In the past year, many organisations have faced significant business challenges due to rising costs, reducing consumer purchasing power and an increase in regulatory actions.
A good number of Kenyans lost their jobs in the last one year through retrenchments, involuntary retirements and business closures. Fifteen listed companies at the Nairobi Stock Exchange have so far issued profit warnings.
And as recently noted by Central Bank of Kenya (CBK) Governor Patrick Njoroge, most Kenyans have not felt the effects of the GDP growth as it is largely driven by government spending on infrastructure which has not trickled down to the consumers.
This has left many organisations with the challenge of continuously providing relevant solutions to customers.
The advent of digital lending facilities such as M-Shwari and Fuliza have seen more and more Kenyans access credit facilities to boost their economic activities.
Kenyans who would typically not qualify for traditional credit facilities, can now access the services with ease and speed.
When well utilised, we believe credit facilities can allow Kenyans to prosper and the economy to grow.
Therefore, there is hope that despite the negative short-term outlook, the sub-sector will find its footing so that it continues to support households and micro-SMEs with dignified access to formal credit. The telecommunications sector has a big role to play in this, hence it is imperative that the regulatory environment also supports the sector more for the overall benefit of the consumers.
In the last two decades, we have witnessed a major shift in taxation of mobile telephony from exemption to increased taxation. Raising taxes risks introducing a rebound effect by adding even more pressure on consumers and businesses which are already struggling under the weight of tough economic conditions.
For instance, our tax commitment to the Exchequer continues to increase every year. In the last financial year, Safaricom remitted Sh 98.13 billion in duties, taxes and licence fees.
It is therefore crucial for both the National and County Governments to find ways to balance revenue maximisation and at the same time, boost business growth.
We are seeing a lot of changes in the telecommunications sector and these require regulatory support to serve the intended purpose of benefitting the consumer.
This is why we are supportive of the Airtel-Telkom merger. We however believe in fair and even-handed competition. We have raised a number of issues that we hope the regulators will address as part of their approval process.
The first is the debt owed by the two operators, amounting to about Sh1.2 billion incurred for the provision of various services including interconnection, co-location and fibre services. Our expectation is that the payment obligations should be settled in full before the transfer of business is effected.
The second is the need to rebalance the frequencies allocation. Given the size of Safaricom’s customer base in comparison to the current spectrum holdings, it is apparent that the merger will create a disproportionate imbalance in the spectrum allocation, which will be inconsistent with the market share.
The third is the need for equal treatment of operators and creation of a level playing field within the industry, specifically in relation to licensing and operations requirements.
As we adapt to this rapidly shifting industry, our request, is to have a fair playing field which is driven by healthy competition, spurred by innovation, investment in infrastructure, and well-executed business strategies, to deliver value to Kenyans.
The writer is Chairman, Safaricom Plc.