Why Kenya should rally behind its national champions

Linus Gitahi, Chairman of Diamond Trust Bank.  [Courtesy]

Smartphones are one of the wonders of the modern world, and many of us cannot imagine life without them. They bring the world to our fingertips, make it possible to work from anywhere and have almost eliminated the need for desk phones and snail mail and helped do away with the telegram.

When you track the making of the smartphone and similar advanced technology, you end up at the semiconductor.

Reading Chip War, the book by Chris Miller about how the semiconductor came to play a critical role in modern life, one can see why the economic historian argues that microchips are the new oil. While they are hidden away, and we interact with the smooth glass of the smartphone and the knobs of the gadgets they run, microchips are the modern foundations of military, economic and geopolitical power. They are also the subject of the new Cold War between the United States of America and China. China now spends more money importing microchips than it does importing oil. Kicking Chinese companies in the shins brings Joe Biden and Donald Trump together. 

In the middle of this war is Taiwan and its national champion, the Taiwan Semiconductor Manufacturing Company Limited (TSMC), the largest semiconductor company in the world by revenue. TSMC supplies companies like Apple, Qualcomm and Nvidia and has become a crucial cog in Taiwan’s economy, as its exported semiconductors account for a significant portion of Taiwan’s Gross Domestic Product.

TSMC from tiny Taiwan came to mind when Safaricom announced its financial results, a key feature of which was that it became the first regional company to surpass billion-dollar earnings. Safaricom long ago established itself as a national champion of Kenya: its M-PESA product is now available in eight countries in Africa, and its model has been replicated in many countries across the world.

Of note to investors would be Safaricom’s assessment of its foray into Ethiopia, a country described as the last frontier of mobile telecommunication, as before Safaricom entered its territory, it had one operator serving a population of 120 million. Notable for me was that while Safaricom is still in the investment stage there, rolling out its network of base transmission stations, a key source of its revenue there is mobile data. This means that its subscribers there are increasingly turning to its famously fast internet to access the world. No doubt Ethiopia is a good bet for Safaricom and its consortium of global backers.

By venturing into Ethiopia, Safaricom was following in the footsteps of other giants who have grown beyond their Kenyan roots. East African Breweries Plc, KCB Group, and Equity Bank went before Safaricom, with success and a lot of lessons learnt. KCB and Equity Bank have made recent forays into the Democratic Republic of Congo, a country brimming with potential that could benefit from the strategies employed by Kenyan banks to increase financial inclusion and grow wealth while giving shareholders value. Consider, as an example of the potential in DRC, that only 26 per cent of the active population in DRC have a bank account, with 35 per cent of adults in this position citing distance to the financial institutions as a major impediment.

National champions like these companies are not only a source of pride, but advance national interests and are the bedrock on which economies are built.

Like the Kenyans you find in the hospitality sector across the continent, Kenya’s national champions have the potential to become African, and indeed global, brands, and the Government can support them to do that.

In doing this, we can take inspiration from how other global national champions have been supported in their respective countries, drawing from examples like Total in France, Unilever in the United Kingdom, and Toyota and Honda in Japan.

From what it’s doing in Ethiopia and has done with the expansion of M-PESA across Africa, Safaricom’s unique opportunity is the potential to drive innovation and grow wealth by having a large supply value chain like it does in Kenya.

The London Business School offers three key tips for governments looking to support national champions: market, not product or political orientation; business executives, not political appointments; and worldwide learning rather than a home-centric approach.

On the first point, on catering to the market rather than on the products or political orientation, a national champion ought to focus on its customers. Its primary orientation should be towards the needs of the customer, with the key questions being: which segment should we target? How can we serve this segment effectively?

Kenyans expect global-level delivery from their national champions, and this is replicated across all the markets they go into and consistent delivery ought to be one of their hallmarks.

National champions across the world are defined by their leaders’ ambitions, which are those of businessmen and entrepreneurs rather than political appointees and bureaucrats. Entrepreneurs look for opportunities and are attuned to develop their companies’ brands and it is entrepreneurs and great thinkers, rather than political appointees, that the government should want to see in the boards and management of these champions.

Finally, national champions must develop a capacity for worldwide learning rather than adopting a home-centric view of the world.

To succeed beyond their home markets, national champions must generate market intelligence on the current and future needs of existing and potential customers where they operate and learn from successes and failures in various markets.

The CEOs of national champions must have the ability to plan for and invest in the future but also respond to changing consumer tastes and expectations while meeting the expectations.

Our national champions have demonstrated that they can take the Kenyan brand beyond the country. They have the wherewithal to succeed, and they will need all the support they can get from a country that seeks to influence the rest of the continent. 

The writer is a former CEO of the Nation Media Group and is now the Chairman of Diamond Trust Bank.