The latest dealership agreement by Safaricom, one of the leading telecommunication companies in Kenya, has been at the centre of controversy. The revised contract gives Safaricom the right to terminate an agreement with distributors without consultation. One of the largest dealers, Goodweek Inter-services Limited, does not like it and files a legal suit against the company.
Legal Row and Allegations
Goodweek Inter-services Limited moved to the High Court, alleging that Safaricom terminated its access to the dealer portal without notice. The dealer alleges that it is through this process that they were being arm-twisted into the new agreement whose terms are unjust, which had been refused by the dealer to sign. Arguing for the dealer, Ken Kiplagat told the High Court that the Safaricom move is targeted at arm-twisting them into compliance.
The new agreement has a highly contentious clause that gives Safaricom the mandate to unilaterally terminate or suspend dealership upon detecting a material breach, without any obligation to consult the affected dealers. Goodweek Inter-services has termed the clause illegal, arguing it threatens to collapse its business in which it has a substantial investment of Sh180 million with an employee capacity of over 200 people across the country.
Safaricom’s Defense
Opposing the case is Safaricom, represented by senior counsel Ahmednasir Abdullahi, who contends that the High Court has no jurisdiction to hear and determine the application, which in any event lacks merit. The company is asking the court to invoke the dispute resolution mechanism agreed in the agreement.
Justice Bahati Mwamuye has directed the two to file their submissions on the objection by Safaricom with the hearing spiced for September 18. Goodweek Inter-services has applied to the court to have its access to dealer portal reinstated arguing that their business operation inroves heavily on it.
Dealer’s Side
Goodweek Inter-services has been a key dealer and distributor of Safaricom products for over 20 years. According to the firm’s director, Mr. Salmon Ogwel, their distributorship began in 2022 and was going well until April 16, 2024, when Safaricom abruptly terminated their access. He claims this was a push to get them to sign a contract that basically had them at the whims of Safaricom.
Business Impact
He operates as the dealer establishing M-Pesa shops and also running Safaricom-branded buses, and vans in his business. The sudden deactivation of the portal led to colossal financial losses and brought the operations to a standstill. Mr. Ogwel said a March 14, 2024 meeting to discuss the new terms was inconclusive since the counter-proposals by the dealers were not put into consideration by Safaricom.