Safaricom has over 20 million subscribers, a 67 per cent market share and over 17 million M-Pesa subscribers and it recently marked 15 years of existence. Berna Namata spoke with the CEO about the role of the private sector in development.
Recently, Safaricom, MTN Rwanda and MTN Uganda launched cross-border money transfer services. What is the strategic thinking behind this move?
Our customers wanted cross-border movement of money and effort was needed from regulators to reduce roaming charges, which were too high. The heads of state sat together and agreed to reduce roaming charges. There has always been a need for cross-border transfers if you want a borderless East Africa.
In relation to that, will it always require political leadership to make service providers in the region work together?
I don’t think it will always take political leadership. Business leadership now increasingly understands the need for collaboration. What happened with roaming was that some networks were net receivers of revenues while some were net payers.
Nobody wanted to share the cake, and if you are a net receiver, you definitely do not want to reduce the fees. I am really pleased that there was political intervention – it is a good example of how the region’s political leadership is taking integration more seriously.
What do you regard as the biggest challenge facing telecoms operators across the region today?
I would say the biggest challenge is always going to be infrastructure. I get a lot of pressure from customers who say “Why don’t you give me mobile phone coverage in this area?” and the reason is that sometimes there is no power — you need a generator, which is expensive. The second thing is that probably I cannot get fuel to the generator because there is no road.
The regulatory environment is becoming more stable and predictable, which is a good thing for us. We also need to deal with corruption. If you do not deal with corruption, you will never create an environment where investors are happy to come and invest.
On a different note, it is election season across the region. We have just had Burundi and Tanzania go to the polls, next is Uganda next year and Rwanda and Kenya in 2017. What is your stand on minimising political risk to promote investment?
I think any smart business person will tell you to stay away from politics. What I think is important for businesses is strong political leadership that is visionary.
Does that mean you are not concerned about term limits?
Term limits are a difficult thing because they tend to be conditions usually imposed by outsiders. When you get into African politics, you need to understand that it comes from a different place to Europe and Western democracy. I am reluctant to try to impose Western democratic principles in their entirety universally across the African landscape.
We have seen Burundi blow up after elections and the region is feeling the repercussions. To what extent are you concerned about the political risk that comes with these elections?
I think often political risk is overplayed. Who would have anticipated Greece 10 years ago or the migrant crisis that Europe is currently undergoing?
When we talk about elections, America has elections now but look at the people who are the current front-runners. I would say political risk is overrated. We have had elections in Mozambique, South Africa, Nigeria and yes, we did have Burundi — it was a bit of an outlier. What is really important is strong and visionary leadership.
You are visiting Kigali to attend the African Philanthropy Forum 2015. Is there a business case for this kind of work?
There is a new way of doing business. Recently, I joined a group called the B team, a global non-profit initiative, co-founded by Sir Richard Branson and Jochen Zeitz, that brings together international CEOs and business leaders to “make business work better.” The way businesses have conducted themselves for decades or centuries is now outdated.
Plan A is not working any more, because all we are seeing is climate degradation, human-rights abuses and corruption.
We have to find a new way of doing business and it starts by businesses saying that the primary purpose is not to generate profits.
The purpose of a business is to uplift the community in which it is operating by helping in the development of people.
We want to run our businesses in such a way that future generations will not suffer.
Earlier you said you worry about corruption. At Safaricom today, are you corruption-free?
We are absolutely not corruption-free; we are a long way from being corruption free. You must remember that Safaricom is the largest company in Kenya and therefore becomes an excellent target for people who are interested in corruption.
We are seeing corruption around awarding of tenders, disclosure of customer call data and collaboration with banks to defraud customers. We published our Sustainability Report recently where we talked very openly about it.
What specific business practices are you implementing to minimise cases of corruption?
We do a lot of stuff; the first thing is to make sure that everyone goes through ethics training. The second is that you have to deal with it decisively — if you are caught stealing even half a dollar, you will be fired. There is no one who is protected from that; we build it into our business relationships.
I sit on the UN Global Compact [a United Nations initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies and to report on their implementation] and therefore drive the local network.
We try to create an ecosystem around this but it would be wrong for me to say that we are making huge progress. We are making small progress and I think we are probably a little less corrupt than we were few years ago.
The United Nations recently adopted a new set of development goals – the Sustainable Development Goals. What can the private sector do to help achieve them?
The private sector has a critical role to play — in fact, as critical as the role of governments. The fact that the private sector was involved in the formulation of the goals was a good start. What we need to address now is how to get shareholders to buy into it.
If the shareholder does not buy into it, then the management and the chief executive officer are not going to be able to be effective. If the shareholders are constantly looking for quarterly results and their annual dividends then the CEO will not be able to take a long-term view.
It needs high net-worth individuals and families as well as pension funds who have a long-term view to start asking CEOs tough questions about what are they doing about SDGs and the specific goal the company is focusing on.
In relation to the above, which SDG is Safaricom focusing on?
We are focusing on healthcare — we think that bringing technology to healthcare can be much more effective than trying to provide doctors at all the touch points. But, how do you reach the person in the village? You give them a mobile phone with an app that can get you access to qualified doctors, diagnosis and prescriptions.
For instance, TB care can be affordable if you track it — it could cost less than $100 to fix it. But, if you do not take the medicine, you develop multidrug-resistant TB and that cost escalates rapidly to $20,000 to cure that person.
Regarding climate change, we are increasingly cooling our own installations by using renewable energy such as wind, solar and hybrid.
Eradicating extreme poverty should also be on everybody’s list because we cannot operate in a society where many people live below the poverty line.
So, what’s next for Safaricom?
The most recent thing that we launched is bond trading through the mobile phone, because the government of Kenya realised there is a lot of money in the informal sector — as in most African economies. Why would a government borrow money in Europe or US in foreign currency when they can get it from the local economy? You can buy bonds for as little as $30.
We are still wrestling with digital broadcasting in the TV/decoder space – I think we made a few mistakes – we jumped into it without bringing the right skill set on board. We did not get the right content and the WiFi did not work well because we had not tested it properly. We took it off the shelf, fixed it and we are going to put it back on the market.