In a recent interview CEO of Safaricom Bob Collymore (BC) shared with Andrew Fassnidge (AF) from Appsafrica.com how the mobile network operator is evolving and supporting the local ecosystem.
AF: The start-up ecosystem in Kenya is thriving, how important is this for Safaricom going forward and how can Safaricom really influence what’s going on in the ecosystem?
BC: It’s massively important for us, because you know we’re moving into a much more collaborative world. None of us can do these solutions on our own. So we have to work with the partners. It is important to work with local partners, because they understand the market very well, we also as a big play, as a relatively big play in the market, got the ability to leverage, our own experience, our own technology.
Lot of these small developers haven’t the experience of either working with a big company like ours nor do they have the experience of working with themselves. So we do a lot of stuff around incubating, helping them to come into a business environment, understanding how to put together a business plan, understanding how to work through partnerships, understanding how to protect IPs.
But more than that we have recently launched the Spark fund. And the Spark fund is effectively providing some financing for early-stage companies, I mean not necessarily start-ups, but early-stage companies, who need a little bit of cash, it’s about a million dollars. And we’ve identified a couple so far, which we will announce soon. And you know hopefully that will give them a bit of a leg-up to get themselves going.
AF: How do you see Safaricom going forward investing in these companies, is it as a partnership, so you can channel services through, or would Safaricom also go in opposite directions to maybe the pure telco business?
I think we will do all the above, I don’t think there’s one right solution. With some of them we will go into JV’s with some of them we’ll just go into partnerships with, and some partnerships fail. Actually quite a lot of partnerships fail, and you have to be prepared to do that, so it could be equity, it could be loan, it could be just partners.
AF: The cost of data is one of the biggest barriers of getting people online in Africa in a mobile first continent. What can MNO’s do to help level the playing field?
BC: In Africa, we tend to get a bit of criticism about the cost of data. It is high, given the disposable income of an average African consumer, but if you look at the cost of data, the retail price of data compared to the retail price of data elsewhere, it’s actually not high at all. Take out your unlimited bundles that you get in some countries, those unlimited bundles are not smart.
If you take that away and look at the price for MB or the price for GB you’ll find that they’re actually not that expensive. What else can we do? I think there needs to be much more of a sharing of infrastructure, which is what we’ve started doing in Kenya. We currently share with both of our other competitors, which will help to reduce costs. But there are still significant investments that need to be done in the industry, we are still spending about 30 billion shillings a year in capex and against that background it is hard to predict a dramatic reduction in retail prices.
AF: How can mobile money become a fully interoperable solution to really benefit all Africans?
BC: Well my take on this is, whilst mobile money is a very exciting thing and a lot of people talk about it, cash is still king. Cash is still more than 80-90% of the transactions and so I say that the market is plenty big enough for everybody, I think we need to see good competition as a healthy thing. Interoperability, I think, is a little bit more complex and it does need a more structured approach. If you are going to do interoperability, you need to do interoperability with everybody.
So you’ll have to be interoperable with MTN, with Millicom, with Vodafone, with Airtel. You can’t just do interoperability between just two operators, I think there is more need for interoperability across borders, and we’re not seeing enough progress being made there, because international remittance is still a big part of African business. I’d like to see more effort put into this.
AF: Do you think, the slow progress on interoperability is actually going to leave the door open others doing mobile remittances and OTT players who will start to take that market away?
BC: Inevitably someone will come in over the top, the days of like five years ago where we thought everything was defensible, it isn’t any more. Look at SMS and Whatsapp, look at voice and Whatsapp. So there will be disruptives, the question is when, and we just need to either be the ones who disrupt ourselves or be able to ride with the wave.
AF: What’s the future for the telco as the original business models of voice and SMS diminish and what are the other exciting things that Safaricom plan to the market with?
BC: Firstly, I think they’ll stop calling people like us telcos, because telcos suggest you just do voice and text, of course a lot of telcos are just going to do voice and text, but as you can see we used M-Pesa as a platform for moving off that particular plate and now we are doing healthcare solutions, agricultural solutions, education solutions, lots of very exciting stuff being done in educational space and of the course the work that people like BRCK are doing.
All of that stuff needs connectivity and I think Juliana and her team have got a pretty creative way of tackling that problem. We have some really interesting stuff happening with agriculture and still only scratching the surface. Healthcare is really exciting you would’ve heard me on the side-lines just now talking about the stuff we’re doing with refugees and the world food program. Now the same platform is now being used by aid agencies to deliver healthcare to customers. You go to clinic, the clinic is paid for by the aid agency and in exchange for that, data is captured around the patient and policies and frameworks are built from a much more informed position with some of the information they give the mobile phone.
AF: I think you touch an important point and there’s a huge emphasis on data and smartphones, but if we take a step back and where most of the market across Africa is still, is USSD and SMS. How important are they to you in delivering services, because a lot of the time they get lost in the clamour for smartphones?
BC: It gets lost in the clamour when you sit in here in London, or New York or somewhere else and I do actually have, I didn’t bring it with me today, but I do actually have a small phone, a phone which we have launched recently and I walk around with it, explaining to people this is what the majority of my customers got and therefore the solutions have to be designed for SMS or USSD. So when we talk about a USSD solution, it’s a necessary solution. Also the M-Pesa solutions are actually USSD based, when we look at a training program for community health workers, people assume that it’s an app, and it’s not an app, it’s a voice based product, because why wouldn’t you run a classroom using voice, that’s how we’ve always used the mobile phone. So we have to design, of course we design clever stuff, Ways, for example, is an app and Uber is an app, but many of our solutions have to be SMS.
AF: Some of our start-up readers will be trying to connect MNO’s to utilise billing but many do not have capabilities, how are Safaricom helping these small guys to connect and roll out services?
BC: M-Pesa is fantastic, M-Pesa is actually one the things that differentiates us, because most people lent on their mobile phone company because, we allegedly had the billing relationship with the customer, but of course a pre-pay customer is not much of a billing relationship. But M-Pesa allows anybody now to get themselves paid using mobile phone. Divorces us from it, as a mobile billing platform, but gives you something, which is equivalent of having a Visa card. Uber in Kenya now uses M-Pesa, it makes sense and you’d be surprised by that, because Uber has the whole world to tackle, why would it go and find a unique solution for Kenya? But they recognise that’s what the customers are using.
AF: Whats is the potential for Internet of Things (IoT) in Kenya and Africa?
BC: Huge. Huge. People think that internet of things can only be done in nice bright shiny Mercedes, but (…) is a good example of the internet of things, and we will have more and more of those solutions, so people will stop measuring how many customers you have by the SIM card, because people have multiple SIM cards, they don’t even know they’ve got SIM cards. So I think internet of things have a bright future in an emerging market like Kenya.