Safaricom: innovation and corporate governance should go hand in hand

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Last week Safaricom launched their new product called Blaze. Blaze is a product for youth aged between 10 and 26 which allows them to create their own tariffs and use their credit in the best way that suits them. Designed by, and for, Kenya’s youth, the platform will offer the young people a wide range of products, services and benefits tailored to cater for their everyday needs. This is an example of the innovative products Safaricom has been offering since its entry into the market.

Safaricom is a classic case of Kenya’s success story making global headlines and winning international acclaim as one of the most innovative companies in the world. Growing to the point of being benchmarked by international corporations like google is no mean feat. Started one and a half decades ago, the company has undergone a tremendous process of growth to emerge one of the best firms in East and Central Africa. Through its numerous innovative products and services, consistent payment of dividends to shareholders and being one of the most profitable firms, Safaricom has become a darling to over 25 million Kenyans.

On being a responsible corporate Citizen, Safaricom has scored highly. The firm honours its tax obligations, is alive to the effects of climate change (in its sustainability report, the company outlines what it does to contribute to the betterment of the environment) and conducts numerous philanthropic activities that have positively impacted in people’s lives, for instance, Ghetto classics. These, among other responsibilities, point out to why the company has remained way ahead of its competitors.

The departure of Michael Joseph from Safaricom, a shrewd CEO who set the bar very high meant that the successor took over a successful company and was tasked with the responsibility of sustaining that growth and making the company soar even higher. Bob Collymore was the man to sit at the helm of the organization. The company was under public scrutiny. Shareholders hoped that the transition would not adversely affect their investments. Bob had to employ ways that were both profitable and not necessarily appealing to the customers. The company has progressed positively since Mr. Collymore took over. Only recently Safaricom announced a record Kshs. 38 billion profit for 2015.

Bob Collymore. Image from http://mgafrica.com/article/2016-02-08-stories-from-the-tech-graveyard

Safaricom’s success story is, to a large extent, pegged on the innovative mobile banking technology that has transformed lives locally and internationally. M-PESA is the product that steered the company to international recognition. With blessings from the Central Bank of Kenya, the product was launched and has now become part of people’s lives. Many transactions take place via the Mpesa platform. Mpesa has changed how people do business and has also been able to reach many Kenyans who were previously unbanked, giving them a secure platform where they could save their money and carry out their transactions.

Safaricom has also created business opportunities for other businesses locally. Entrepreneurs who have interacted with the company praise the company for prompt payment of products or services offered to the firm. This is attributed to the fact that the company has robust and regular cash flows helping it honour its financial obligations.

Like any other successful company, there will always be challenges that threaten to taint the image of the company. Following the leakage of a draft internal report by audit firm KPMG, Safaricom has lately been in the limelight. The KPMG dossier has even become a subject of parliamentary investigation. This is especially so because some senior managers have been implicated in the alleged tendering malpractice. The parliament is now looking into some over 20 questionable tenders awarded between 2013 and 2015.

Bob Collymore confirms that corruption is a challenge that the company faces but as a CEO entrusted with the responsibility of steering the multi-billion company in the right direction, he has been championing integrity at the company. To deal with issues of the integrity question and to find the truth behind rumours of corruption the company hired audit firm KPMG to audit the two-year period (Sept 2013 and August 2015). The draft report was leaked two weeks ago and has created quite a stir.

The report that was commissioned by Bob Collymore speaks to the fact that Safaricom aims to improve its internal processes and was going to use the report to plug any holes that were exposed. The draft report is supposed to give the company a chance to work on any issues that were raised as red flags. This is something Safaricom has dealt with by firing some employees and also looking at continuously working to streamline processes so that opportunities for self-enrichment by employees are minimized.

It is interesting to note that the report was leaked to support an external agenda of somebody who had a grudge with Safaricom. The star wrote an expose on why is Ken Kiplagat so hostile to Safaricom?

The Daily Nation in a commentary says Safaricom has taken steps to ring fence its systems. It acknowledges that even the best companies in the world are not perfect but it is how they deal with issues that sets them apart. The article also states “internal audits are, as the name suggests, for internal consumption; they should not be used by third parties for extortion and blackmail by dubious characters, which is essentially what is happening in the Safaricom case.”

After KPMG reported its findings Bob Collymore came out publicly to state that he will act on the recommendations from the final report, and close to 60 of its employees have lost their jobs as a result of involvement in corrupt activities.

We need to give Safaricom time to deal with the issues presented in the report. Hopefully Bob Collymore will give another update soon on what other measures have been put in place since the draft report was released. Process improvement and corporate governance are things that have to be continuously improved in all organizations so that the integrity of a company is maintained. One of the challenges facing organizations is not only focusing on innovation, growth and making profits, but also to focus on processes and integrity of the people behind the processes because they can have far-reaching consequences on the company’s reputation and management.

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