Why Safaricom poses new headache for incoming government

Safaricom mobile phone subscribers queue to upgrade their sim cards registration outside the Safaricom outlet at I&M building, Nairobi on April 11th, 2022. [Elvis Ogina, Standard] Now that William Ruto is the fifth president of Kenya, big business will keep a keen eye on his policies. While on the campaign trail, future president William Ruto and the Kenya Kwanza Alliance adopted a manifesto that made sweeping promises to revamp the country's Information and Communications sector. Top on the to-do list extolled by both Ruto and his Deputy Rigathi Gachagua is breaking up the region's largest telecommunication service provider Safaricom, which the two termed as monopolistic and predatory to low-income earners. "The market monopoly created noticeably by Safaricom Limited through its domination of the telecommunication and money transfer sector through the use of M-Pesa has resulted in near slavery of the hustler nation through mandatory transfer charges, high interest on M-Shwari loans and predatory lending through the Fuliza mobile loan service which places millions of Kenyans in unending debt cycles through a machine designed to keep the loan borrower under the heel of the telecommunication giant," reads the Kenya Kwanza manifesto. "Effective immediately after forming the government, the administration will seek the break-up of Safaricom Limited into two distinct and separate business entities with a mobile telecommunications institution under the direct jurisdiction of the Communication Authority and the financial institution firmly under the jurisdiction of the Central Bank of Kenya" states the manifesto. The justification is that the move will create clarity of purpose and regulation that is currently lacking and that has allowed the firm to eclipse its competitors. The bid to split up Safaricom into several stand-alone business units has been a long-running conversation in the country's ICT sector for the better part of the past decade. In the past five years, Safaricom has survived more than five attempts by Parliament in the form of inquiries and proposed legislations that sought to break up the Sh1.1 trillion telco. This task will now fall on the incoming ICT Cabinet Secretary who will likely face a bruising battle. In the first place, Safaricom remains the National Treasury's biggest corporate cash cow at a time the country is struggling to grow revenues. In the financial year ended March 2022, Safaricom paid Sh144 billion to the Exchequer including Sh124.7 billion in taxes and license fees and a Sh19.5 billion dividend pay out courtesy of the government's 35 per cent stake in the firm. At the same time, Safaricom has in recent months been working with rivals Airtel Kenya and Telkom Kenya under the stewardship of the CBK to open up the M-Pesa ecosystem. The three mobile operators have since unveiled an interoperable platform that allows users to make payments to one Till or PayBill number, irrespective of their network. According to data from the CA, other mobile network operators including Airtel Kenya and Jamii Telecom have also gained subscribers in recent years. Safaricom has cited this as a defense that its leading position in the market is not prohibitive to competition or new market entrants. Kenya Kwanza has also pledged to construct 100,000 kilometres of internet fibre, boosting the country's capacity by almost ten times. Other ICT proposals include digitisation and automation of all government critical processes making 80 per cent of government services available online; and the establishment of an Africa Regional Hub for software development for export.

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Why Safaricom poses new headache for incoming government

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