As second or third generations take over the reins of family businesses, they may be more open to outside investment to grow their companies. East Africa in particular has a rich seam of such businesses, which canny private-equity investors should be exploring.
Must Safaricom’s CEO be Kenyan?
The search for Bob Collymore’s successor as Safaricom’s CEO is on.
But the main issue now seems to be whether a Kenyan or a foreign national runs the company.
- Two company insiders told Reuters that the Kenyan government – one of the two principal shareholders of the telco – is insisting that the position go to a Kenyan.
- Not only did the cabinet secretary in charge of information communication and technology, Joe Mucheru, not deny that position but he also added the sound bite: “It will be hard for them [Safaricom board] to justify, what is so special about telecoms?”
Mucheru’s question is valid, but it is not the most important one.
The Board’s interest is to fill the role with someone who can drive Safaricom’s growth in the next phase, as it did with Collymore taking over from Michael Joseph in 2010. The principal shareholder, Vodafone, has previously shown a preference for non-Kenyan Vodafone insiders, but that seems to be harder this time than it was in 2010.
The telco’s massive profits and increasingly important role in many facets of Kenyan life make the position the most visible corporate job in East Africa, and the government is keen to have a Kenyan occupy it. It would strengthen Safaricom’s brand as a uniquely successful Kenyan brand, but there are some who fear that in the hands of a Kenyan, it would begin to suffer the same problems as other Kenyan corporates.
In preparation for Collymore’s exit, one of the items in the agenda of the 2017 shareholders’ meeting was to “encourage the retention of a predominantly Kenyan character in the senior management and Executive Committee of the company.”
That Trojan horse of a statement, listed under special issues, is the government’s primary weapon in its push and pull with the other major shareholders.
So who is in the running?
- As a nearly two-decade-old company, Safaricom now has enough insiders who can successfully run it and who have even been appointed to run other telcos. Last year, for example, current Chief Customer Officer Sylvia Mulinge was appointed the Managing Director of Vodacom Tanzania. The appointment did not come through though because the Tanzanian government denied her a work permit. Mulinge is a Safaricom veteran who joined the telco in 2006 from Unilever.
- There are other candidates outside the telco, such as outgoing CEO of KCB Group Joshua Oigara, who most people assumed was the unnamed “senior Kenyan banking executive” mentioned in the Reuters article. Since his appointment in November 2012, Oigara has added to the banking group’s storied history of success, and is currently overseeing its massive expansion drive. He has also run another of Kenya’s most successful and uniquely Kenyan corporates.
In March, Bob Collymore told The Africa Report that his successor should be:
- “…someone who understands the financial sector a lot more, if we are to occupy the fintech space, and someone who is not going to be scared of going into other markets.”
- Collymore noted that he is not good at mergers and acquisitions, but that his successor should be. Banking executives such as Oigara have shown a penchant for them in recent years.
Strong and stable
The main question isn’t really whether the Safaricom board can find a Kenyan qualified enough to continue the telco’s success. Their common goal though is to ensure that whoever takes the job continues Safaricom’s growth trajectory.
- Safaricom’s corporate stability, having had only two CEOs in 19-year history, has been cited as one of the reasons for its successes.
- Its competitors have had multiple CEOs as they continue to work to overthrow Safaricom’s dominant market share.
Safaricom is not just a brand in Kenya; it is intricately connected with daily life, and not only because of its ubiquitous mobile money platform. It’s invested extensively in building and maintaining its position as Kenya’s central brand, with stadiums, awards and jazz festivals named for the company. It has also built other facets of daily Kenyan life, such as a digital security system in the capital, Nairobi, and the city of Mombasa.
- The project, which began in 2014, cost the Kenyan taxpayer KSh15bn ($148.2m).
Technically, both CEOs Safaricom has had since 2000 are now Kenyan.
- The inaugural executive, Michael Joseph, became a Kenyan citizen in 2014, four years after he left the job. He is now the chair of the Kenya Airways board, where he’s struggling to turn the airline around. His tenure there has already raised eyebrows, as the senior executive positions have mainly gone to non-Kenyans.
- Bob Collymore, who was born in Guyana but is a British citizen, has also obtained Kenyan citizenship in recent years.
It’s as likely that the job will go to a Kenyan as it is likely that it will not, but the government’s insistence on having a local executive means that it might not hesitate to use the other tools at its disposal to bend the board to its will.
Key among those is the question of market dominance.
- Back in 2015, parliament discussed rules that could have seen Safaricom have to spin off its secret weapon, the money transfer service M-Pesa.
Bottom line: If a Kenyan gets the job, then all eyes will be on him/her to prove the naysayers wrong. If it goes to a non-Kenyan, then whoever it will be will need to learn quickly that its not just an office job on Waiyaki Way.