Kenya is on the cusp of building world-beating firms; we can’t stop now

Baraka Muli is a Nairobi-based communications consultant

 

Interoperability is starting to creep into Kenyan financial circles thanks to our world-beating exploits in mobile money and financial inclusion.

Interoperability is the ability of a computer system to run application programmes from different vendors, and to interact with other computers across local or wide-area networks regardless of their physical architecture and operating systems.

While this is already happening among players in the banking industry, it has just started being piloted by telecommunication firms, where mobile money customers will be able to send and receive money across different networks.

Wallet-to-wallet interoperability growth has been phenomenal and an excellent example is how bank ATMs speak to each other across banks, countries and even currencies.

As fintech goes, telecommunication companies are fast migrating into the conversation that banks have been having since they started going branchless and then connecting with rivals to offer services such as Point of Sale Service and ATMs.

The local mobile payments ecosystem is quite diverse. It has players and solution providers across the board. It’s wider than telcos as it also features solution providers, such as Interswitch, Cellulant, Integrated Payments Solutions Limited, and others. Indeed innovation is the only differentiator.

As it goes, interoperability always needs a mediator or clearing house. It is a critical component to avoid having a single operator bearing all the risk.

Concerns are addressed

Interoperability has been driven by innovation and as often happens, innovators find themselves way ahead of regulators. But it makes good sense that policy and regulation should never penalise innovative market leaders and reward poor performers.

The Communications Authority of Kenya – which is the core regulator for telcos – has announced that it will publish for public discourse a report on whether Safaricom is a dominant player in the telecommunications market in Kenya and what action, if any, should be taken in response to any such finding.

The publication shall then inform the final release of the report by ensuring that stakeholder concerns are addressed. As CA prepares for publication, I wish to state a few home truths since, in any event, the outcomes will affect most of Kenya’s 40 million mobile phone subscribers.

It has been argued elsewhere that interoperability will foster competition. I beg to proffer that this position is unfounded. Interoperability in the banking sector has never been the defining factor for competition. It is the business models, marketing strategies, partnerships, innovation, product differentiation, customer service, depth of value added services and above all, trust, that define brands and the respective bottom lines.

One of the key references to the study on the telcos industry in Kenya is structural barriers to entry. It is hollow if one were to track the competition between the main players and how we got here, all of which lies in plain sight.

The acquisition of licences, the tax regime, regulatory environment, media landscape and other business environment factors have all been equitable and accessible down through the years that cell phone companies have been battling for our hearts and minds; for our trust.

To have the social licence to operate and build a client base, nurture trustworthiness is an attribute that takes years of excellence, service and innovation.

So critical is this element that 84 per cent of bank executives agree that trust is the cornerstone of the digital economy according to a recent report by globally acclaimed management consulting and professional services company Accenture PLC.

Penalising market leaders by requiring them to stop and wait for perennial underperformers to catch up would be a gigantic injustice not only to the market but to the millions of customers they serve.

Wonderful innovations

It should be avoided at all costs for it would endanger the quality and assurance of world-class services and a track record that will take generations to match, much less surpass.

Market leadership attained through the right strategies at the right time should never be viewed as inordinate dominance. Competition does not mean that all contenders end at the same place. Irrespective of identical environments, no two trees in the same forest are of identical height and build. A move against this natural wisdom may be akin to an attempt to manicure a forest.

I was happy to learn that telcos are now entering commercial arrangements to interoperate their mobile money platforms. They are already demonstrating that the industry does not necessarily need regulation at every turn.

I’m inclined to posit that our telcos should even be looking to regional and international markets as their field and this is where CA should be driving the conversation about our wonderful innovations like mobile money and mobile banking.

Whatsapp is already piloting mobile money in India and other big players like Facebook, Google, Amazon and Alibaba are already in the Kenyan space. I suppose that’s who we should be looking at as competition or potential competition for our telcos and not get preoccupied looking inward.

Market leadership is not at all a bad thing. But just which market are we looking at? Can our village champion win at the inter-village championships and climb to beat global competition?

Let us develop Kenya’s market leaders into global trailblazers. We host the Silicon Savannah and we can do it.

-The writer is a Nairobi-based communications consultant.