Institute of Economic Afairs (IEA) CEO Kwame Owino recently penned an article in Kenya’s Daily Nation titled “Policy confusion distorts competition.”
This unwarranted attempt to sell purchased opinion as independent thought cannot go unchallenged since it seems like Safaricom’s dominance is cemented through bribery of the likes of Owino to distort facts.
In this article, Mr. Owino came across as both an obvious puppet of the dominant player and a critic with lack of robust understanding of the policies in the telcoms industry. With those, it’s clear that Kwame Owino cannot even be entertained any more to clearly prosecute the case of market dominance in the telecommunications sector.
Besides Kwame Owino’s stayed views that the existence of state officers on boards of both the telcoms sector regulator (CAK) and that of Safaricom PLC, a private entity competing in the sector, presented the entity with an unfair advantage to the detriment of its competitors Airtel and Telkom Kenya, and especially Airtel who unlike Telcom and Safaricom have no state representation on its board or management ranks.
Below are extracts from that article by Mr. Owino;
And yet the quest for enhanced competition is undermined by policy choices. A few examples illustrate this problem. Kenya has about six cement making plants that provide jobs and essential goods for households and firms.
Yet the government has direct interest in these firms and is conflicted in its roles as a profit chaser and a guardian of competition.
One indicator that the corporate interest dominates is the degree of tariff protection for the cement firms.
Based on average prices in the last quarter of last year, the working Kenyan required at least 1.5 days of income to afford a bag of cement.
This ratio is too high even for a country of Kenya’s income level and suggests that cement manufacturers are price gouging and keeping uncompetitive firms afloat.
It is no wonder that the quality of wall and floor surfaces in the rural areas is poor and that the collapse of storied buildings in towns is due to inadequate use of concrete and steel reinforcements.
Lack of competition has consequences in the market, but also leads to deaths and injuries. An overview of the telecommunications industry reveals that whereas the Competition Authority has not made a finding of firm dominance, the regulatory arrangements are troubling. Due to its part ownership by the government, the competitors of Safaricom Limited are placed in a disadvantageous position.
No less than the Treasury Secretary and the Cabinet Secretary for Information and Communication are represented on the board of directors.
It is difficult to convince a dispassionate policy observer that on account of this access to policy makers, the firm is unable to influence their views on critical issues of competition and technical regulation.
The firm is also constrained in its decision making because it always appears to be a beneficiary of regulatory decisions and reversals made by the CS and the Communications Authority of Kenya. This situation of direct linkages to policy offices through board membership seriously undermines both perceptions of and effective competition in the sector. The government must let successful firms compete.”
The same Kwame Owino penned another article in the Daily Nation on March 7, 2018 with the heading “Safaricom dominance: What I learnt from a Communications Authority public consultation meeting.”
In this article, Kwame Owino questions the economic, business acumen and wisdom and substance of the recommendations made by Analysys Mason, the renowned global Telcoms competition expert which was competitively engaged by the regulator to conduct a market study / research and make recommendations to fix the uneven playing field in the Telcoms sector in Kenya.
One glaring example of Kwame’s display of ignorance in the matter of telcom competition laws, and general trade and consumerism in the telcoms sector comes to light in the form in which he draws the conclusion in that article to the effect that, and I quote, “The more controversial matter is whether agents ought to be allowed to use their float from the operations with one operator to facilitate payments for others. It remains unclear whether this matter should be regulated at all because it should be left to licensed operators to decide through guidance to agents.”
For the education of Mr. Kwame Owino, the correct position is that the cash float in the mobile money agency ecosystem is the direct investment of the retailer/ agent, and not the operator. The anticipated proposal by Analysis Mason, when implemented will be to the relief and benefit of the agents because it will remove the encumbrances by one operator (Safaricom), thereby enabling the agent to recoup more profits from the capital invested through diversified use of the cash to serve more customers irrespective of the network they choose. Customers will also benefit from the convenience of choice and ease of access to cash in transactions.
Further to this, it is worthwhile pointing out, to the benefit of Kwame and others that the Telcoms space is a specialised business industry that is differently regulated the world over and governed by clear set of principles that have been established over time. These internationally recognised principles for regulation are applied within the local laws and regulatory framework.
They are necessary because the sector has high barriers to entry due to its high capital expenditure, technology and the precedents set in the evolution.
Anyone making analysis, and offering recommendations on matters in the sector therefore needs to be specialized, and qualified in the principles, policies and operations of the sector.
You can’t pick the usual market madman to give expert opinion on market operations.
Expert’s commenting on this sector can’t be mere generalists applying rudimentary economic observations and industry jargon and pronouncements of expertise where non is evident, leading to repugnant and misleading conclusions that like we have seen in this specific case and others in the past.
Safaricom must face the reality that for Kenya to grow, the company’s dominance must be contained. The arrogance and underhand tactics used by the telco to drive warped narrative is injuring this economy and stagnating the growth of the country as the telco repatriate billions in earnings year-in year-out.
Every time Safaricom is faced with candid questions on the dominance, it relies on using the unexpected or the obvious. The bribery of shallow, ignorant armchair telecoms experts is the latest in a bag of tricks by the dominant payer. It was previously unending promotions, bribing state officials and sabotaging competitors through sponsored infrastructure vandalism.
Everything must an end. Safaricom’s continued misrule is injuring not only the telcoms market in the country but also affecting our governance and other sectors of this economy. Safaricom “experts” have been variously accused of getting unduly involved in election matters in the country.
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