kepple Capital, Asia Africa Investment, and Vested World.  Sendy was officially in 2015 and has since expanded its operations from Kenya to Tanzania and Uganda.

Evanson Biwott, Meshack Alloys, Don Okoth, and Malaika Judd co-founded Sendy. Over 5,000 vehicles are already registered on its platform. Some of the major clients that Sendy serves include Safaricom, Unilever, and Maersk.

Business model

Sendy operates under an asset-free model that allows it to invest most of its capital funds in technology. Clients in need of delivery services connect with drivers via a mobile app or web platform. The rates vary depending on the type of courier and distance.

The logistics start-up focuses on helping entrepreneurs grow their business by offering fast, reliable, and affordable delivery services. With the rise of online businesses in Kenya, minimising delivery expenses is important to business owners. Kenyans have embraced e-commerce but delivery costs increase prices significantly.

With less than Ksh. 100, a business owner can deliver a product within Nairobi’s CBD via a runner courier. Sendy offers the alternative of express bikes for small packages at a base price of Ksh.280. Pickups and vans are available for medium loads and trucks in different sizes for big loads.

Sendy has tried to cover all types and sizes of businesses in the market. Another selling point is its insurance cover on products in transit. African business owners know the risks involved in transporting goods, especially across borders.

The first step for new clients is to create an account on the Sendy app or web solution. The client will then choose a pickup and destination for the item(s) that needs delivery. The app automatically gives an estimated cost based on the chosen courier services.

Clients can track the designated driver in real-time until the goods arrive at the destination. Sendy boasts of an efficient customer service that is ready to serve clients in case of issues with delivery. The company delivery anything from farm produce to furniture, clothes, parcels, and food.

Competition

Sendy’s major competitors in the Kenyan market are Nigeria-based Kobo360 and Lori systems. Both companies have raised significant amounts through venture capital to expand their operations. In 2019, Kobo360 raised $20 million in its Series A round. Goldman Sachs was the major investor in that round.

Lori systems closed $30 million in the same year. Kobo officially launched its operations in Kenya in 2019, having established a strong presence in Nigeria and Ghana. Sendy has already established its presence in the Kenyan market.

The major challenge now is to keep its client base in the presence of the new entrants. The logistics space is huge but risky. Expansion to different markets, optimizing safety, and fast deliveries are necessary to win.

Sendy plans to stay ahead of its competitors by upgrading its technology. The current technology is already a step ahead but further investments in better technology will boost its competitiveness. Sendy faces other established competitors such as Glovo and small logistics firms, especially public transport companies.

Growth and expansion plans

Sendy remains committed to efficient deliveries and helping business owners to reduce their costs. The logistics company intends to deploy new talent to improve its services further. The talent includes engineering and data teams that will help in improving operational efficiency.

Sendy intends to optimize its trucks and set up service centers for its vehicles. The speed of delivery depends on the trucks, especially for heavy loads. Packed trucks are a common site on Kenyan roads majorly because of breakdowns.

The start-up may solve this issue for business owners with efficient trucks. The move is an opportunity for drivers who intend to join the network to invest in the best truck models.

Opportunities for Kenyans

$20 million is a good deal for a Kenyan company that has already established its brand in the market. What does it mean to Kenyans at a time when economic projections show tough times ahead? Let us break it down to you. How can you benefit from such an investment?

The obvious path that most Kenyans would follow is to apply for a job at Sendy. You may be lucky to get a good job as a data scientist or engineer if the company follows through its expansion plan. However, such opportunities are limited. You need to think beyond getting a job.

Some Kenyans are already ahead of the curve. We have witnessed foreign companies like Kobo360 and Glovo succeed in our market. Kenyans are establishing their own logistics solutions or apps that operate the same way as Sendy and its competitors.

Muva Technologies helps clients develop such mobile apps ideas further into income-earning ventures. Learn from Sendy. Four investors came together to establish a business that can raise $20 million from international venture capital funds.

If you start today, your business could be the next in line for such huge investments in the coming years. The initial investment is huge. You may need to work in partnership with like-minded people but start. Think beyond Kenya to other parts of Africa where business owners face the same challenges in delivering products.

Final remarks

The logistics space in Africa presents multiple opportunities for Kenyans to create solutions. E-commerce is expanding fast in the country. Kenyans need to wake up to these opportunities before foreign companies dominate all major markets.

Even with companies like Sendy in the market, the space is large enough for new entrants to provide better solutions. The successes of established logistics companies should act as pointers to entrepreneurs to existing business opportunities.

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10 Ways to Identify Fake Loan Apps in Kenya

The debate on whether loan apps in Kenya are helpful or enslaving continues. In fact, some people have termed loan apps as modern-day shylocks.

The arguments do not matter much to those facing financial constraints. Most people borrow to meet their basic needs that their income cannot meet.

Recent reports from different groups including the Financial Sector Deepening (FSD) Digital and Lenders Association of Kenya (DLAK) warn Kenyans of rogue apps.

Are you using a fake loan app? Read on…

Statistics

The Bill and Melinda Gates Foundation in association with the government and the FSD conducted a study on mobile lenders. The team produced the Digital Credit Audit report.

The study showed that by September 2018, the two main app stores, Google PlayStore and Apple’s App Store had 110 mobile loan apps.

According to the findings, 74 unique app developers had developed money lending apps.

By April 2019, 65 out of the 110 apps were no longer listed on the app stores.  Instead, 43 new developers joined the stores and introduced 43 new apps.

The changes within just a few months raise many red flags.

The team found out that most of the digital lenders are neither SACCOs nor banks. The lenders are not accredited to any financial institution.

This means that if you save with the lender, your savings are not secured in any way. In addition, such lenders are not insured.

If established banks go down, what do you think of unregulated digital lenders?

If more than half of loan apps are pulled down in just 7 months, why should you consider borrowing money from loans apps in Kenya?

Ways to identify fake loan apps

If your income can meet your bills and emergencies, you may not think of a loan. Again if you can access an unsecured loan from a local bank, an instant loan may never cross your mind.

Unfortunately, this is not the case for millions of Kenyans. Many depend on loans to survive.

Banks have also turned to online lending after the stringent rules that the Banking Amendment Act 2016 introduced.

Hence, if you don’t land in the hands of private digital lenders, you will end up in Mshwari, KCB-Mpesa loan, Stawi loan app, Kopa Chapaa by Faulu, Timiza from Barclays, Eazzy loan from Equity or Co-op Cash.

You may not qualify for a loan from these apps. Your alternative is private or international lenders like Tala, Zenka, Branch, or Saida.

New names have also in the Kenyan market such as Berry Loan App, KopaKash, Okash, Tumiwa, Uwezo Kash and Pezesha among others.

How can you tell if you are just about to borrow money from a rogue digital lender?

1. High registration fee

According to the Digital Credit Audit report, rogue lenders charge anywhere between Ksh.200 to 400 as registration fee.

Of course, the lenders know by now that borrowers are looking for free apps. With the high number of apps in the stores, coming clean with the registration fee is not an option.

Look out for claims that the fee is for checking your CRB record or score. You will never see the evidence that they actually checked your score.

Actually, you may not have access to the app after sending your registration fee. Some begin malfunctioning immediately and deny a fresh registration with the same details.

2. Data access

Beware of the permissions you grant to any app including loan apps when installing. For instance, an app may request to read your exact GPS location, which is expected with loan apps.

However, why should you grant permission to your phone gallery or messages/SMS app? Some will not install until you grant access to your call logs or your device identity.

A genuine lender does not need such information. You never know how the app owners use such information in this age of cybercrimes.

Also Read: Top 5 Instant Loan Apps in Kenya

3. Mimicked names

We know about brands like Tala, Branch, Fuliza, and Coop Cash. As you search the app store, you will come across loan apps in Kenya with twisted names.

For instance, you may see Tala Kash, Fuliza Sasa, Tala Pewa Loans or Mkopo Branch Rahisi.

Such lenders target borrowers who are unaware of the right brand names of loan apps. Stay away from such apps.

4. Rewards or prizes for referrals

If you need to refer other borrowers to an app to gain points, rewards, or qualify for a higher amount, you are in the wrong hands.

Some fake apps will not even grant the first loan before you enlist other borrowers and earn enough points.

Your creditworthiness should be sufficient to qualify you for a loan from a genuine lender.

5. Minimal details asked

How easy is it to qualify for your first loan? Is the app promising a high amount even with a low credit score?

Lending online does not eliminate the need to verify the identity and creditworthiness of the borrower.

If the lender needs few personal details to issue loans, chances are they have obtained the information illegally. Else, the app may go down at any time after earning a high interest from you.

See Also: Safaricom’s Fuliza Wins a Prestigious Award Months after Launch

6. Fake physical address and contacts

Most borrowers do not bother to check the contacts and address of digital lenders until they run into trouble. Check this information first no matter how pressing your financial need is at all times.

If you cannot get through the phone numbers given at any time of the day, discontinue the service. A loan app should be accessible and functional 24/7 with a quick support team.

7. Negative reviews

Do not believe every promise that an online lender makes. Check other borrowers’ reviews on the app store.

If all you read are complaints, do not ignore and assume that your experience will be different. Check the lender’s response to the complaints as well.

8. Exorbitant interest rates

Even the best loan apps in Kenya charge higher interest rates than banks do. However, rogue apps go beyond the normal rates for apps.

Compare the interest rates from established brands first to determine the prevailing interest rate.

9. Sudden changes in terms

Have you ever used app, qualified for a certain amount but your limit went down after payment? Loan apps promise to increase your limit when you pay in full and on time.

If the terms change suddenly, you are probably dealing with crooks who cannot sustain their business.

They come up with excuses for penalizing defaulters or changing loan limits even with evidence of previous communication.

10. Frequent breakdown 

Here is one more red flag for rogue loan apps. An app hangs when you are trying to request a loan or choose a longer repayment period.

The malfunction rarely comes before you repay for the first loan or send the mandatory registration fee.

If you can hardly complete a process without a dysfunction, you are most likely using a rogue app.

You will not miss the red flags if you do your homework. Do not take chances. Seek for information before you share your confidential data with unknown digital lenders

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Samsung Galaxy Fold is finally in Kenya: Why Is Everyone Talking about it?

Do you remember the days of foldable phones? Well, they are back! Samsung broke the limits in manufacturing smartphones earlier this year with the folding design.

Samsung Galaxy Fold was released into the market in February 2019. It has taken several months for the device to reach the Kenyan market. However, the phone has been in use in other parts of the world since its launch with positive reviews.

The head of Samsung’s mobile division in East Africa, Charles Kimari was excited about the launch. At the event, Charles indicated that the device’s capabilities have never been seen in the history of smartphones.

The capabilities and price got everyone talking on social platforms. Here is what you need to know about the device.

Features and capabilities

The Infinity Flex Display of the smartphone is the first in the world. Of course, phone manufacturers will quickly replicate it but Samsung has set the pace.

You can expect cheaper brands with the same design in the coming years. It happens with every new trend in mobile technology. However, it will take the brands some time to catch up with the full capabilities and functions of the new phone.

Perhaps the ability to multi-task while using the folding smartphone will interest you. The Samsung Galaxy Fold is built with the capacity to support heavy tasks including video games.

Watching and sharing videos is fast because of its advanced performance. You know the frustration of waiting for a video to load and play? The new smartphone solves that for you!

In addition, you can run three apps at the same time with 12 GB RAM. It functions more like your PC. Samsung included a high powered AP chipset to help consumers do more.

Try opening 3 apps on your device and evaluate its performance. Most devices in the market stop functioning and prompt you to close all the apps.

The intelligence functionalities set the device apart from other Samsung innovations. Many phones are yet to come close to this level of production.

The Company added Bixby Routines, which enable the smartphone to anticipate your needs. In short, Samsung is enabling you to do more with your mobile device than call, text, and keep up with social media.

You can program your life with the smart device and use your time more efficiently.

The Routines streamlines your phone time to ensure that you do not forget important activities or spend too much time on one activity. Most phone users are guilty of spending too much time on social media chats.

A device with Bixby Routines reminds of specific actions based on the time, event or location. The smartphone adapts to your life and preferences.

The large 7.3-inch display is synonymous with the latest Samsung smartphones. It collapses when folded to a 4.6” display.

Folding the device reduces the resolution of the display as well. However, the resolution is still above many devices’ resolution in the market.

Get this, the Galaxy Fold has 6 cameras! Talk about pushing mobile phone technology to the next level! If you like keeping memories with photos, this phone is definitely worth your consideration.

Phone manufacturers have realised the importance of clear images and videos. In our world of selfies and social media, you need clear photos from all angles.

You are assured of clear shots with 6 cameras at your disposable.

Data Security

Data security has become such a big issue to the extent that Kenya introduced a new law for the same. The concern is not specific to the Kenyan market.

People around the world have become suspicious given the rise of malware that spy on smartphone users. You never know the information that an app accesses and shares from your smartphone.

Samsung thought of this concern among consumers. The Galaxy Fold is equipped with Samsung Knox to improve data performance and keep your information safe.

You can hardly avoid using your phone to shop with the popularity of mobile money transactions. Banking apps have us accessing our accounts from our smartphones.

Hackers target social apps as well through links that enable them to access data on your device.

Samsung Knox enables you to use your mobile device without worrying much about data security. Most of the latest Samsung smartphones come with the security platform.

However, manufacturers cannot give a 100% guarantee on data security. Even with such platforms as Samsung Knox, you still have to be careful of the data you share or upload on your device.

Price

We know you are looking for this part! Well, for most consumers, buying a smartphone boils down to its retail price.

The introductory price of the Samsung Galaxy Fold in Kenya was set above Ksh. 200,000! Too high?

While you are thinking about the price and your bank account balance, the phones sold out immediately after the launch!

The retail price overtook the folding design in most discussions after the launch. It seems some consumers have been waiting for the phone to hit the market since February.

Clearly, owning the folding Samsung is a luxury, just as it was with the first foldable phones back in the day.

The quick sales did not come easy. Samsung ran a campaign for about 2 weeks prior to the launch and it worked.

Samsung Galaxy Fold falls into the category of smartphones that require some consumers to take a loan to purchase. Charles did mention of a plan to provide financing in the future to enable consumers to purchase the device.

Such plans involve partnerships with local banks. Hence, you still have a chance to own the device if you cannot pay out of pocket. You just need to wait until Samsung keeps its promise of such partnerships.

Final thoughts

Samsung has set a new standard in the market that other brands will soon follow. The retail price may be high for many consumers but the quick sales show there is a demand for high-end smartphones in the Kenyan market. It also seems like the old saying is true. History repeats itself. The competition in the global market for smartphones is pushing manufacturers to break limits in design and capabilities.

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