Safaricom Case Study

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CASE STUDY SAFARICOM

This case study is targeted mainly at the undergraduate students taking class in social marketing. Given the success of the company and the context in which this company operates, we think it could be a strong case on how it is possible to be profitable in, what we called until recently, a third world country. This case is about Safaricom, Kenya’s largest mobile operator established in 1997. Although Kenya is the biggest and most advanced economy in east and central Africa, it is still a poor developing country with a Human Development Index (HDI) of 0.509 (released by the United Nations Development Program), putting the country at position 143 out of 185, one of the lowest in the world and half of Kenyans live in absolute poverty. The company started to get international attention when, in 2008, its CEO Michael Joseph decided to implement a range of new services that were targeting the poorest part of population of the country. One service in particular revealed to be successful and revolutionised the way people were making transactions in Africa. This service is called M-PESA and allows Safaricom customers to send money to each other using text messages. Cheaper and faster than ordinary money transfers, it is used by 23% of the population and has inspired more than 60 similar schemes in the world. The company is owned by Vodafone, but most Kenyans are not aware of it. It is also the most profitable business in eastern and central Africa, with earnings of $223.7m in 2008 growing each year. We have chosen this case because we think that the success of this company, and in particular of its M-PESA service, is a great example of how an organisation can be not only profitable in a BOP context but also how a simple service can have such an impact on a country’s economy. Having worked on this case study students will learn to adopt a new dominant logic. What we consider Bottom of the pyramid not only have needs that can be satisfied...
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