After former President Uhuru Kenyatta declared a partial economic shutdown on account of the Covid-19 pandemic, giant telco Safaricom implemented a number of transaction fee waivers for its financial services.
Withdrawal and deposit of funds in bank accounts and fees on M-Pesa transactions below Sh1,000 were the most prominent waivers.
Those waivers mean Safaricom sacrificed $200 million (Sh20 billion) at a time when job losses and low money circulation were shocking an economy battered by the global Covid-19 pandemic.
Safaricom CEO Peter Ndegwa counts the Sh20 billion hit that the company took to cushion Kenyans as one of his biggest achievements while at the helm of Kenya’s biggest corporate entity.
For the past few months, a lot of talk on Mr Ndegwa has focused on whether Safaricom’s Board of Directors will renew his contract, which lapses in March 2023.
But in an exclusive interview with Sunday Nation, Mr Ndegwa says it is business as usual in his corner office, the issue of contract renewal notwithstanding.
Ethiopia operations
Having reported a Sh6.8 billion drop in net profit to Sh30.2 billion for the six months period ended September 2022, he is focused on turning in a profit from the Ethiopia operations, which weighed on the telco’s performance last year.
Being a systemically important company due to the sensitive communication and M-Pesa services it offers, the appointment or renewal of Safaricom CEO’s tenure tends to attract interest from the highest office in the land.
In corporate governance terms, the telco’s two biggest shareholders — the National Treasury and UK multinational, Vodafone — have the biggest control on the board whose responsibility it is to appoint or renew a CEO’s contract.
“Contracts are supposed to be an internal thing… But for me I’m going to continue driving this business,” Mr Ndegwa said.
During his tenure, Safaricom has hired 500 technology experts, mostly software developers, to help drive its new strategy.
The techies are also a strategic investment for Safaricom, which intends to throw its hat in the ring for the numerous digitisation contracts on offer in the public and private sectors.
One such contract is the rollout of the Hustler Fund, of which the telco remains a key player.
Smart metering for water is also among Mr Ndegwa’s priority areas, which he sees as the future of the company.
“We are already testing with Eldoret Water and we shall be announcing in future how that is going but there is a lot of interest at the county level and also at the national government level because you have visibility of where losses occur but also connecting between what is distributed and what is built,” Mr Ndegwa added.
But even as Safaricom ventures into the new, Mr Ndegwa is insistent that its core business — voice calls and text messaging — will grow with the firm’s investment in Ethiopia.
Safaricom launched operations in Ethiopia in October 2022 and has since netted over two million subscribers.
At least 100 staffers from Nairobi have been seconded to Ethiopia to help set up infrastructure that will improve Safaricom’s coverage and subscribers.
On average, Safaricom is now netting between 15,000 and 22,000 new subscribers in Ethiopia each day. “We have established 92 distributor shops, we own two shops by ourselves. We are increasing the footprints, we are close to 1,000 network sites. But essentially we are recruiting anywhere between 15,000 and 22,000 customers a day. Every two months you should expect another million,” Mr Ndegwa said.
“In four, five years we need a new revenue stream on the GSM side and Ethiopia will provide that. We also thought from a geography perspective. It’s the only country that had a single operator. Also, it is a big statement for Safaricom to be leading an international consortium to go into a country that large and that has been primarily led from a public sector perspective. On Ethiopia, this is a business that can be the size of Safaricom (Kenya) in 10-12 years. So it requires significant work in the next three years,” he added.
For now, Safaricom will concentrate on Ethiopia and Kenya for its core business. In Ethiopia, the firm has already applied for licences for its financial services.
M-Pesa growth
For M-Pesa, the CEO said the platform is still growing as strategies on how to reconfigure and improve it continuously.
Mr Ndegwa says he has grown M-Pesa from 2,300 transactions per second to 2,600 and that there is still room for improvement.
M-Pesa is seemingly crucial to Mr Ndegwa’s plan, as he intends to capitalise on the Internet of Things (IoT).
IoT involves embedding technology with physical objects and utilities to ease service delivery.
The corporate boss says he has implemented new strategies that will see Safaricom shift its attention to investing in problem-solving products that will balance between easing things for the ordinary Kenyan while generating revenue for the corporate giant.
Safaricom is also eyeing insurance and pension services.
“Starting to reconfigure M-Pesa was also very important. Not focusing on just payments, but also expanding credit. Now we are going into merchant credit. We have always been a consumer-oriented business. (We are now) going into wealth management, coming up with savings of wealth products, and even starting to think about insurance. The insurance bit has not been approved by the regulator yet, but those other two have actually been approved so are just waiting to be launched,” Mr Ndegwa said.
BY DAILY NATION