Wednesday, June 20, 2007

The Potential of ICT in Kenya

The potential of ICT investment in Kenya is illustrated by the phenomenal financial results posted by Safaricom. A previous posting (1/06/07) in this blog had profiled the company and its CEO.

Safaricom has emerged as one of the most profitable Kenyan company with historic results that saw its pre-tax profits hit Sh17 billion. The results were released today (20th June, 2007).

This is the highest that a Kenyan company - whose results are made public - has made, eclipsing corporate giants listed on the Nairobi Stock Exchange.

With profits at this level, Safaricom nearly made as much money as what Kenya Airways, East African Breweries and Barclays Bank did combined. These businesses made a combined pre-tax profit of Sh21 billion on revenues of Sh94 billion.

This is the kind of money that all Kenyan banks and insurance companies have been struggling to make in a single year for sometime. Kenyan banks combined made a pre-tax profit of Sh27 billion in 2006.

With Safaricom’s revenues and net profits growing by over 30 per cent over 2006, these results underlie a robust performance of the economy, but also opens a new debate over whether mobile carriers are overcharging customers with the company now earning an operating margin of 38 per cent.

This means that for every shilling the company generates in revenues, 38 cents goes into operating profits. More on http://www.bdafrica.com/.

4 comments:

Alex Gakuru said...

One day at a Chiromo Campus lecture room in 1989, a statistics lecturer digressed a little to narrate to an incident that had delayed his coming to deliver that morning's lecture.

He said that he had just witnessed a car hit a pedestrian who flew into the air, the "projectile" flying directly towards him.

But alas, the vehicle was also approaching him straight but on the ground.

He quickly realised that he had only two options: -

1. To stand still and stretch his arms to hold the pedestrian in preventing the imminent, second, impact when they hit the ground.

2. Adrenalin "fight of flight" to take control and he flees because the car was going to come and hit them (again only) both this time.

Students debated for a long time, what the lecturer should or should not have done.

I relate this incident with ICTs and Consumer Protection in Kenya today.

B.K.Muthoga said...

Inded Alex. It is the case of damned if you do and damned if you don't. Safaricom has exploited the situation to rake in huge profits. My take on this is that we cannot blame business for doing what it exists to perfecting ie making profit. The blame lies on us (Kenyan consumers) who have an apathy to consumer agitation that is incredulous. The corporation is the predator, the consumer the prey. The onus is on the prey to protect itself and thus my total support for your project.

Nico said...

Consumer Protection? It should have come a long time ago. According to me ,"lowering tariff charges" and then announcing some crazy profit leaves feeling cheated if not fleeced. I only wish we had more players to choose from. In fact I can't wait for Reliance to start their operations i.e. if they ever will

B.K.Muthoga said...

Yes Nico, one would wonder whether there has been a conspiracy to stifle consumer awareness and protection in all areas. The ICT sector should develop a consumer aware culture because our products of information and technology are also vulnerable to quality manipulation.