Ndegwa: I like the man I’ve become, and the Safaricom we’ve built

I went to Starehe Boys’ Centre, which also shaped my upbringing quite a lot. The sense of mission that the founder, Geoffrey William Griffin, had; the kind of school he created, which was not just about academics, but building a holistic person who thinks about society, impacted my life’s journey a lot. In fact, Griffin used to say that the reason he started an education institution was that he learned during the colonial era that if you free people's minds, they will free themselves to be anything they want.

But even before I got to Starehe I had been influenced by very ordinary people; like teachers and parents who just wanted to see me do well for no benefit to themselves. Starehe's philosophy was Natulenge Juu, or Aim High, regardless of where you come from, and do more for society. I remember when I was in Form Four we were required to have a holiday job in a public institution, so I worked in a hospital to give to give back to society. I was shuttling around, going to wards to take medicine to patients at Nyahururu Hospital.

Did that influence a lot of the decisions you made later in life? Do you see that Starehe boy mirrored in many facets of your life today?

There is no question that our upbringing has a massive impact on what we become. Starehe, really, prepared me the future. It wasn't just about being in the school, but how to build a boy who had ambition and integrity, and who has the ethos to be successful. Today I always say that, even with the increased authority and high positions, at the core I will always be the Starehe boy. I am confident about the person I am and I don't need to use status and positions to indicate that. I also have enough inner confidence to do what I think is right, and I value what I stand for.

Let’s shift gears a bit and talk about some interesting stuff at Safaricom in recent days. You launched the Safaricom Golf Tour ostensibly to demystifythe sport and make it more accessible? Aren’t you aiming too high?

The Safaricom Golf Tour is rooted in what we are all about; a successful enterprise that is financially very successful, but which at the core it still believes in transforming lives. So that wiring -- and we can talk about how we do it, whether through foundations or the way we construct our products and the way we express our brand -- has always been part of our DNA.

And so, since we were started 21 years ago, we've always supported sports, especially football and athletics. We have supported golf, too, but at the national or international levels like the Kenya Open or the Masters. Now we want to demystify golf because it's seen as an elite sport. We want people from the lower socio-economic levels to access this elite sport and open it up to communities. That's the same way the rugby craze in this country was created. If you remember, the Safari Sevens didn't exist before brands started investing in rugby, and so in the same way we are putting Sh100 million in this golf programme.

What is Safaricom today? Is it a telco, a bank, or both?

If you went to the streets and asked people “What is Safaricom?” they will probably think of the brand and what it does for them. They'll think of a communication and connectivity brand, so you could say we are a telco with a big payments solutions and credit face through M-Pesa. In 2020 we came up with a new vision of being purpose-led organisation, so purpose will still continue to be a key part of our strategy. We want to be a purpose-led technology company by 2025. We recognise we've been a very successful telco, and now we want to continue to combine technology and innovation to solve societal challenges. So rather than just purely focus on connectivity, in the same way that we did with financial services, we could go into new areas, whether that's agriculture, health, education, or even for small businesses like the mama mbogas and boda boda riders.

Why would you want to go there, given you are already doing well?

We want to enable small- and medium-sized businesses to do anything they want, whether you want to borrow money in the morning and buy vegetables to sell, or you want to start a small retail business, or you want to transact, or you want a marketplace for your business, those are the solutions we are saying we will need to bring to life by combining technology and innovation.

Given you past and present and the lessons you’ve learnt from it, what do you think the Safaricom of the future looks like?

The way I see it, the Safaricom of the future will be an ecosystem business. The M-Pesa app, for instance, will become a super app, such that if you want to, say, book a ticket to travel to Mombasa, you will go into your M-Pesa app, where Kenya Airways or whichever travel agency you want will have a mini-app, you can book and then exit by paying through the app. That, therefore, makes us an enabler of lifestyles for individuals. We want to enable any lifestyle, whether you want a commerce transaction, or to pay your children’s school fees, or you're on the road and need to buy whatever services or products. Technology will play an important role going forward, and what we are doing is essentially taking advantage of what is happening in society and saying, since digital and technology will be so important in everyone's life, we will enable that life people want.

We want to be a brand that says to a customer: whatever you want to do, we can enable that. We are not going to control all these areas, of course. For example, in agriculture we will have an ecosystem but all the SMEs who provide seeds, fertilisers, agronomy support and post-harvest services will still be operating. So we are enabling the ecosystem to operate, but our intention is to connect the farmer to a market. We don't have to control the transportation, or the logistics; all we are doing is providing a tech solution and ensuring the user experience is right. We did the same in the financial services space, where we used technology to solve a financial inclusion problem. Today we are the biggest ecosystem of collection for banks because we have M-Pesa agents around the country.

But building that kind of a super app comes with a number of challenges, including security ones. How are you preparing yourself for that intriguing and demanding future?

Although we have pushed the boundaries around financial inclusion, we still see a big opportunity to expand the offering to include other financial services products, in partnership with banks and insurance companies. But, as I have said, technology brings about risks. The actual technology could fail, for instance, so stability is important. I say to my team that M-Pesa has to be stable 99.99 per cent of the time, and that's the reason we invest $350 million a year on the network and the information technology behind it.

Let me tell you a story about why reliability is important. I have a CFO who came from another country. He's been here for one year and recently told me he doesn't know the colour of our banknotes because he only uses M-Pesa to transact. But he would not be that confident if M-Pesa was not stable, so stability is crucial even before you start thinking about data and its security or safety.

The next big thing for us is securing the data in the system. Cybersecurity is an important component of our business. Remember, the stability of data, or an attack from a cyber perspective, is not just an internal ecosystem issue but an external one as well. We work with regulators like the Central Bank and the Communication Authority to make sure that the ecosystem is secure. And then we share information about vulnerabilities when we see them.

Your customers will counter that, even with all these security innovations and products, they are still losing money to fraudsters on the network.

I know that there are issues around customers losing money, but the way I see it, customers lose money for two reasons. One is because they might send it to the wrong person and the person might decide that they are not going to refund; and the second is that they have been SIM-swapped through social engineering. In this regard we are doing a lot of education on how to protect their information, in the same way banks tell you to never give out your password. We are doing that because customers need to have a worry-free interaction with us. We also understand that trust is the biggest area of focus if we are going to be a successful technology company.

Let’s talk about the cost of services, particularly on your network and across. Safaricom continues to resist the cut in termination rates that will bring down calling rates. Why take such an unpopular stance when the rest of the players are on board?

The process of determining mobile termination rates is well understood within the telecommunication industry. It happens in every country and has happened in Kenya, so it isn't a new area that we are not familiar with. We were aware that the Communication Authority was going through this process and there is an ongoing tribunal case, so there are few things that I cannot go into detail about. I should say, though, the CA has the authority to determine mobile termination rates and we do not have a problem with that. The only thing we are saying is that there's usually a process that the CA should follow to determine the rates; you do a network cost study, approve the rates, then roll them out over time because you don't want to shock the system. That's what we are saying needs to be done. Just follow the process that you followed in the past, and do it in a way that ensures that the industry is predictable in the way these things are done.

The competitors are saying you are using your position as a market leader to frustrate the process.

This is how I’m going to answer that: we were, and this is fact, a department of Telkom Kenya at launch. Second, we were awarded licence at the same time as the predecessor of Airtel Kenya. We've been successful because we've innovated and invested. We should not be punished for success. We've not abused that success or size and we do not underprice. In fact, our customers are telling us to lower our prices! So we have not abused that success and should not be punished for success; for investing, for innovating.

Do you feel you are unfairly targeted?

When you're a leader in a market you have to manage that success. Of course sometimes we are in the spotlight because we are large. Does that mean that we are punished? I don't know. But all we are saying is, in this process, just be fair and treat everyone in the industry fairly.

Kenyans keep complaining about your data bundles and how they ‘vanish’ after short usage. What algorithms do you use to allocate data bundles?

What we have realised is that, because we have a better network, we have better speeds. That means that your data, depending on what you are running in the background, could actually run faster. But now we have tools that tell a customer what they are using their data for, for instance. There are so many things that customers are not aware in the background; they could be downloading stuff that they may not have actually initiated but are initiated by their computer or mobile phones, including even updates in the background. We are also pre-warning customers when we feel they're using data quickly. And before your data expires we tell you the bundles that are outstanding.

The other is using what we call Customer Value Management engines that allow us to use data to give a lot more value to our customers depending on their lifestyle. In fact, the biggest area we want to focus on is to make sure that customers believe that whatever they pay for, they get value for it. And you'll see over the next few months what we mean by this.

Your current position is to offer 5G access via home internet. When do you see Kenyans enjoying 5G on their mobile phones and how much would the service cost?

We believe that 5G is a future technology whose uses today, even in the West, are very few. That's why we've said the main use of the technology for us would be as a substitute for fibre, because on 5G you get near-fibre experience in terms of speeds and latency. That's why we are not going big time on 5G. Also, it's good to walk before you run. We still have a long runway for 4G; we have only 25 per cent penetration of 4G phones in this country yet we have 96 per cent 4G coverage in the country today, for instance. What we need to do now is accelerate the rollout of phones so the upgrade from 2G to 3G to 4G is faster.

Once we've 60 or 70 per cent of 4G phone usage here, we will start to see a lot of new phones that have 5G functionality and capability. And then we will have a better case for a 5G network.

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