THE COLLAPSE of Kenya’s government owned and profitable companies has always started with the rumour of an internal report, mostly commissioned by the Board and done by an audit firm.
Uchumi is almost on it’s death bed. Mumias has died many times over and is now being revived, just like Benson the Protester was, and as for KQ, well – let us just say it is constantly on turbulence.
But these companies were once profitable. Very profitable in fact. They made so much money, newspaper headlines called the profits ‘embarrassing’. At the height of their success, their combined profitability was above Kshs. 5Bn. They were the places anyone wanted to work at and their purchase orders were as good as cash in hand.
Then internal reports started leaking. And what followed were claims and counter claims of boardroom fights, tender wars by unknown and unmentioned persons or unspecified enemies and entities out to destroy the CEOs.
This script is all too familiar. And this wonted screenplay is now being played out at the parking lot of Safaricom.
The CEO of East & Central Africa’s largest corporation held a press conference on a Saturday afternoon. That looked odd. In the briefing, Mr. Collymore insinuated to the fact that there are tenderpreneurs who have migrated from the corridors of government offices to the parking lots of corporate Kenya, and it is these entities that are propagating various tales about Safaricom being a den of corruption.
But why would Safaricom be a prime target? To understand this, look at Safaricom’s numbers. The company’s capital expenditure (money invested by a company to acquire or upgrade fixed, physical, non-consumable assets, such as buildings and equipment) was 32.12Bn.
That is 3 times what Safaricom’s parent ministry – Information, Communication and Technology Ministry – was allocated in the 2015/16 budget. Of this, more than Kshs. 20Bn was spent in Kenya and to Kenyan companies.
The total amount spent in advertising, paying various promotional agencies, digital activations and doing TV commercials is in the north of Kshs. 3Bn. That is more than the profit of most companies listed at NSE, and even some ministries’ budget!
The company’s free cash flow is Kshs. 30.36Bn. That is enough money to buy Kenya Airways 5 times over, and have some change to pay the pilots for several months.
Hearing about corruption at Safaricom must therefore worry all of us. This is because Safaricom is not just another company in Kenya. It is the organisation that moves Kenya. They move more cash through MPesa than all banks combined. Every 8 out of 10 phone calls in the country are to or from a Safaricom line and 90% of all SMSs sent are through the network. Basically, there is an 85% chance that you will tell someone about this article using a Safaricom service.
Because of these, and the fact that Safaricom’s capitalisation accounts for almost 40% of the total value of shares traded at NSE, we must take keen interest in these stories.
And for that reason, Bob must be the Bob we know him to be. He was the first CEO to declare his wealth and tell us how much he earns. He set precedence by leading Safaricom to be the one of the first companies to sign a pact to weed out corruption in their companies. And we know that in the last 2 years, he has fired more than 115 employees on corruption related matters.
His openness in this matters therefore edicts that he must be subjected to a court of public opinion. I don’t mean the one where we pick a line out of a 300-page draft report and throw as much mud as we can while passing judgement.
In that court, it should not be enough for Bob to point to that court that he personally commissioned the draft KPMG report that is now subject of a parliament process. He has to unashamedly discuss the existence of corruption at Safaricom, who has been or is involved and what action has been taken, both against the person(s) and towards the development of a system and framework to ensure this is never happens again. And the discussion should be done with a lot more temerity than that contained in the Sustainability Report that the company prepares every year.
In the court, he must set precedence by being the first in Kenya to name and unmask these people we hear of but have never had the benefit of knowing their identities.
He must explicitly reveal the contracts these people were denied, their values and the machinations that happened. Doing so will safeguard Safaricom from suffering the same fate as Mumias, KQ and Uchumi, who went through a muddy process of leaked reports, loss of confidence, eroded brand equity, consumer flight, parliamentary committee hearings and finally loss of shareholder value.
This will allow us see these people for who they are – tenderpreneurs after the more than Kshs. 20Bn local Safaricom contracts.
His previous acts dictate that he has to do a first on this one as well. Name them! Let the accolades he has received for fighting corruption count for something.