State of the Republic: The Safaricom Republic – part 2


By Arkan Yasin
L ‘etat c’est moi” – Louis XIV of France (1638 – 1715)
I am the State.”
For the top honcho(s) as Safaricom, this would suffice as the standard “State of the Republic Address”.

“As the information state replaces the bureaucratic welfare state, control over information creation, processing, flows, and use has become the most effective form of power – Braman, Sandra

What does Safaricom’s over-arching dominance mean for citizens?
Here is a real-life example that perfectly epitomises the answer to this question. During the 2007 post-election violence, the press quoted then CEO Michael Joseph as saying that Safaricom delivered airtime scratch cards to people in distress using helicopters.
This critical infrastructure is on “paid for” use even during crisis/emergencies. The public has no fail-over, no fall-back. Period.


How we think it is vs. how it really is

The dominance over the citizen of a predatory group as highly organised as utility, as highly capitalised as a listed public company, as highly protected as a supranational multi-national corporation in strategic vital sectors of communication, commerce is…absolute.
The citizens’ only recourse is to the only highly organised group he has mandated with guardianship, the Government.  Accordingly, let’s look at what Safaricom’s overarching dominance means to the administration of the territory: Government of Kenya.

The story of Safaricom and the Government in oversimplification is the story of the Elephant and the Man in “The Gentlemen of the Jungle” by Jomo Kenyatta.

Third World administrations suffer from systemic perspective blindness and institutional weakness that make it difficult for them to either see fatal weaknesses or respond correctly and effectively to mitigate exposure. The never-ending cyclical changes brought by endless electioneering do not allow any administration sufficient room to perceive systemic problems, let alone correct them as they are often subtle and happen in timelines that exists outside the electoral cycles, which have become the norm of Secular Democracy.
Safaricom Limited, by its own admission in its True Value Report, is DOMINANT.

But this is not the simple competitive dominance that Airtel once pushed Communications Authority of Kenya to declare, leading to legal triggers that compel certain Anti-Trust policy action. Safaricom’s dominance is deep on the level of monopoly, and it exhibited this power by dragging the other players to a table at Statehouse where it compelled the “President” to end a price war. Only Safaricom, not even the population, is capable of this.

Socio-economic capture
How we think it is vs. how it really is

If today’s state is an Information State, then Safaricom’s position is at the heart if the economy, security, communications, finance is completely as it is imperial overlord, whether or not it exercises this power. It is a long-running Facebook joke, that it would be more effective to conduct an election via the M-PESA application, as it is the most current record of all residents.

As revealed by the “True Value Report”, the territory’s dependence on Safaricom, socially and economically, at a macro and micro level makes it, Safaricom, a strategic pillar of society, and therefore of the Administration. In a crisis, security resources of the territories administration would need to be dedicated to protect Safaricom Limited. This is because any initiative that the administration seeks to undertake cannot be effectively operationalized without Safaricom. An example was the “choppering in of scratch cards to people in distress during post-election violence”.

This, by the way, is not limited to Safaricom. Communications is a strategic pillar of any society. In Iraq, employees became targets of kidnap and ransom, and Newsweek cited a case in which was able to get its employee released by switching off its network. Newsweek quipped, half-jokingly, “apparently even kidnappers need network”. Meanwhile made over $300 million (Sh30 billion) in profit that year, even as the war raged on.

In Kenya, the governance, social and economic fabric of the tribes of the region – people to people, people to business, business to people, business to business, administration to people, people to administration, emergency services – all rest on Safaricom.

It has to be stated, and it has been documented, that the region’s disaster preparedness has repeatedly been shown to be poor (due to weak institutions) i.e. emergency services are virtually non-existent, due to a weak public service. Therefore “emergency services” are essentially community family bonds, the emergency number access is ineffectual. The population, by being dependent on social bonds that are now exercised through Safaricom infrastructure, is therefore dependent on the company.

No plan made to mitigate exposure to Safaricom, whether social, political or economic, can exclude Safaricom as a basic factor of planning and operational execution. This is an economic social entity, a group. While the network infrastructure is inanimate, the multi-national corporation is not. It will seek further and further entrenchment and dominance over all individuals and institutions of the population, and will organise itself to resist any attempts to limit its reach into all facets of life, and will work to undermine, pre-empt and directly prevent any attempts to bar its will.

This is what the Safaricom True Value Report fundamentally is – a pre-emptive strike, a defensive gambit against any future anti-trust initiatives.

In Venice, the ruling family Cosimo de Medici’s power and dominance did not come from money or prestige; it came from being at the heart of the elites and society’s transactions and relationships.

Consider Safaricom Limited, which is at the heart of the economy, finance, communications and security. If the Administration attempted a Universal Basic Income as is being touted by the world’s elites at the World Economic Forum, it would be most effectively distributed through Safaricom. If we are to get microchip implants (which is looking more and more likely, ours will be Safaricom microchip implants.

Rent seeking is defined in the Journal of Economic Perspectives as the socially costly pursuit of rents, often created by governmental interventions in the economy (Tollison, 1997). The journal in its endeavour to define corruption, articulated the forms it can take, one being, “collusion between firms that imposes costs on consumers and investors”.

So, when President Kibaki rose from State House to direct the end of further cuts in mobile termination charges, Safaricom Limited was at once guilty of high corruption and anti-competitive, rent-seeking practice.

While the Administration must organise itself to move back to the centre if it is to be able to effectively claim to be the Government and not Safaricom, it must be warned: “when you come at the king, you best not miss”. As in the CAK endeavour to lessen the Safaricom tax burden on the public by lowering mobile termination fees in 2007 demonstrates, a simple regulatory edict simply will not do.

What is the effective opportunity cost of Safaricom’s dominance?
Safaricom’s singular ability to mobilise the administration to successfully end the price war triggered by new entrants is alone sufficient indicator of the malevolence of its influence.
OECD calculated Carlos Slim’s dominance in Mexico as costing the Mexican economy 2.6% of GDP. Similarly, what is the opportunity cost of M-PESA? What is the opportunity cost of Safaricom? To wit, Safaricom’s M-PESA platform migration from Germany to Kenya was a national event!

What is the cost of Google and Facebook’s dominance?

Recent revelations of Facebook’s control of hashtag popularity relative to the Palestinian issue should guide the level of concern the public should have about Safaricom.

A caveat must be issued here though. Because of the complexity – explicit and implicit, visible and invisible – of the existence of system behemoths like Safaricom, it must NOT be viewed through a simple monopoly anti-trust lens. This would be myopic and dangerously simplistic. There are services and products that can only be enjoyed at an ultra-large scale. This is a question of calibrating optimums that requires immense research and high policy precision operated with innovative technological tools to be successful.

What does Safaricom’s over-arching dominance mean to itself?

History has shown society does not take kindly to over-bearing entities that have not been promulgated through some sort of suffrage. Safaricom Limited must endeavour to learn from the dismantling of the Standard Oil Trust.

The fact that greater good has been achieved by Safaricom is no defence in this situation as the massive profits it announces are not considered reward for effort but perceived as proceeds of extortion. And at this level, perception is more important than reality. It is therefore in Safaricom’s own interest to participate in intervening to correct in the interests of the public and the ecosystem, in the same way it intervened to protect its interests. Failure to do so may compel external interventions that may over-compensate and causing new complications.


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