When DIPLOMAT EAST AFRICA first hit the newsstands a year ago this December, we identified our typical readers in the foundation editorial as being “deeply interested and involved in diplomacy as it meshes with geo-political issues throughout this region, in business, trade, entrepreneurship, education, health and innovation (the prosperity factors) and in the environment and development”.
Since then we have interviewed ambassadors, international civil servants and two Presidents, among other eminent persons. We are proud to cap our first year by adding to this growing list of powerhouse interview subjects a man and the corporation that he leads that truly exemplify the prosperity factors in eastern Africa – Mr BOB COLLYMORE, 52, the new CEO of Safaricom, the region’s greatest runaway corporate success story.
Mr Collymore, the successor to Safaricom founding CEO Michael Joseph, spoke to DEA Editorial Director KWENDO OPANGA at the Nairobi headquarters of East Africa’s biggest company by market value, with photojournalist GAZELLE KEMUMA filming the encounnter. Excerpts of a great conversation…
DIPLOMAT EAST AFRICA: Has Safaricom peaked or are there milestones still to be attained?
BOB COLLYMORE: Beyond a shadow of a doubt, Safaricom has not peaked. It is like saying that technology has peaked or that human needs have peaked. We have met some of those needs, some of which are very basic needs, and that to me means we need to speak with each with a degree of ease and without — with a degree of inexpense, if you like. However, there is much more that we need to do to contribute to Kenya’s society.
Q: You might want to explain, without, of course, letting out your secrets, what these things you wish to do for the Kenyan society are?
A: The technologies that we have and will continue to have over the course of the next five or 10 years will allow us to make a big impact and I will focus on two examples. One of the impacts we will have will be with regard to children’s access, people’s access, to information.
If I could use an example that is overused — if you ask a child sitting in London or Boston about any information in the world, with a quick click of the mouse that child will be able to give you that information immediately. That child has free access to huge amounts of information and a huge bandwidth. It will not matter how complex the question is, that child in the developed world will give you the answer.
If you take any child in Kisumu or in Kitale, and ask him any question in the world, you could come back in 10 years’ time and he may be able to give you the answer.
Now what can Safaricom do? Safaricom can get that child connected; we can bring them the device, we can bring them the connection, we can bring them the low cost connection to information that will then bring Kenya to that position from where that child can compete on a global platform.
The other example regards malaria. Since you sat down [for the interview] about three minutes ago, about six babies have died of malaria in Africa. This is a curable disease; it is not like HIV/Aids. But the reason these children die is because they do not have access to medication. It is not because of lack of diagnosis; we can all spot malaria a mile away.
It is about access to medication and we can use the technologies that we have to aid and assist government in achieving what they want. Let me give you an example. In Tanzania, Vodacom, Vodafone, Norvatis and IBM have worked in partnership on a programme called SMS-for-Life to ensure that drugs are distributed across rural Tanzania and for the people to have optimal access to drugs.
In its pilot phase, more than 300,000 people had optimal access to drugs. The factor of these people having to walk long distances to pharmacies only to find there were no drugs was eliminated. It is a simple template Norvatis and the partners have developed into which the rural pharmacies fill in their stock needs on a given day and then these drugs are distributed to them.
There are other solutions I could mention from Latin America, Asia and other parts of Africa, which only Safaricom can do simply because we are the only telecommunications network which has greater reach than any other, more access to technology than any other; we have the only 3G network, we have a 2G network which covers 85 per cent of the Kenyan population and therefore the network for making a difference in people’s lives.
Of course we will make profits and of course we will drive revenues, which is what the shareholders expect me to do.
But your question was whether Safaricom has peaked. Safaricom does not measure whether it has peaked or not by how much money or profits we have made or how much revenues we have derived; we measure our achievement by how much we have contributed to the community in which we operate and that society includes our shareholders as well as our 17 million customers.
Q: You just talked about profits and your reach and recently there has come a new competitor in the market who has come up with new products — and excited the market quite a bit.
A: Products?You think so?
Q: Yes. You don’t think so?
A: They have dropped the price; that is not a product. If you are talking about products, I would expect something like M-pesa; that is a product. I would assume something like mobile data; that’s a product. We haven’t seen any product; we have seen a price drop.
As my predecessor would say, any fool can drop a price and that is not a smart thing to do. The smart thing to do is we continue to invest in this market; we continue to take the lead in terms of technology ownership. We continue to deliver the value that we talked about for our customers. Maybe at some point they will do these things, but all we see now is a price drop.
Q: You mention M-pesa. You have been doing an upgrade lately. Is there more Kenyans should look forward to from M-pesa, or is that it?
A: With technology, you cannot say the end of the world is nigh! We are just starting. The reason why we are upgrading the network is because we want to put M-pesa on a platform that will handle an increased number of transactions from the current 70 per second to more than 200 per second. And the reason we are doing this is that there is much more that can be done with M-pesa. The simple answer to your question is that anything you can do with cash you can do with M-pesa and more. When people travel for the festivities of Christmas and New Year many of them will abandon cash or actually they will put their money into their M-pesa accounts and travel and retrieve the money when they reach their destinations. So now we have something you can do with M-pesa which you can’t do with cash. Kenyans can expect a lot more with respect to M-pesa.
Q: Is M-pesa the best product Safaricom has or is there a rival?
A: M-pesa is certainly Safaricom’s best product. M-pesa is far ahead of anything else in this market, in this world. There is no other country that has as successful a money transfer as Kenya. But basically we have four products including M-pesa; the other is Voice, which we all use, then there is SMS, which most people use and then the broadband data access. But none of these three has the life-changing effect of M-pesa.
Q: You must be aware that when M-pesa was being introduced, the banks ganged up to fight it. Now what will they do? They embrace it, yeah?
A: The reason banks initially fought M-pesa is that people tend to fear change and they also saw M-pesa as a competitor. In fact, it is not a competitor and you are right—the banks are now on our side.
In fact, when the banks were building a lobby against M-pesa, they were not fighting M-pesa; they were building a lobby against wananchi, yet they had ignored these people for decades, saying they were poor.
Many banks had closed their branches—and I am not talking only about Kenya, but many countries in the world—and they now were fighting a product which the people had accepted and taken to their heart. Now we have banks as our partners.
Q: It has been argued that M-pesa does not encourage saving or does not promote a saving culture. Do you agree? Is there a way M-pesa could be used to encourage saving?
A: There are a number of dimensions to that question. The first one is that is that the criticism is not justified. It is a bit like saying to me, ‘Bob you do not look good in dresses’. I wasn’t designed to look good in dresses. M-pesa was designed to be a money transfer service.
The second dimension is that M-pesa actually encourages saving because, instead of having cash on you, you put it into your account and there it is safe. There is a sizeable chunk of money which sits in M-pesa accounts. People take their money out of their pockets and keep it in their M-pesa accounts and decide whether to keep it there or use it. That criticism of M-pesa is unjustified and irrelevant.
Q: M-pesa wins awards, and, as we at DEA say, it seems to have formed a template for other countries. Are these countries doing exactly what M-pesa is doing or are they doing something different?
A: I was working in South Africa and have worked in Tanzania and all they have to do is to come to us and ask to share our experience. Michael’s [former Safaricom CEO Michael Joseph] team was always ready to share the experience and I will be more than happy to do so. Even recently Michael was in Tanzania trying to help. They are doing something so fundamentally wrong and they are not listening to us.
There are a few things that make M-pesa a success. One of them — and which is not easy to replicate — is that in Kenya it is a trusted brand. It is the most trusted brand in Kenya. Which other brand is more trusted? Maybe East Africa Breweries — maybe—but there is no other brand. The Church could be a trusted brand. So if people trust you they will give you their money.
The second thing is we have a wide distribution network. We currently have 21,000 M-pesa agents. And we set out not wanting to make a profit. People struggle with that because, as soon as they launch it [a money transfer service], they want to make a profit. So, they don’t want to invest in agents because they don’t want to lose money, and so it fails.
You want an agent to be a supermarket? An agent should be a duka [shop]. You don’t want people to get into a matatu to get to an agent to get their money. Understand your customers and we understand our customers. We understood what people wanted and we designed a product for them. There are more than 150 M-pesa equivalents around the world, but none of them has succeeded.
Even in Tanzania, with which country you speak the same language, it is not the success it is here. Any of the 3,000 people in this company can replicate M-pesa anywhere else, but you have to have the trust and you have to understand this is not about making money.
For a long time, I used to say to Michael ‘you keep showing us figures, but when is this thing going to make money?’ And he used to say, ‘in good time’, and we kept investing money. Now it is profitable and will get more profitable.
Q: Are Kenyans overseas making use of M-pesa?
A: We are creating more opportunities for them to do that. Today you can send money from England, but there are only a few outlets because we have this problem with inter-country transfers. We are, however, working on a new product in collaboration with Western Union. Currently Kenyans can send money from London and Uganda and now that we have a new platform we are going to introduce more transnational services. We will soon introduce the service in the US with Western Union.
Q: Safaricom does quite abit of CSR. Do you intend to continue?
A: Yes. I think this is very important for a corporate. My predecessor said to me ‘one reason why I support you is that you know what Safaricom has built’. And, as I said earlier, I do not just think of Safaricom in terms of profits and revenues, but I take a more holistic approach. I think about it in terms of people who are our customers, in terms of people who will be our customers and in terms of people who will never be our customers. One of the things we try to do is to meet the need where it exists and not where we have a base station.
Q: You have mentioned your predecessor. He was well-known to Kenyans, the media liked him and he could be quite outspoken if there was an issue. Do you find his shoes too big?
A: Not really.
Q: Not really?
A: Michael and I are two different people. Michael built the Company from 16,000 customers to 16 million customers. He’s led a fantastic team and I am very privileged to be picking up such a strong team. Despite the personality cult which follows him, it was not of his making. I know how it came about and I do not know whether it was the right thing or wrong thing but that is just the way it was. I am frankly surprised at the cult status of this role.
As far I am concerned, I am just doing a job and I am surprised that this week this is Day Three and yet again I am on TV tonight. I do not know that there is any crisis for me to be on TV for three days running. I do not know what is going to happen when there is a crisis.
Q: You have not come across this in your career?
A: I am not used to this in any other country in any other job, unless you are the president. I don’t see this happen anywhere else. It happens in Kenya; it is unique to Kenya and I am surprised at how much interest there is in the job.
All I am doing is managing a phone company and I am proud to be part of a large family of a phone company. I was in the company of 27 other CEOs at a conference recently and none of them gets this kind of attention. But I do not think it is Michael Joseph — I think it is the Kenyan media.
I have known Michael for 10 years. We wear different shoes and have different tactics. He brought the company where it is and we have to take it through the information age, where it is about those two children I talked about. It will be about what we do for rural health. So, the question of shoes is kind of irrelevant.
Q: Kindly tells us about Safaricom and the environment.
A: We won an award with the Total Eco Challenge because we have planted more than 1 million trees.
One of the priorities of our Foundation is the conservation of the environment, which is why we are involved in a lot of tree planting.
Secondly, we are a big consumer of electricity and most of our base stations are off the grid, so we continue to experiment with various ways of providing electricity — such as wind and sun — and we are confident we will find that which is more cost-effective.
I am going to drive the sustainability agenda during my tenure because Safaricom is one of East Africa’s more important companies and therefore it has the responsibility to set the tone and set the agenda. We will not wait for the general mood to swing before we respond; we will set the benchmarks.
Q: You have not been around for a long time, but you must have tried to find out what the people are saying about Safaricom. DEA can tell you that we have heard that as Safaricom has grown so also has the Customer Care department grown, but as the two have grown they have left the customer behind them. When you call that number you will wait for an eternity as you listen to that recorded voice. Have you come across this complaint?
A: I have been here [in office] for five weeks, but I have been in Kenya for three months and most of this time I have spent talking to people, whether it is online or face to face. It is clear we have challenges and this is one of my top priorities right now. I have three or four priorities for the remainder of this financial year. The first one is to fix this network because we are very painfully aware it is a very big issue for us. We have to fix the network and we have to fix the Customer Care issue.
Let me qualify that. We have some of the best people working in our Customer Care. They are all very bright young graduates; some have two degrees, some have three degrees and some are working on their masters degrees. These people are not silly.
The challenge that I have is that of the volume of calls. If I benchmark that relative to other networks, the volume is disproportionate and that is because we are doing something else wrong. Once you get through to Customer Care it is great. So what is it we are doing wrong?
M-pesa alone accounts for about 20 per cent of our calls. We need to find a solution to M-pesa reversals —that is the call you make when you have sent money to the wrong number. Right now you can go into your phone book and send money from it. The other is Skiza. To call Skiza you have to know the code, but many call and then ask for the code. But when a customer makes that Skiza call it costs you Sh5 and it will cost me Sh40 to take that call. So my top priority is to fix the network and to fix the customer care.
Q: Lastly, can subscribers across the region expect further tariff reductions or has die market hit rock bottom?
A: Today Kenyan customers pay less than half the price per minute European customers pay.
Q: Is that so?
A: That surprises you, does it not? Today the European customer pays 8 euro cents. Today Kenyans pay about Sh3, which is about 4 euro cents. Contrast that with the price of the network. In Europe you build the base station. In Africa you build the base station and you have to aircool it because it is hot. You have to put generators in it because there is no power and when you put generators in it you have to put in diesel. When you put diesel in it you have to put a watchman and when you put a watchman and you have to put a second watchman to watch the first one.
Our costs are considerably higher than our European colleagues.