Dealers wrangle in Safaricom contract terms meeting fallout

Safaricom Dealers Association chairperson Caroline Kiprop (left), Eastern Region representative Brian Muthomi and secretary Julie Adell-Owino (right) address journalists after their meeting on March 5, 2024. Evans Habil | Nation Media Group   

By KABUI MWANGI More by this Author

A meeting organised by the Safaricom Dealers Association on Tuesday to chart a way forward on their engagement models with the telco ended in an uprising after

members accused their elected officials of failing to ably represent them in contract negotiations with the company.

In a heated debate that lasted close to three hours in a Nairobi hotel, the dealers scolded the only two officials of their governing board who showed up, accusing them of withholding critical information and securing raw deals in their negotiations due to a lack of a consultative framework.

In the end, the members resolved to disband the entire governing body of the association and install a fresh team, effectively stopping all ongoing talks and nullifying any deals that had been reached by the ousted officials.

Technical team

In the interim period before the newly elected leadership takes office, the association will pick a technical team to fast-track pending deals as it races against time to beat an April 1 deadline for agreements on a new contract.

The technical team, set to operate on a pro bono basis, will be composed of at least two members from the ejected team as a measure to retain institutional memory, while the rest of the lineup will be unveiled to members in due course.

“The technical team will be required to be fully accountable and seek members’ resolutions on every issue before going to the negotiating table. They will also be required to promptly report back on any developments emanating from such negotiations,” stated newly-elected secretary Julie Adell-Owino, who presided over the meeting.

At the heart of the disagreement is the ongoing negotiation of a new contract structure, whose signing Safaricom is said to have deferred to April from an earlier date of January.

The dealers had instructed their officials to extract specific concessions from the telco before next month’s deadline, which the representatives reported back as having failed to achieve, sparking the members’ anger after it further emerged that they even lowered the bar on several demands the dealers issued.

The officials reported, for example, that Safaricom had only conceded to increasing the residual commissions earned by the dealers by 0.5 percent to stand at five percent of all airtime spent by a subscriber during the lifetime of a registered SIM card, against the demanded increment of up to 7.5 percent.

The members also lamented that they were being compelled by the telco to sign contracts with unclear commercial terms, even as their officials kept withholding critical information regarding the progress they were making in the talks.

In its annual sustainability report for the year ended March 2023, Safaricom indicated that it supports 432 dealers who sell data, mobile devices, and airtime on its behalf.

In the report, the telco giant said that its value in the economy grew by Sh182.3 billion to hit Sh909.5 billion compared to the Sh727.2 billion contribution reported a year earlier.

At Sh909.5 billion, the telco’s contribution to the economy stood at the equivalent of 14.6 times the Sh62.3 billion net profit it posted during the period, or 5.1 percent of Kenya’s gross domestic product.

The economic value added through operations rose by 3.4 percent to Sh542 billion, while the social value from M-Pesa grew by 17.7 percent to Sh325 billion, with the telco linking this to an increased number of users and the average number and value of transactions made per customer.

→ kmwangi@ke.nationmedia.com