The discussions around Safaricom’s dominance are nothing new. We’ve seen numerous arguments around the company’s grip on the Kenyan market, both in the Telecommunications Industry, and in mobile money, and we’ve heard different proposals on what could be done. However, with each passing day, no concrete plans are ever set, and the giant continues to grow.
Safaricom is one of the largest companies in East and Central Africa. In the year ended March 2020, the company added KES. 654 Billion to the Kenyan economy, an equivalent of 6% of the country’s GDP, cementing its position as the single largest contributor to the economy. In the same year, the company paid over KES. 110 Billion in taxes , and registered over KES. 71 Billion in profits.
These are good numbers, and many companies would be envious of Safaricom’s position. Of course, the government of Kenya, with significant ownership of the company, Vodacom, and other shareholders are happy with this position. Things are going really well.
However, with every new year, Safaricom’s control over the market seems not only unfair for competition, but also unsafe for this middle-income economy. The unfair part – New and existing companies cannot possibly dream of competing with Safaricom ever. Even if one argues that anyone can enter the market, there are many hindrances that continue to be laid each year as Safaricom continues to grow.
The unsafe part – Safaricom controls so much of Kenya’s economy, that should anything happen very many sectors will be affected. This includes simple technical failures, unforeseen dip in profits, or even leadership struggles.
While one CANNOT say Safaricom got to its position unfairly – they actually still are the best in communication, customer service, expansion strategies, and much more, things that collectively contributed to and continue to enable their growth – it would be unfair to say there’s still a chance for any other company to rise, or even compete with them. That fact effectively makes them a monopoly.
However you or the government argues against this, the numbers show something else. Here’s a company with 35.6 million customers in a country with 50 million people. Here’s a company that enjoys between 50% to 56% of the KES. 2 Trillion market capitalisation at the Nairobi Securities Exchange. Here’s a company that very many individuals and corporations with small, and large businesses, including banks, rely on not just for their transactions, but […]
