Katy Gabel
18 September 2008
(Page 2 of 2)
In the past, if you wanted to send a message to your family to say that you’re ill or you need money, you’d have to go and get on a bus or matatu, you’d have to travel on bad roads, maybe you’d have to send a telegram, or you’d have to go to a matatu with a piece of paper, give it to the driver and ask them to deliver it. But now you can call them up. For personal and security reasons, the mobile phone has helped tremendously in a country like Kenya where there’s insecurity and poor roads.
For health: you know, we are disseminating health information over the mobile phone to all over Kenya. Not just HIV/Aids, which is the popular thing, but tuberculosis, diabetes, how to get help, etc. It’s just revolutionized people. It’s had the biggest social impact on Africa since electricity, which maybe fewer people have.
What are some of the challenges you face in riding the wave of mobile development?
The thing is to keep it affordable. There’s no point in selling a line or SIM (subscriber identity module) card for 50 shillings when people can’t afford to use it. We have to make it as affordable as possible. And governments in Africa don’t help. What they do is they see this as a huge way in which they can tax people, by taxing airtime and so on. But the challenge is to keep it as affordable as possible.
What can the international community, including governments and private investors, do to support this kind of growth?
Governments should not see this as a tax cow, something you can milk for money. Governments should see it as enabling their people, enriching their people. They should look at if they lowered their taxes, how many more people would be able to afford to use it, and therefore create more jobs and more wealth. They should tax us less and regulate us less.
Investors should invest in this business. It’s a good business. But we’re riding on a wave of success right now. In Safaricom’s case, we’re a very profitable business. We’re the most profitable company in East Africa. But you shouldn’t expect big returns. This is a big investment, so expect longer-term returns. If you look at the mobile industry in Africa, investors want to put money in mobile because there are big returns now. But the longer-term returns will be a little bit longer in coming.
How has Safaricom managed to maneuver in Kenya’s delicate political arena? Has the political environment become increasingly important recently?
Politics always plays a very important part in any company’s life in this kind of environment, where a company like Safaricom is top in the awareness of any politician, mostly to see what they can get out of it. And because we’re top in the awareness of the public as well, whatever we do it is always scrutinized or has some news value. If our network goes down for half a minute, it’s headlines in the next day’s paper.
We always have to work in this political environment. I think we’ve done very well. Because we provide such an essential service, politicians in general tend to let us get on with our job of providing services because it benefits everybody, including them. And we have a direct line – I speak directly to ministers, the highest in the land, whenever I want, because this is a very important service we provide.
I try to push the ministers not to raise our taxes. They all nod their heads very wisely, and say yes, they understand, but they don’t do it, because it’s a very lucrative source of revenue for them. Twenty-six percent of airtime is taxed, so a quarter of what a customer pays goes to the government. That’s very high.
How will the introduction of a third provider affect your business?
It definitely will reduce our market share. Right now we have 85 percent market share, which is pretty unhealthy and actually quite dangerous. If you have such a big market share, your competitor gets very desperate. They do desperate things, like cut prices to the bone or give it away for free, which is not good for us from a shareholder point of view.
For sure, our market share will reduce, but it’s whether our absolute numbers will reduce or not, and that will not reduce. That will continue to grow. But we will have less of a share of the pie . That’s to be expected, but the competition is good for us. When you are so big, and when you have won so many awards you get very complacent, and your team gets very complacent. Competition makes my team lie awake at night worrying. And that’s good for us.
How is Safaricom planning to capitalize on the landing of undersea fibre-optic cables and the advent of increased access to high speed Internet in Kenya?
We are a foundation investor in the undersea cable. We are one of the three biggest investors in the Teams cable. We are a 20 percent shareholder, on par with the government and Telkom Kenya. So we’re very keen for that cable to come because we have broadband, we have satellites, but satellites are expensive and have very slow response times. We have 3G (third generation) broadband mobile already, and we will invest in the other cable – Seacom – as well.
The undersea cable is going to give us broadband capacity at a very low price. Not very, very low, like the United States, for instance, but a very low price compared to satellite. And the applications that we will roll out into Kenya will use broadband a lot and we will see that grow. But they must provide the services at a low price, and all they talk about right now is maybe. I haven’t seen any cable land yet.
Ten years down the line, where do you see Kenya?
Kenya is one of those countries that’s always on the brink of greatness. We’re never there. We’re always just there, and then we somehow jump back to the other side. The key for us is that we need people to have access to the outside world. My dream is for every school to have a computer so that kids can freely access the outside world. If you go to schools throughout the country, you can find plenty of computers, but they have no access to the outside world. So what do they do with these things?
In this global world, we have to have access to the outside world. That’s where I think ICT could be very important; where the cable would be important, the government initiatives putting fibre-optic across the country – that’s where it’s going to be key. Get it into the schools so the next generation will be completely computer literate. You can’t wait for handouts. We need to create all that work, and businesses and industries in Kenya. And we can do it – if we have access.
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It was an utter pleasure to hear from the man himself, Michael Joseph, on how he has lead Safaricom to one of the greatest success stories in bridging the digital divide while growing a highly profitable and successful business. Growing any technology business, even mobile telephony, to those living at the bottom of the pyramid, is one of the hardest tasks for any company or leader.
Last month I wrote an article about how Safaricom and Joseph "had figured it out" with respect to the strategies for growing a for-profit technlogy businesses in emerging markets. (http://www.disruptiveleadership.com/2008/08/23/safaricom-has-figured-it-ou t/)
This interview gives additional insights into the challenges and strategies of Safaricom. Not surprisingly, he mentions that business schools have been writing case studies on Safaricom. Anybody passionate about technology and digital access as a path to progress and prosperity should study them closely.
Very interesting article, Thank you. notebook memory
We're very excited about Africa's cellular revolution as well!
Nathan Eagle's txteagle program is one initiative that we, here at ALTA, are very excited to see growing!
http://www.altalang.com/beyond-words/2009/02/18/beyond-txt-crowdsourcing-wi th-txteagle/
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