The story is especially apropos after the firm’s long awaited IPO finally took place this past week (delayed after violence erupted in December, following elections that left over a thousand dead, and the entire nation on seemingly on the brink of political and military chaos). The largest IPO in East African history saw “heavy demand” (much from retail customers) for a 25% stake valued at about $800 million. And The Wall St. Journal wrote that “analysts expect Safaricom’s [IPO] success will spur the government to privatize other entities, especially in light of its need for capital to rejuvenate the economy.” Safaricom dominates the country’s mobile-phone market, with 80% of the market share. And according to Economist, it is the most profitable business in eastern and central Africa, earning profits of $223.7m in the financial year to the end of March, up 16% on the previous year. Before the public offering the Kenyan government held a 60% stake in the firm. But that share is now reduced to 35%, with the other 40% owned by Vodafone Kenya Ltd., a subsidiary of the London-based Vodafone Group PLC.
As I’ve written before, the importance of mobile phones in frontier markets cannot be overstated, if for no other reason than for e-commerce. Economist proclaims that “mobile banking could be the next stage of mobile-driven economic transformation,” and the piece on Joseph opines that his “most enduring achievement is likely to be M-PESA, a pioneering service that enables Safaricom’s customers to send money to each other by text message. Cheaper and faster than ordinary money transfers, it now moves $1.5m a day across Kenya, in mostly tiny transactions, and is being rolled out in India, Tanzania, Afghanistan and elsewhere.”
Joseph arrived at Safaricom in 2000, having already set up successful mobile-phone networks in Spain, Greece, South Korea, Brazil, and Hungary. His most important decisions, in the hopes of rebuilding and expanding the Safaricom brand, included: (1) targeting “pay as you go” customers, who pay for mobile airtime in advance, and therefore do not pose a credit risk to the operator; (2) introducing billing by the second (vital for the ultra poor).
Joseph believes that his the poorest customers are the most price-sensitive, and thus that a strong brand can keep them loyal. So far, his optimism not only for the potential for his product to help those in need, but also for the political and economic future of the continent as a whole, has paid dividends. And by the looks of this week’s IPO, there are many others who share his sentiments.