Ratio Magazine :: The Inside Track to East Africa’s Economies - Ratio Blog: Ours is bigger than yours (Well, until we sell it)

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Ratio Blog: Ours is bigger than yours (Well, until we sell it)

Thursday, 13 May 2010

Andrea’s weekly column for the Star

Forget that long, tedious Powerpoint presentation with endless slides and, worse still, a haphazard mix of fonts and formats that you can use to read out your entire presentation with your back to your drowsy audience. These days, you have to bring along a snazzy corporate video demonstrating the overall awesomeness of your products or services, plus ideally another one that demonstrates the overall awesome caringness of your corporate social responsibility programme. If it involves grateful people in rural areas doing productive things or, in aid and NGO lingo, income-generating activities, even better.

That’s at least what I concluded from the first day at the Mobile Money Transfer conference. The day started out with a presentation by Safaricom CEO Michael Joseph, talking about MPESA. Garnished with said videos, it was an easy one: M-PESA is well known to have been the frontrunner in mobile money, and wildly successful, too. What followed next reminded me a little of what inevitably unfolds when I nudge the Intrepid Doglet out of my car and into my friend’s garden where he instantly has a stand off with Rocco, my friend’s boy dog: Who’s the man? Who? Who??

Thankfully, at the conference, no zips were unzipped, and no car tires marked as territory. But George Held from Zain, the second speaker of the day, took over from Michael Joseph with a snarky reminder that Zain was represented in MANY countries in Africa and the Middle East. And he upped the ante on videos, adding a clip of US Secretary of State Hillary Clinton talking very earnestly (and off a teleprompter) about how mobile banking can kiss things better in DR Congo, especially so for women and children (gotta have women and children in your poverty alleviation these days).

I suspect that at some point between his extensive and video-supported enthusiasm about Zain’s borderless One Network and Hillary, my eyes glazed over a little. Not because I didn’t think the One Network was a great idea. I did. I do. But wasn’t this a mobile money transfer event? Can we fast-forward through the promo material and get on to the subject matter? We did, eventually, a little. But I did wonder – and I did ask: After all this emphasis on the One Network, can I send cash across borders to, say, Ghana? No, not yet, although ‘trials are under way’. Also, I asked: once the sale of Zain’s Africa assets to Bharti Airtel had gone through, what would happen to both the borderless network and the mobile money between the then separate Africa and Middle East operations? Ah, now that question, his lawyers had instructed him not to answer – he would only go as far as indicating that ‘discussions were under way’, and that the potential for ecommerce had been one of the reasons why MTC had acquired Celtel in the first place.

But this jarred just a little: Whatever Zain’s grand plans for Zap, their mobile money service, whatever their perceived advantages over other services, and with all the sniping at M-PESA, the bottomline is that Zain headquarters in the Middle East had, in fact, decided to rid themselves of their Africa bits. Which, unrelated to mobile money, also meant that they had killed off Celtel , a strong African brand - for nothing, as it turns out.

More than a year ago, Michael Joseph had argued that he expected most large mobile operators to copy M-PESA within 18 months. That, the conference showed, had not yet happened. According to Joseph, several factors contributed to this: For one, you deal with people’s money, so you must, must take this seriously, and make the necessary investments, including in the agent network. Also, Safaricom’s dominant position in Kenya’s market played a big role: It’s easy to find an agent with withdraw cash – Safaricom’s loud frog green is ubiquitous in Kenya.

Ironically, however, it is just the last factor that made MPESA a globally known success story that triggered a highly contentious regulatory smack down: Newly gazetted regulations define Safaricom as the ‘dominant licensee’, which in turn renders it a regulated service and so subjects it to restrictions: Safaricom have to alert the Communications Commission of Kenya (CCK) of any promotions they wants to run, and any tariff changes they intend to implement, and obtain the CCK’s permission. Michael Joseph is not a happy camper: He says that a dominant player should only be penalized if it abuses its dominant position, and the regulations contain no definition of abuse – a crucial oversight. Or maybe not strictly speaking an oversight , since Safaricom had raised this issue repeatedly with both the Ministry of Information and the CCK in the drafting stages, and both had given him assurances that they would include it.

Zain have joined Orange and Yu in issuing a smug press release thanking the CCK for so graciously leveling the playing field. Orange and Yu are relative newcomers in the market, and both have had a few issues: Yu was initially an Econet operation, and Econet’s market entry had been delayed as their initial local co-owners, the Kenya National Federation of Co-operatives (KNFC), couldn’t pony up their financial contribution. Orange brand owners France Telecom seem to have second thoughts about bidding nearly USD100m more than the nearest competitor in the Telkom Kenya privatisation, and reportedly would like to see some or all of that cash back from the Kenyan government - fat chance of that happening, if you ask me, so Orange must be grateful that the GoK is at least willing to offer a regulatory hand. But Zain, or rather its predecessor Celtel, have been in this market since 2004 when they acquired KenCell. At that time, one telecoms article states, their market share had just fallen from 50% to 40%. Now how exactly did they manage to work their way down to 14%, I wonder? That must have been one slippery playing field.

Republished with kind permission by the Star.

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written by Baines, May 20, 2010

A crucial historical background you missed. Safaricom had the advantage of having a crucial partner when it launched its business in Kenya. You missed noting that strategic partner, who reduced shareholding in 2007. Of course, the elephant in the room is the Government of Kenya (GOK). Having the GOK at the time as a strategic partner gave Safaricom some innate advantage that other competitors did not (do not) posses.

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written by devid, May 28, 2010

hey..!! nice idea for money transfer,you can transfer your money online.

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