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MICHAEL JOSEPH, THE chief executive of Kenya’s leading mobile phone company, Safaricom, has a right to be proud. As head of the most profitable company in East Africa, Joseph directs a regional operation inextricably linked with Kenya’s bright future in the East African bloc. The Safaricom logo is on every street corner, every village store, even on half the village houses on the Nairobi-Mombasa road. The growth of Safaricom has tracked Kenya’s economic development. Ten years ago 15,000 people in Kenya owned mobiles; today that number has reached 15.4 million. With Safaricom holding an 84% market share in terms of revenues it is clear the company has played a key role in bringing affordable communication to the masses. And in 2008, it was Safaricom’s IPO that bought shares to those masses. In May of that year, 820,000 local retail investors bought Safaricom stock when the company listed 10 billion shares, in return for a 25% stake. But within days of the listing the share price plummeted, eventually reaching just 40% of the original price despite the deal being 532% oversubscribed.
Clearly, the timing of the deal was unfortunate, with the onset of the financial crisis leading to foreign investors dumping Kenyan stock.