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Saturday, March 29, 2008

Hearty Laughs All Round As Ordinary Kenyans Bleed

The story of Kenya is really sad. Even as hundreds of ordinary folks lined up to start purchasing Safaricom shares yesterday, hoping to make a quick killing, details emerged that may not be such good news for them.

The privileged in Kenyan society are also not aware or have chosen to completely ignore the great suffering going on amongst many ordinary Kenyans that has been directly caused by insensitivity from the government. I have in mind the IDP camps where since the long rains started pounding down last week, life is rapidly becoming unbearable. It is obvious that we will soon hear of deaths in these camps as a result of young children being exposed to the cold and rain. But alas the government’s energies are at the moment fully concentrated on IPOs and ensuring that the Safaricom one is a huge success at all costs, ordinary mwananchi kitu gani?.

Secondly the campaign by Local government minister Uhuru Kenyatta (who has never used public transport in his life) to keep Matatus out of the CBD has caused a lot of suffering amongst ordinary Kenyans, more so as the city is experiencing a lot of rain these days. A clear illustration of the fact that the government has no idea what it is doing, is the introduction of special shuttle buses to get passengers into the CBD from Muthurwa and other far off pints where they are dropped by matatus from the residential estates. These shuttles are charging Kshs 20/- while the old fares from the estates remain the same. Forcing ordinary folks to pay more at a time when they are desperately trying to recover from the effects of the post-election skirmishes. So if somebody was paying Kshs 40/- to get to town, they now need to pay Kshs 60/-. All in all the return trip now costs Kshs 120/- up from Kshs 80/-.

This past week there was a case of a man’s leg being cut off when he fell from a moving train in Nairobi. The man also sustained injuries to the neck and was lucky to be alive. It is said that the man jumped on the train as it passed through the city’s Dandora estate in a desperate attempt to get to work on time. However eyewitnesses say that the man slipped and his leg was caught between the rail and the wheels of the train. He was taken to Kenyatta National Hospital by the police who arrived at the scene more than an hour after the 7:30 am incident. If he was conscious, you can imagine the agony the man went through all that time.

The bottom line is that the government does not care for ordinary Kenyans. Period. And this lack of caring includes ODM which is yet to release a single statement about the IDPs or the suffering Nairobi commuters.

But let us go back to the Safricom IPO, shall we.

You know how the rich and powerful laugh?

It is usually a hearty, forced laughter that has a lot of throat activity in it. Usually it will be accompanied by a sneer and a patting of the huge pot belly. It is the kind of laughter that is unmistakable and tells you that somebody has enough zeroes next to their bank balance to make you dizzy.

There was a lot of this hearty laughter from the rich and powerful at the Safaricom IPO launch yesterday, from characters like Jimnah Mbaru who has made an absolute fortune from the NSE so much so that if he was still having children he should name the next one “Stocks” Mbaru. Meanwhile it is becoming increasingly clear to this blogger that serious threats loom close in the horizon for Safaricom profitability.

For starters many analysts agree that the climb in profitability has peaked off and can now head in only one direction; south. Up to this point Safaricom has had no serious competition to speak of. Kencell entered the market first but the truth is that their management was a joke and they failed to read the clear signs on the wall in the famous per second versus per minute billing war. Safaricom were charging more but cleverly passed the message to consumers that they do need to pay for seconds they did not use. Kencell completely out of touch with the common man in Kenya were charging less per minute but resisted introducing oer second billing until it was too late. In fact they started talking about it being cheaper to order a bottle of wine rather than a glass of wine at a restaurant. Wine ni pombe? many Kenyans wondered. The Kencell European managers, were never able to explain why Kenyans went for the higher tariffs.

But Kencell and their out of touch European management is no more. The recent take over by Celtel has already shown clear signs that the future is definitely going to be a lot more red (Celtel colours) than green. Safaricom are for the first time experiencing real competition.

But perhaps the largest threat yet has to do with the changes taking place at Telkom Kenya. France Telecom has purchased a significant stake and the CDMA wireless system has taken off like a rocket. The huge advantage is the cheap rate calls to landlines. Then there is also the fact that this system is favored by businesses who ordinarily make a lot more calls than individuals. A price war of sorts is inevitable and that is bound to reduce profits dramatically for Safaricom. The fat cats behind the Safaricom IPO have this information and more. Which convinces me that their strategy on Safaricom is rather short term. The shares are not 5 bob for nothing, I can assure you. It is all dependent on the masses buying the shares in large numbers and so many people missing out on the IPO that they will be lining up at the NSE when trading starts in June ready to buy at a slight markup. This will shoot the price up quickly, the fat cats will then clean out and make a strategic retreat and the Kenyan public will have paid them handsomely for their trouble. You know what will happen when the fat cats dump the shares. In fact some of the same fat cats have invested heavily in Telkom Kenya through the foreign investor (details of that can be found in my raw notes. Sorry that information is still too hot to publish here.)

P.S. Here are some fascinating tidbits about mobile telephony in Kenya.

Kenyans are only second to the Phillipines in the world in terms of using SMS text messages.

Nairobi density of cell phones during the day is higher than that of New York, a city many times larger.

It is still a puzzle to Safaricom management why phone traffic between 8:00 pm and 8:40pm on week nights is four times higher than normal.

Most of the government statistics on income expenditure and population are all wrong and are still wrong. One just needs to look at the huge number of cell phone users in the country to prove this. The government’s figures on Internet use are also hugely understated (Kumekucha can authoritatively tell you).

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