This archive report was first published on 26 April 2020.
Published on April 26, 2020, a business analysis perspective for Safaricom reveals six key ways to look at the company.
1. Toll Bridge Investment Strategy ¶
Safaricom's M-PESA has become a toll bridge, with over 80% of Kenya's mobile money transactions passing through it. This guarantees a steady income stream, making it a wonderful business to own in the stock market.
2. Supplier of Suppliers ¶
Safaricom supplies M-PESA and other services to various industries, which then offer these services to end-users or customers. Local banks promote Safaricom services for free, selling them as value additions, while mobile lenders use M-PESA as the channel for their clients to access borrowed money.
3. Non-Bank Financial Companies (Fintechs) ¶
The rise of non-bank financial companies (Fintechs) has been driven by stringent capital requirements and regulations in the traditional banking sector. Safaricom's M-PESA has been at the forefront of this revolution in Kenya, followed by Mshwari, a partnership between Safaricom and Commercial Bank of Africa.
4. Second Curve ¶
Companies, like individuals, must plan for their next product, service, or market while still on the first curve. Safaricom's M-PESA has laid the foundation for the company's second curve, enabling it to stay ahead of the competition.
5. Matthew Law Effect ¶
The cumulative advantage or Matthew Law effect has been a key factor in Safaricom's success. The company was first to rollout robust infrastructure, reduce airtime value, introduce per-second billing, and launch M-PESA, among other innovations.
6. The Elephant Can Also Dance ¶
Safaricom's ability to adapt and innovate has allowed it to dance its way to the top, even in a crowded market. The company's nimbleness has enabled it to overtake Zuku in the fixed internet market, and it is now neck and neck with its competitor.
