We're killing the goose that lays the egg

Kenya Pipeline Company storage facility in Nairobi. [File, Standard]

I was thinking about this privatisation bug that seems to have bitten the powers that be and I concluded that, as much as every government has to set its policies in line with its expenditure projections, we are rushing things.

We are selling everything and anything that appears to have value. And we are embarking on this treacherous journey starting with the family silver - Kenya Pipeline Company (KPC) and Safaricom - two strategic entities that play a critical role in our overall security.  

At this rate, we might even privatise the armed forces or such other strategic entities. I am not saying those buying a portion of government’s shareholding are ill intentioned. No. But the reality is Safaricom - and KPC - offer such critical infrastructure that a systemic failure of either would have catastrophic consequences. See what happens when M-PESA fails for even one hour: the entire country comes to a standstill. If KPC’s pipeline would have a structural failure that put it out of commission for a week, we would be reduced to a walking - and a starving - nation. That is how much these entities mean for us. 

Let’s focus on Safaricom. At almost a trillion shillings, the contribution of Safaricom to Kenya’s GDP is around 7 per cent, making it the single largest and impactful entity on the economy. The government needs the money but we shouldn’t sell the golden egg plus the goose that lays it.

For me, Safaricom should stay under the government’s control in terms of shareholding rather than letting a foreign entity - Vodafone - run the show.

Yes, we will get a chairman and two token directors but it’s almost guaranteed that these fellows will just be there to earn fat fees for sitting in board meetings, nodding their heads sagely in agreement with whatever decisions imposed from South Africa. Him who pays the piper calls the tune. True, Safaricom’s privatisation happened ages ago when it was spun off from the dinosaur that was Kenya Posts and Telecommunications Corporation. And it was a good thing that this happened.

Getting a fixed line then involved jumping one hurdle after the other, trying to cajole tea sipping and gossipy fellows behind the counter to at least tell you whether the waiting time has reduced from the standard five years or so to, say, a year.

Therefore, spinning off Safaricom was a good thing, now that we all have mobile phones and tens of thousands of kilometres of fibre optic cable.

I am not an expert in valuation but I think for the government to receive Sh244 billion to reduce its shareholding in a company that last year gave dividends of almost Sh17 billion doesn’t sound right.

Also, the bit about forfeiting future dividends of Sh55 billion for a payout of Sh40 billion today feels like we have a government desperate for cash. Of course we fully appreciate the time value of money principle (a shilling today is worth more than the same shilling tomorrow) but, a Sh15 billion hit is quite something. 

Safaricom has been a very profitable entity, though at the personal level, I feel that some of the profits are from very dubious sources. I realised last week that somehow, I had subscribed to two services - something called kids arena and another one for games - for the last one and a half years.

I have always thought that subscribing to a service is a process - its not a one click service - such that you can’t accidentally subscribe to such a service. You have to make a conscious effort to subscribe.

For one of them, I purportedly subscribed in the wee hours of the morning, at precisely 3;53am. Now, at Sh55 per day for the last year and a half, it is not pocket change, especially if just a tiny portion of the 50 million subscribers suffer from the same problem. Somebody should and must explain this anomaly. And by the way, you can’t even get through to customer service. Has the downsizing already started?

-The writer is a communications consultant