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Why Kenya should learn to rally behind its national champions

Opinion
 Safaricom shop along Kenyatta Avenue, Nairobi. [Elvis Ogina, Standard]

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 need for desk phones.

When you track the making of the smartphone and similar advanced technology, you end up at the semiconductor. Reading Chip War, a book by Chris Miller on how the semiconductor came to play a critical role in modern life, one can see why he argues that microchips are the new oil.

While 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 US 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.

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 GDP. 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. 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 120 million people.

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 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 lessons learnt. KCB and Equity Bank have made recent forays into the DRC, 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.

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 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 UK, 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, 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?

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.

Entrepreneurs look for opportunities and are attuned to develop their companies’ brands and it is entrepreneurs and great thinkers, rather than political appointees. Finally, national champions must develop a capacity for worldwide learning rather than adopting a home-centric view of the world.

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

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