Safaricom for all intents and purposes is a telecommunication company. Its primary services are voice, SMS, and data. However, given the level of competition in the local Kenyan market, the telecom has been innovative in meeting its subscribers’ needs.
Given the fact that Kenya, like most developing nation, had a vast unbanked population. Safaricom came up with what could be the first wide-scale fintech solution in the form of mobile money service M-Pesa.
M-Pesa is now the poster-child for successful fintech solution deployment around the globe. The telecom has further come up with innovative solutions in attempts to preempt its subscribers’ needs. And thus came Safaricom’s e-commerce platform Masoko and its controversial music streaming services Songa by Safaricom.
For the record, in its e-commerce platform Masoko, it is Safaricom’s mobile money services M-Pesa that is the primary payment method. We are not saying that Safaricom wants to lock its subscribers within its own ecosystem (the type of behavior we see with big tech companies such as Apple), but the telecom has been accused of the practice before. Previously, Safaricom signed an exclusive deal with mobile money agents, who could only server M-Pesa customers only and not any competing services.
However, its competitors have cried foul over its business model that seeks to box-in subscribers to its platform while stifling any competition in the market. Something that has seen multinational companies such as Orange and Econet Wireless pull out of the Kenyan market citing unfavorable business environment as Safaricom has grown so big and aggressively stifles competition by locking in its subscribers to its platform.
Although the Communication Authority of Kenya (CA) has not found these accusations to hold any water, the authority has nonetheless directed Safaricom (and all telecoms companies in Kenya) to share their mobile money agents, and even their telecom infrastructure. This move has definitely been a sigh of relief for smaller telecoms to compete better against Safaricom, and it is for that reason that Bharti Airtel has doubled down on its earlier decision to pull out of the Kenyan market.
Arming for the future
Kenya like many developing countries is fast coming out of low GDP economy, and there is increasing roll-out of infrastructure and business-enabling environment. It is only a matter of time before it pops up on the radar of big multinational corporations like Amazons and other big tech companies.
Indeed companies like Netflix have already identified the country as a viable market. However, as Netflix and other streaming services launch in Kenya, they will find have to fight for customers alongside Safaricom, which has also launched streaming services like the ‘Songa by Safaricom’ services.
As Amazon still waits to venture into the Kenyan market, Safaricom is getting a head start by having launched an e-commerce platform. And in keeping with its tradition, the telecom has made its mobile money payment services, M-Pesa as the primary payment method. Again, back to the accusation that Safaricom is locking-in its customers to its platform.
The telecom is also increasingly seeking out a partnership that will further increase its customer base outside of the traditional telecom territories. It has inked MoUs with local banks that see Safaricom subscribers use M-Pesa to deposit and withdraw funds from their bank accounts.
Perhaps the only speed bumps in the telecom’s growth plans are the recently increased taxation on mobile money transfers. The company’s CFO, Sateesh Kamath argues, “increased excise duty on mobile money transfers will negatively impact mobile led transfer services and payments and slow down the government’s drive towards a cash-light economy.”