Monday, January 29, 2007

Should Retrenchees Get Safaricom Shares?

I have had strange thoughts of late. The recent one involves the possibility of allocating Safaricom shares to Telkom rentrenchees. The soon to be privatized telephone monopoly is letting go 11,873 employees of its 18,000 labor force. Unfortunately, most retrenchees are low skilled individuals who might soon dry their Kshs 250,000 retrenchment packages.

Here comes my proposal: Retrenchees should take-up Safaricom shares as part of their retrenchment benefits. They can take 50% cash and 50% shares. That arrangement would introduce them to capital markets, which is a smart way of safeguarding their urgently needed financial safety nets.

But wait a minute! It’s most likely that Telkom retrenchees got their jobs through bribery, nepotism or tribalism. A preferential treatment in Safaricom IPO would be tantamount to rewarding vices that have crippled our nation for decades. However, these people should not be hanged-out to dry, but encouraged to take advantage of the fast maturing NSE.


coldtusker said...

No, for the reasons you outlined...

Many other Kenyans found 'real' jobs outside of government & they should benefit from the luck of the draw that is Safaricom...

If Safaricom was 100% Telkom project, it would have closed up shop...

Onyango said...

There was no way to fix Telkom's woes without firing people. But the price should not be only paid by people who are just trying to feed families. Why don't we condemn those by those responsible for hiring them corruptly or mismanaging the company to this point? I'm sure they will have plenty of options to buy shares.

On the shares, it is Safaricom's employees who should get Safaricom shares. They are some of the smartest people in Kenya and their talents and dedication are being abused.

In any case, the current arrangement where Vodafone and their cronies are being setup to become majority shareholders is a terrible idea. What makes anyone believe that they will continue to reinvest in Kenya, especially in light of the restructuring they are doing in Europe?

Staff Writer said...

I do not see any useful arguments at all from an economics point of view for privatising Safaricom. I know, I know we subscribe to the mantra that government should not be in business, blah, blah, but Safaricom has managed to be the best run, most profitable company in East Africa with the state still enjoying a stake in it
I think the issue is always how a company is run, not who owns it. The vital thing would be to ensure depoliticisation of every government parastatal not divestiture.

So you think that brains should be the criterion for distribution of wealth?

I don't think it matters how the Safcom people got their shares, only that they will soon be destitute if left to the Kshs 250,000 only. Whose joy that will be is lost on me.

Kenyanomics said...

ColdTusker: Failure to advice retrenchees could lead to some politician agitating for a welfare fund for these people. But not with my tax shillings.

Onyango: I hear it was Moi's directive to increase parastatal hiring by 10%. How can we punish the mzee while some of the most vocal politicians (Kibaki, Kenyatta, and Raila) are "protecting him?

Staff Writer:
1). I would rather see an investor buy Safaricom shares openly rather than hear that some Mobitelea person became a shareholder through corruption.

2). I would rather see a private Kenyan get Safaricom dividends other than see bureaucrats and politicians squander the cash.