Michael Joseph's coat of many colours and his headache at KQ
By Macharia Kamau | August 2nd 2020
Safaricom, it appears, is intricately intertwined with Michael Joseph (pictured). The founding chief executive of the telecommunications firm that he helped to become a regional giant from an offshoot of Telkom Kenya has never left the corridors of the company.
Even after retirement as CEO a decade ago, Joseph has been playing critical roles as a director at Safaricom's board, and last year stepped in as an interim leader following the death of chief executive Bob Collymore.
He relinquished his interim CEO role in April this year when Peter Ndegwa took over as a substantive boss.
Yesterday, he started on another more visible role as chair of Safaricom board of directors.
Ironically, Joseph will juggle that role in one of the most profitable firms in eastern Africa with a similar one at Kenya Airways (KQ), which finds itself in deep problems and is currently laying off some employees in a fight to stay afloat.
He has been the airline's chairman since 2016 and got a three-year extension in June 2019.
His appointment to chair Safaricom’s board was met with mixed reactions on Thursday.
A section of observers queried how one man could hold a near similar job at the same firm for more than two decades, while others noted he deserved the job going by Safaricom’s performance over the years.
The performance of KQ also came up, with some noting that the national carrier might suffer divided attention at a time when it needs a chair with few distractions, leave alone a giant telecommunications company.
Some also noted that KQ continued to under-perform even after Joseph took over as the board chair.
While serving as chief executive, Joseph steered Safaricom from a subscriber base of less than 20,000 to over 16.71 million customers. He also oversaw many innovations, including M-Pesa which has enjoyed wild success and given the firm an edge over its competitors.
The mobile money transfer service has in the past been the subject of heated arguments on whether it should be removed from Safaricom to become a standalone entity, which the firm has successfully fought off.
Joseph retired from the CEO seat n 2010, paving way for Collymore, who further grew the company during the about ten years at the helm. He continued serving in the board.
In 2018, Joseph sold off his shareholding in the company, according to Safaricom’s annual report for the financial year to March 2019. He held 1.17 million shares as of March 31, 2018, but these came down to zero a year later.
When Joseph took charge of the KQ board four years ago, many expected him to have the same magic touch and turn around the troubled airline.
Today, he is handling a crisis at KQ, which is currently in the process of layoffs that are expected to be concluded by September 30.
The aviation sector is perhaps the hardest hit by the Covid-19 pandemic but even before it broke out, KQ had been experiencing turbulence.
The airline reported a net loss of Sh12.98 billion for the year ended December 2019, a 72 per cent drop from a Sh7.5 billion loss a year earlier.
Joseph says the pandemic has just accelerated the tough decisions that had to be made.
“We had already made a decision to scale down the number of destinations and ground aircraft and when we do that, we have to have a reduction in staff. The pandemic has made the need to make those decisions much more urgent," he told KTN News on Thursday.
"Nobody is flying and there is no way to pay their salaries.”
The carrier’s pilots have since noted that this is the wrong direction for the airline, arguing that other airlines in the region are expanding their operations and if KQ went ahead to downsize, it risked being overrun by competition.
Through the Kenya Airline Pilots Association (Kalpa), they also said it made more sense to hire than lay off workers so that if some of the crew or pilots caught Covid-19 and were forced to quarantine, the carrier would have enough people to continue operations.
Joseph, however, said that while he would have wished to retain all KQ workers, it was impossible considering the circumstances.
“I empathise with the pilots and everybody at KQ… nobody wants to lose their jobs and I understand what they are saying, but there is no way you can continue to have 4,600 people in an airline that is making significant losses and is reducing its number of destinations and its aircraft by 30 to 40 per cent,” he said.
The human resource rationalisation is not the first major hurdle he has had to handle in the course of his four years as the KQ board chair.
Other than the losses getting heavier and shareholders’ grumbling, the airline lost its chief executive, Sebastian Mikosz last year. He quit before his tenure in office was over.
This was despite the high expectations that had been placed on him following previous success in turning around LOT Polish Airlines.
Kenya Airways is currently in a delicate situation as it is set to return to government ownership.
Parliament is set to debate the National Aviation Sector Management Bill 2020, which provides a road map on how the airline will be nationalised, again.
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