Africa 2008: The Africa We Want to See – The Safaricom Case Study

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Africa 2008: The Africa We Want to See – The Safaricom Case Study

Posted on June 13th 2008

Africa continues to receive its fair share of negative news that helps to define who and what we are. The promise of Africa is more elusive to the majority notwithstanding the efforts by state and non-state actors alike to change the standard of living of all our people for the better.

The past 52 years of independence have regrettably produced a perculiar dependency syndrome among many of us. The decolonization project was expected to produce a new African armed with a great sense of responsibility for the future of the continent and how it is potrayed yet the majority of us still expect other people to invest in the changes that we want to see in the continent.

The fact that Africa is well endowed with natural and human resources has failed to leverage the position of the majority of Africans as agents of economic change. It is in this context that we have to reflect critically on why after 52 years of independence the success stories in enterprise development in Africa reflect largely a continuum of its colonial past.

An examination of the movers and shakers of Africa as reflected on its stock exchanges will confirm that very few native Africans have graduated from their colonially determined status and profile to become decision makers on the future of the continent.

The principle upon which post colonial Africa was founded and organised has largely determined and fixed its destiny. Was post colonial Africa destined for greatness? Are we a continent of progress and if so, who really is meant to benefit from it?

The lack of progress on key human development indicators in Africa has largely been blamed on the impact of neo-colonialism, corruption, dictatorship, civil wars, and lack of entreprenuers. The brain drain that has seen African human capital migrate to former colonial masters is just but one symptom of a continent that has no plan for its citizens.

Instead of asking what Africa can do for us we have to critically ask what we have done to raise the African flag high and bring hope to a continent that is blinded by its past and challenged by its future.

The brain drain demonstrates that in the minds of manyAfricans the continent offers inferior opportunities for personal and corporate development particularly to its natives. Instead of being engaged in the enterprise of nation building some believe that Africa owes them something and the changes they want to see will occur automatically.

While the continent continues to be potrayed as dark it has surprised many foreign investors who continue to reap hundsomely from the continent while pessimism, cynicism and even despair pervades the native African mind.

The Safaricom initial public offer (IPO) story that has recently dominated the print and electronic media is pregnant with lessons for native Africans about the opportunities that elude them. It has been reported extensively that a South African born, Mr. Michael Joseph, has turned the mobile phone service provider into a remarkable success story.

The spinning of the Safaricom story in the media has been positioned in such a manner as to simultaneously imply the existence of a native entreprenuership vacuum in Africa as well as sending a message to international investors that post colonial Kenya notwithstanding its recent political problems is a fertile ground for innovative and enterprising individuals and companies to reap hundsomely.

Safaricom commenced business in 1993 as a division of the Kenya Post & Telecommunications Corporation (now a French Telecom subsidiary following privatization) operating on an analogue ETACS network which was upgraded to GSM in 1996. Safaricom Limited was incorporated on 3 April 1997 and it was awarded a network licence in 1999. It was converted into a public company with limited liability on 16 May 2002 with the government through Telkom Kenya Limited holding 60% of the shares.

Pursuant to the IPO, the government's interest has now been diluted to 35% following the offer to the public of 25% of the shares. A consortium led by Vodafone holds 40% of the company.

Safaricom was the first mobile phone player in Kenya. When Mr. Joseph arrived in 2000 in Kenya, the company had 20,000 customers and through his leadership the subscriber base has exploded to 10.5 million making the company the biggest in East Africa with about 85% of the market share.

After about 45 years of independence it is instructive that Kenya has no managed to produce a black person matching Mr. Joseph's skills and experience. Equally this story tells us that the state is not always a reliable partner for progress and development and yet many Africans genuinely believe that the government has all the answers.

Some in Africa have argued that land is the economy and the economy is land. However, the Safaricom story informs otherwise. The listing of the company whose shares were oversubscribed by 532% and whose price surged by 50% on the first day of listing shows that good ideas can find a profitable home in Africa.

What has made Safaricom a success story? If Mr. Joseph was black would the government of Kenya have trusted him to run the state controlled company and lead it to privatization? After 45 years of independence, the control of Safaricom has been transferred to a foreign company by a government that was elected to advance the interests of its citizens.

What Safaricom has done is to convert 10.5 million citizens into believers of an idea and yet in post colonial Africa it is rare to get the same number to believe in an idea called a nation state. Mr. Joseph did not invent the 10.5 million African subscribers all he did was to provide them with a service that they are willing to pay for.

The concept of exchange of view must be a fundamental building block for a new Africa. If African governments were structured and operated like Safaricom I have no doubt that citizens will believe in them and subscribe to the idea of working together to build one reality. All that has been listed in the form of Safaricom is the consequence of 10.5 million believing in one idea. With good management and service there is more that can be done in Africa.

The value of the Safaricom is now estimated at US$4.5 billion. There is no doubt that the new conquest of Africa is being efficiently intermediated by our own African governments further reinforcing the notion that native Africans cannot manage their own destiny without the infusion of great ideas from without.

I have no doubt that if Mr. Joseph was native Kenyan questions would already have been raised about his cronyism and its alleged impact on business success.

The airtime that has made Safaricom the success it deserves is consumed by 10.5 million Africans the majority of whom are poor. Safaricom has produced its own 10.5 million users who pay for the minutes they consume. It is now one of the largest new mutual created in Africa and for Africans. If Safaricom can convert a small idea into a big idea why is it that we have fail to pose and think carefully about what is wrong with our continent.

The majority of Africans are poor and yet 10.5 million individuals can buy into an idea called Safaricom and accept to voluntarily surrender their hard earned income to a business model that appears so basic. The government of Kenya only managed to make 20,000 Kenyans to believe in the Safaricom idea.

Whatever our thoughts on Africa we must think again about the development models that have informed post colonial Africa. The time has come that we as Africans take responsibility for the future of the continent. Safaricom has shown that the state does not have all the answers for many Africans who continue to remain at the bottom of the development ladder.

Mr. Joseph and Vodafone have challenged all of us to reflect on the challenges that confront Africa. There are many things we do not like about Africa and yet we remain disinterested about the things that matter. If Mr. Joseph can believe in Kenya and make good on its promise then surely all the smart Africans in the continent and in the diaspora must know that it may not be imperialism that retards our continent's progress but our own attitudes.

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