Safaricom and Mpesa Committing Corporate Suicide

Mpesa and Safaricom have reached their zenith. There is no way out if they continue on their monopolistic trajectory. It leads straight in to the abyss.

Like all monopolies, they now rely on their unhealthy links with the state inevitably making corruption a major brick in profit making. Most of the recent mega projects have involved the state and corruption. This dependency on the state like all chain reactions leads to their involvement in politics and byx that tying their fortunes to those in power. It goes without saying that their ultimate fate is like siamese twins linked with nearly 100% shared organs making separation fatal for one or both.

They can voluntarily end the monopoly and distance their business from politicians and politics or wait for it to be done with disastrous results.

Safaricom has stood in the way of other mobile companies thus stifling them and by the same token stifling itself. It is more like the relationship between a camel / donkey and the tribe dependent on it: Both are tied down! (ref. James Michener – Afghanistan).

The problem with this arrangement is that Safaricom will concentrate on its immediate domestic competition at the expense of innovation. Those telecom companies outside its shadow are advancing far beyond its ability to compete them.

Tanzania now has an advanced mobile money transfer. With a free regulator, mobile roaming and transfer of funds across the networks has been eased opening it up in ways unknown in Kenya. Yet we still boast of being the home of money transfer and proudly parade figures showing how much more was transferred last year compared to the years before. This can easily be explained by the natural population growth and the number of new people getting mobile phones. After all the economy is itself growing.

The latest foray into the credit card business should be an indicator of decadence and stagnation creeping in – not an explanation or innovation. Credit cards failed in Kenya and are not likely to pick up now that safaricom has gone in to the business. Mpesa succeeded because it was so much unlike the banks and credit cards which were elitist, associated with the rich and just not the thing for an illiterate or functionally literate population that Kenya is. Safaricom is embracing the very things that made banks fail to spread.

By forcing customers to stay in Safaricom of suffer small indignities and inconveniences when transferring or receiving funds, there is an element of resentment which will build up to levels that may destroy its own market.

That Safaricom controls The Regulator and not vice versa is no secret. The lack mutual mobile phone roaming for all networks has been destructive and harmful to the interests of citizens. That you would need three or four sim cards to travel in Kenya, changing from one to another to maintain network cover has probably help’ed the phone companies to declare good results at the end of the year for their shareholders but it has not helped the Kenyans who could not make calls even while having a huge tall mast within their own compounds. The recent elections where the IEBC claimed that 11,000 polling stations were not covered by the 3 G network was a scandal ignored by the media. It turned out that the entire country of kenya is properly covered by the 3 G and 4G networks but there was a mismatch where companies with those networks happened not to be the ones allocated the contract in the affected area. So there were polling stations with results and a 4G network they could not use because it was not the one allocated the transmission in that area! Think what inter-network roaming would have achieved!

It is not that the companies are new to paying each other for the use of their networks! Calls terminate in to each others network and they pay up without failure! They just don’t allow roaming! In many decent countries that would be considered a national security issue.

Let Mpesa be freed from monopoly and let the telecom companies attract and keep customers by other fringe benefits and goodies not compulsion.

If Safaricom does not free mpesa some other mobile phone company or a bank will. It may not be called Mpesa but will certainly offer citizens freedom.

This arrogance was once the preserve of Kenya Posts and Telecommunication Corporation. One required to show a payslip, get a letter from the employer, another from his local assistant chief and a certificate of good conduct along with a huge deposit to get a line after five years of application. When Safaricom came many cheered. Safaricom is now exactly where KP&T was when it collapsed never to rise again!

 

 

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