Safaricom, the largest mobile network in Kenya, has recently undergone a series of boardroom realignments that have sparked controversy within the company and caused a drop in the Safaricom’s share price to a two-year low. The most notable of these changes was the departure of the its immediate former board chair, John Ngumi, who left the company barely six months into his role.
George Bodo, an equity and non-equity analyst, suggests that the departure of John Ngumi, former board chair of Safaricom, may have initially caused a decline in the Safaricom’s share price to Sh22.50 on Wednesday. However, Bodo believes that the leadership changes at Safaricom are politically motivated and does not anticipate the company to suffer in the long-term. He stated in a telephone interview with People Daily. “Considering Safaricom is a large company, top shareholders, Vodacom and the government of Kenya, will have a significant impact on the company’s direction, including decisions on leadership.”
Economic expert Samwel Nyandemo shares a similar sentiment, calling the changes “mere gimmicks” whose impact will not impact the firm in the long term. However, Nyandemo expects more “heads to roll” in the coming weeks, perhaps months which he noted could touch the top management as well. “It is just a matter of time before you see more familiar faces leave the company,” he offered, consciously not mentioning names.
The exit of John Ngumi from Safaricom has raised eyebrows, as insiders at the telecommunications company believe that his appointment as Chairman may have had political motivations. Ngumi, an investment banker, was widely recognized as one of Kenya’s most accomplished bankers. Despite the speculation, his departure is considered as controversial.
However, there was a growing conviction, soon after the new administration came into office, that his appointment could be repealed for the aforementioned red flags for a man that has played key roles in developing Kenya’s capital markets, including his leading role in the development of capital markets regulations.
Despite the recent turmoil at Safaricom, it is important to note that the company is a well-established player in the Kenyan market, with a strong track record of performance and a dedicated customer base. As Bodo and Nyandemo have noted, the company’s top shareholders, Vodacom and the government of Kenya, will likely have a significant influence on the company’s direction and its ability to weather this latest storm.