From Airtime to Airline

Kenyan Mobile Communications giant Safaricom now boasts yearly profits of 315 million dollars with 25 million active users. But when Michael Joseph came to the helm in July 2000, it was a little-known telecoms company with a handful of users. BTP’s Nikita Bernardi met with Joseph at the Vodafone headquarters in London, where he is now Director of Mobile Money, to talk technology and communications in Africa.

As we walked to a quiet room for us to talk in, I was surprised that not more people were staring at us. In Kenya, Michael Joseph is nothing short of a celebrity; a symptom of the fact that Kenyans feel a nationalist pride and a sense of ownership over Safaricom.

Pride in Safaricom was Joseph’s intention all along. ‘That was a conscious decision’, he says about keeping the Safaricom name after he re-launched it as a joint venture with Vodafone UK and Telekom Kenya in 2000. Although Safaricom would be 40% owned by a British company, Joseph wanted people to feel that ‘this was a Kenyan company and it belonged to them’.

It seems like Joseph and his team made a whole series of good decisions that eventually lead to Safaricom becoming what it is today. He is quick to point out that hindsight allows you a wide berth. At the time however, Joseph argues, ‘we didn’t know the decisions we were making, that I was making, were that smart. We made them because we thought they were the right decisions to make.’

The Right Audience

One of these major decisions taken by Joseph was to target low-income people, ‘those who go to work in a Matatu’. Matatu are the ubiquitous privately-owned public minibuses that tear around the streets of Nairobi; a noisy but necessary service used by roughly 30% of the population.

Joseph decided that, to target these people, many of whom probably did not have a mobile phone in the year 2000, he needed to import low cost phones as well. Safaricom provided both the service and the means by which to use it. It meant that suddenly an entire section of the population which had been previously ignored by telecoms companies was now part of the market.

As they had been neglected for so long, it was important to teach people how to use this new technology. Joseph subsequently made another crucial decision for the company — free 24-hour customer care. Reflecting on early teething problems, Joseph remembers that ‘one of the first things I discovered about Kenya, is that no one was reading the manual’. The customer care team would receive calls just asking how to turn the phones on and send a text. Kenyans understood the concept of mobile communications, they were just unsure how to get it started.

From Mobile Phones to Mobile Money

This peculiarity is in part due to the fact that mobile technology arrived in Kenya all at once. It was not part of some developmental trajectory. In fact, it is completely reasonable in Kenya not to have running water but internet on your phone. And a connection often faster and more accessible than in Europe or America. Joseph says that Safaricom was fulfilling a ‘fundamental need’ for communication. This then progressed into fulfilling the lack of banking services for the low-income population through the introduction of M-PESA or Mobile Money. Joseph points out that, ‘It’s not that Kenya skipped banking, it’s that banking skipped Kenya.’

Mobile Money is Joseph’s pet project. He says that banks didn’t think that those ‘at the base of the economic pyramid were worthy of being customers’. Yet he and his Safaricom team absolutely did. Now Mobile Money has gone from somewhat of an experiment in Kenya, to expanding to 10 other countries with about 20 million users worldwide.

Hurdles

But this has not been a blanket success story. The service was shut down in South Africa in May this year. ‘Mobile Money takes a long time to take off’, Joseph argues. The fundamental issue is one of trust. To persuade people that they can send via an SMS anything from between 100 Kenya shillings to 40,000 Kenya shillings (80p — £300), and that it will arrive to the recipient every time, takes a great deal of trust from the public. This cannot happen overnight. Joseph laments that ‘unfortunately in today’s world we do not have the patience and the dedication.’

Public trust is not the only hurdle which must be overcome. In the early days of M-PESA, Joseph soon found out that the banks in Kenya were putting pressure on parliament to question the motives of the service. To remedy this, Joseph went personally to the Minister of Transport and Communications at the time, John Michuki, to demonstrate how the service functioned. He showed Mr Michuki that it was not so much a threat to banking but rather an alternative for the people who were not being targeted by the banks anyway. Over 10 years later and now Mobile Money is so prevalent in Kenya that banks themselves are offering it as a service.

Violent Communications

The 2007 post-election violence was another time when politics threatened to interfere in the rise of Safaricom. It was a truly testing time for Joseph and his team. In order to minimise the wave of panic sweeping through the country, Joseph was adamant that they had to continue providing a way of communicating to all their customers. This was a mammoth task which included having to send fuel in helicopters to their various base stations, as well as to ensure there were people on the ground distributing airtime. One of their main stations was burnt down during the violence. But they managed to protect and keep the others going.

Conversely, it became evident that mobile phones were actually being used to incite violence. At one point Joseph received a call from the government telling him that he had to shut down the network as text messages were being sent through a Safaricom server that identified locations of particular groups and, concerningly, incited violence against them. The moral dilemma faced by Joseph was immense. If he shut down the network, there would be even more panic. People would not be able to communicate with their loved ones to ensure they were safe. However, people were being killed.

Kenyan protocol requires that an order must be given in writing from the government to shut the network down. At the time of the violence, Joseph was in Lewa, a relatively remote region of Northern Kenya. There was no fax machine and a letter would have to be driven up from Nairobi. Fortunately, after a few days of waiting for this written notice, the broadcast messages were no longer being sent and the network never had to be shut down.

Reputations

Although Joseph is adamant that only in hindsight the decisions he made were the right ones, it takes understanding of the economic, political and social set up of a country — not just ‘the market’ — to arrive at the right choices. It is perhaps this unique understanding which Joseph possesses that has led to his most recent appointment as the new Chairman of Kenya Airways.

The airline has struggled for the past few years. At one stage, pilots threatened to go on strike unless the CEO was fired. In this new role, Joseph is no longer captaining a well-loved company but rather one whose reputation has taken a hit.

But Joseph is off on the right foot with Kenya Airways. As soon as he was appointed Chairman, strike action was called off by its pilots. Not a bad start.

Nikita Bernardi

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