Safaricom partnership with local startups improves

Business practice changes by local startups have helped

Improved business practices among local startups and a review of developer engagement policies have resulted in better relationships between Safaricom and local developers.

When Bob Collymore took over as Safaricom CEO in 2010, he found a company that had a fractured relationship with local developers and startups. There were complaints that once local developers presented product ideas to Safaricom they would be turned down, only to find the same idea implemented by a bigger, international firm.

Collymore promised to repair the relationships with local startups by amending developer engagement and NDA policies and three years later, the situation seems to be changing. Last month, Safaricom launched products with two local startups, Tangazo Letu and Green Dreams.

"Our partnership with Safaricom confirms to the industry that Kenyan ICT companies have come of age. Safaricom is now partnering with local companies like Tangazoletu to deliver innovative products and services to the masses," said Tangazoletu CEO Chris Gathingu, CEO.

Tangazoletu partnered with Safaricom to develop and launch Lipa na Mpesa, a product that helps small businesses transact through Mpesa, while Green Dreams has developed an application targeting agricultural.

"Safaricom is actively involved in partnering with developers within the market and also local startups to bring products to market. We currently have the Social innovation team, which has worked with various startups, and seen the introduction of products such as Lipan a Mpesa, iCow, Afya Tips, M-Kopa and other various initiatives to consumers, which help in transforming the lives of Kenyans and as well empower local startups," said Nzioka Waita, Safaricom corporate affairs director.

The company had a good relationship with bigger corporations that had big legal budgets with lawyers ready to scrutinize contracts, nondisclosure agreements and partnership agreements. On the other hand, Safaricom had a bad reputation with local smaller startups and developers who had complained of business ideas being taken away after they were presented to Safaricom staff.

There was also lack of understanding about how Safaricom works with partners, especially on products, ideas, applications, the time it takes and intellectual property issues.

The growth of innovation and incubation hubs in the country has allowed Safaricom to interact with developers, receive suggestions, recommendations and make appropriate changes. For instance, Collymore has given fireside chats at the iHub Nairobi to provide updates and interact with developers.

"Safaricom has gone to great lengths to get embedded in the startup community around mobile apps and services; there are great opportunities for collaboration and delivery of solutions tailored for the local market, which is great for the country," said Erik Hersman, founder of iHub Nairobi.

One of the major challenges faced by both Safaricom and developers is understanding that it can take a long time between the first meeting and product launch, and that strategies between the two parties must be aligned.

"Tangazoletu started this partnership with Safaricom three years ago, over time we have established various synergies, our strategies and objectives had to be aligned in order to provide cutting edge solutions for the consumption of the market which has helped differentiate our offering in the market," said Gathingu.

Intellectual property issues in the ICT sector have been challenging, with people wondering who owns the IP once the product enters the market. This was one on the problems cited by the developer community, where they would share their ideas which were then rejected, but the same idea would be implemented with a partner that had more financial muscle.

Safaricom came up with a model of revenue sharing so that if a developer comes up with an innovative idea using existing Safaricom infrastructure the IP belongs to Safaricom. Another model is where an application or service is developed and only uses Safaricom services the IP belongs to the developer.

"The challenge for both Safaricom and the startups is how to share the intellectual property or develop a monetary model that makes both the developers and Safaricom happy," added Hersman.

While Gathingu said that IP ownership is important, he insisted that a company that wants to make money and provide employment and innovation opportunities should take advantage of Safaricom's existing country-wide infrastructure and not be bogged down by concerns over IP ownership.

It may be a good time for local developers, but it has not all been rosy. Some startups have problems delivering, others take a deposit and never deliver services, while others take on jobs only to realize that they cannot deliver.

"One of the key challenges revolves around business models. Through engagement with startups, Safaricom assists in guiding developers and the local startups to evolve their business models and also help provide different scopes through which their businesses and ideas can be brought into market," added Waita.

With the local developer community growing, there is optimism that Safaricom will continue opening up its infrastructure to more innovation. Huawei has already been awarded a contract to build a local Mpesa platform, which might provide further collaboration.

"There is still an opportunity for Safaricom to contribute greater to the community by opening up their infrastructure via APIs and let everyone jump on and make money. For instance, Mpesa has reached such a level that it can be agonistic and local tech community will find a way to increase revenues," said Hersman.

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