Thursday, June 30, 2022

How Safaricom’s first dealer Esther Muchemi built her own multi-million business

Kenya’s largest telecommunications firm Safaricom is celebrating 20 years since inception. As part of these celebrations, Safaricom has been telling stories of ordinary Kenyans whose lives were transformed when it launched its wide variety of services in the country. One of these Kenyans is Esther Muchemi, the chief executive officer of Samchi Group. Here is her story as told by the Safaricom Newsroom:

One day in 2001, a senior employee at Safaricom walked by a mobile phone dealership at Nginyo Towers on Koinange Street and decided that he needed to make a call to its owner, Esther Muchemi.

Mobile telephony was very new at the time and the number of Safaricom subscribers was hovering at less than 500,000.

The visitor had one question for Mrs Muchemi: Would she consider becoming an exclusive dealer for Safaricom by dropping the rival business?

Esther turned to one of her managers, phone still in hand and said: “Mr Ngari, Safaricom is asking whether we would consider becoming exclusive for Safaricom.”

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Mr Ngari said it would be a good idea and Esther told the Safaricom representative the same. That afternoon, Esther and her staff at Samchi Telecom tore down the competitor’s branding, a radical decision that marked a new chapter for her business.

When the competitor’s director of sales later came by, he shed tears. Kencell had just lost a sub-agent who would go on to become Safaricom’s first dealer and a trailblazer in the telecommunications sector in Kenya.

Esther has two reasons why she took that route: gut instinct and mounting frustration she had faced from Safaricom’s rival at the time.

Kencell, the predecessor of the present Airtel, was the market leader, and Safaricom had entered the field in October 2000. Before that, Safaricom had lived for seven years at Extelcom House as a department of the Kenya Posts and Telecommunication Company, and nobody had high expectations of a parastatal.

Kencell had refused Samchi’s application for dealership, and although Esther aggressively sold their lines and airtime, she was unhappy that they wouldn’t promote her to a dealer and maintained her as a sub-agent, yet her company had demonstrated the necessary potential and drive.

Samchi Telecom was established in 2000 after Esther left her salaried job as a partner at an audit firm. She sunk her savings at the time, KSh800,000, into setting up the shop at Nginyo Towers that sold phones and other mobile hardware.

Her husband, Gerald Muchemi, was a military man and communications engineer who would later rise to head the Directorate of Military Intelligence at the time of his death. He had encouraged her to go into the mobile telecommunications business.

The Muchemis had a hunch that mobile telephony would be the next big thing.

When she took up the offer from Safaricom, Esther rolled out a two-pronged strategy to grow her dealership: deploying agents to sell airtime outside Nairobi and then, when her company gained some strength, setting up shop wherever Safaricom went.

Among the company’s first strategies was to expand along Kenya’s highways, going first to Nakuru and Mombasa, with the company’s second focus being the populous Mt Kenya region.

“That’s why you’ll find that in most of the towns in Mt Kenya, I have a shop. It’s not because I come from there. It is because it was the second strongest market when we opened,” says Esther.

One of the first hurdles she had was the fact that all Samchi had in cash was KSh50,000 yet they needed to buy stock and pay suppliers. That meant they would use the money to buy stock, sell it the same day, collect and bank the cash and write cheques for suppliers the following day.

“I remember one bank manager who used to call me every morning and tell me: ‘Esther, your cheque is here, and there is no money in the account’ and I would tell her: ‘Wait. Wait. Wait. By 10 o’clock, there’ll be money in the account,’” she recalls.

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Samchi operations depended on the trust and integrity by banks and suppliers, which in turn enabled her business to grow and increase her capital base.

Safaricom would later give bank guarantees to their dealers, in effect enabling banks to lend without worrying.

When they sensed that they were on to a good thing, the dealers quickly came together and would often have countrywide activations, deploying their armies of green-shirted employees to get more customers to sign up.

These and other forms of support underlined their relationship with Safaricom and would over the years propel both to greater heights.

Esther credits Safaricom’s success to four key factors: per-second billing, going for the mass market, the pre-paid approach, and the provision of phones at subsidized rates.

In addition, she adds, Safaricom’s branding also connected with customers. “At that point, I think it was a powerful colour and it worked for us and for them then. We made the green so strong that everywhere you saw it you thought of Safaricom,” says Esther.

There have been humorous moments over the years as well.

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One phone, one of the early Motorola models, was sold out as customers had somehow been led to believe that one of its components was a large amount of gold that they could harvest and sell to gold traders in Dubai.

Safaricom and its dealers consider each other partners, and their relationship is not always a bed of roses.

“There are times we fight, but fighting is good and it’s healthy, but once we agree on the way we are going, we’ll go and we’ll not look back,” says Esther.

When she started out, Esther was keen to establish a business that could be run by a family, that was scalable and could grow and give her the success and greatness she felt was lacking in her professional life, despite being a salaried partner.

Samchi Telecom now has more than 50 shops across the country. Her portfolio now includes a hotel at the heart of Nairobi, a restaurant, a real estate development company, a microfinance company and a virtual office company.

Divesting has been important for her as the dealership business is also changing as more people buy their airtime virtually and refuel their mobile wallets directly from their bank accounts.

Esther acknowledges that the volume of business in scratch cards and M-PESA agent visits has reduced but she believes dealers will continue to thrive.

“The reasons why the dealers will survive is because Safaricom has allowed them to participate in all the products they innovate. When dealers get involved in the products and services we give to the customers, there is always success,” she concludes.

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