[kictanet] [Fair Competition Laws will Promote Innovation and Reduce Unfair Market Practices - the bill is not targeting a particular company or product] Safaricom to be compelled to split m-pesa business in new bill

Mon Jun 24 07:57:23 EAT 2019

Patrick

>From the context of this headline, I'm curious to see how Safaricom
contributes to your quote below:-

*"...OK to drive mama mbogas (small vegetable sellers), youth-founded
startups, indigenous innovators and other MSMEs out of business, by
leveraging legal/regulatory loopholes that allow them to distort market
forces using their mass-scale market power. "*

Whilst I generally agree with your thesis below I think it's fair that when
we make such accusations in relation to a specific company we quote
specific examples. I'm all for ensuring a level playing field across the
board and contend that this is a collective effort of Good Citizenry by
corporates (which by the way is good for business long term) and robust but
fair policies and regulation by government.

The world is full of examples where breaking up companies has never
achieved the desired effect of creating a level playing field (Standard Oil
is probably the best example. Years later these baby Standard Oils are
mostly back together in the form of Exxon Mobil.
<https://www.visualcapitalist.com/chart-evolution-standard-oil/> And by the
way, the breakup may have made the Rockefellers even more fabulously
wealthy). Rather than breaking up companies, the world should address the
elephant in the room.

State Capture.  <https://en.wikipedia.org/wiki/State_capture> Boeing is
probably the most current example of how government regulation was
completely corrupted
<https://www.economist.com/business/2019/03/23/regulatory-capture-may-be-responsible-for-boeings-recent-problems>
by a company, resulting in a colossal loss of life.

One of my best examples of how governments can reign in bad players is how
the fear of breaking up Microsoft and other tech giants in the 90s
<https://www.theverge.com/2018/9/6/17827042/antitrust-1990s-microsoft-google-aol-monopoly-lawsuits-history>
contributed
to the rise of the current #BigTech companies. Maybe the cycle needs to be
repeated?

Let me reiterate. I'm in general agreement with your post, I'm just
concerned we don't specifically target an organization without specific
evidence to back it up.

Regards

*Ali Hussein*

*Principal*

*AHK & Associates*

Tel: +254 713 601113

Twitter: @AliHKassim

Skype: abu-jomo

LinkedIn: http://ke.linkedin.com/in/alihkassim
<http://ke.linkedin.com/in/alihkassim>

13th Floor , Delta Towers, Oracle Wing,

Chiromo Road, Westlands,

Nairobi, Kenya.

Any information of a personal nature expressed in this email are purely
mine and do not necessarily reflect the official positions of the
organizations that I work with.

On Sun, Jun 23, 2019 at 1:14 AM Patrick A. M. Maina via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> Fair competition laws are long overdue and should be very welcome because,
> if properly formulated and implemented, such laws will rapidly stimulate *economic
> growth* and create *millions of new jobs*.
>
> An objective observer will agree that there is something *fundamentally
> wrong* about billion-dollar-revenue companies operating in poverty-ridden
> low-income countries that find it OK to drive mama mbogas (small vegetable
> sellers), youth-founded startups, indigenous innovators and other MSMEs out
> of business, by leveraging legal/regulatory loopholes that allow them to
> distort market forces using their mass-scale market power.
>
> Instead of celebrating a few concentrated pockets of super-profits - we
> should be concerned as to why such "stellar" performance does not match the
> overall sector's competitive landscape (especially if everyone else in the
> sector is making losses) - as well as, the general state of the rest of the
> economy.
>
> Hopefully the relevant parties in legislature will do the right thing for
> opportunities-starved wananchi and for the struggling economy by passing
> fair competition laws (I am also hoping that wananchi, politicians, public
> interest NGOs and activists will add weight to such beneficial initiatives
> as/when necessary).
>
> There is still room for more to be done, however, especially in the six
> areas below (which if addressed, will create an environment that is even
> more conducive for prosperity and growth):
>
> *1. Contextualized Intellectual Property Protection*: This area needs
> urgent attention to address rampant theft of IP due to obsolete,
> non-contextualized laws that favor corporate tyranny and plunder.
>
> Compelling data-based evidence  (see link #1-2) shows that a *laissez
> faire* attitude to IP is a top contributor to poverty and low quality FDI
> in low income countries. Wealthy nations zealously defend their indigenous
> IP as a critical economic resource that is part of their national security (equivalent
> importance to oil, mining and financial sectors).
>
> Did you know that the *top 10 most valuable companies in the world are
> IP-based* (see link #3) and none of them is in oil / gas /precious stones
> or minerals? Extraction is no longer the secret to prosperity (in fact it
> only attracts chaos instead nowadays)!
>
> Did you know that *Apple*, the world's most valuable company overall, *does
> not own a single factory *(see link #4)? Apple is an *IP and distribution* *company
> *(not a manufacturer) - it is in the business of selling ideas! This
> should be very interesting for Africa, the fact that high value ICT
> corporations can be based on ideas, IP and distribution networks alone.
> Wake up brothers and sisters. We don't have to build physical factories to
> plug into the global ecosystem. We just need a good framework for
> monetizing great ideas!
>
> Even if we are to choose the harder 19th/20th Century path of traditional
> own-factory manufacturing (instead of the easier and more profitable
> logistics-driven 21st Century alternative) path, a conducive IP
> protection framework still remains an essential must-have prerequisite.
> Global clients will need strong credible guarantees that there wont be
> leakage of their designs / prototypes / proprietary tooling etc.
>
> *2. Preventing Deceptive PR and Marketing Practices*: Weak
> regulation/enforcement encourages corporations to engage in deceptive PR
> campaigns (e.g. fake partnership offers or deceptive innovation
> "competitions" / "boot-camps" / "demo-day" events whose purpose is to
> facilitate the theft/plunder of IP. We also have anti-poor  / anti-social
> companies which brazenly deceive the public by masquerading as  pro-poor /
> pro-social via dishonest marketing and CSR.).
>
> *3. Fast-tracked MSME friendly dispute resolution:* Judiciary should
> consider a dedicated court to handle and fast-track commercial disputes
> that involve MSMEs v/s large corporations with affirmative action in favor
> of MSMEs (e.g. state provides litigation assistance and cushions the MSME
> from legal fees).
>
> Currently corporations use their resource-power to bully and steal from
> MSMEs because the current legal framework has loopholes which allows
> corporations to subvert justice (e.g. companies steal BILLIONS by delaying
> MSME invoices to accumulate debt then they declare bankruptcy. This is
> theft - plain and simple - but the law does not treat it as such.
>
> Other corporations use legal technicalities to unjustly drag court
> proceeding for years - hoping that litigants will run out of resources or
> give up even if they have a strong case. These kind of dispute resolution
> loopholes cause great harm to MSMEs.
>
> *4. Anti-Price Gouging regulations:* Companies that provide essential
> services to the public (e.g communication / data / e-money) should not
> price them exorbitantly in order *to exploit the must-have nature of the
> product*. This should especially apply when there is limited /
> ineffective competition or indicators of cartel-like collusion within an
> industry.
>
> Dominant / monopolistic entities that offer essential services to the
> public should be compelled to publish their audited pricing methodologies
> every month in a way that shows the profit margin percentage for each
> product line (after factoring in scale and piggybacking advantages).
>
> *5. Anti-predation, anti-usury laws:* I believe there are ongoing efforts
> in this area. The public should not be enticed into odious debt or
> induced to take on debt that they cannot manage; and the CRB should not be
> used as a financial weapon for oppressing the poor or entrenching poverty. Maintaining
> a record for 5 years after someone has cleared a loan is disproportionately
> punitive and shows a lack empathy with the ordinary mwananchi's economic
> struggles.
>
> CRB rules are anti-poor and punish people for lack of opportunity and a
> poor education - i.e. things that are not wholly of their own making, in
> favor of predatory corporations. The financial sector needs *more empathy*
> and less greed. By punitively and unreasonably denying people access to
> opportunities, they unwittingly limit their own growth potential.
>
> *6. Regulating **non-profit foundations associated with for-profit
> companies:* to limit conflicts of interest. Many (if not all) of these
> companies are covert vehicles for corruption, lobbying and influence
> peddling. They subvert agendas in sectors like education, finance,
> agriculture and health with the goal of creating new markets for affiliated
> corporations, winning government tenders or creating rent seeking avenues
> contrary to public interest. Ultimately the country loses because the net
> effect is wealth extraction. The left hand gives with a big show, and
> pompous ceremony where everyone is invited, but then, once the lights and
> cameras go off, the right hand quietly takes it all back, and then takes a
> lot more (leading to a net-loss).
>
> Economic analysts should start conducting *net-effect analysis* of
> charitable/donor activities to confirm the growing sense of awareness
> across Africa that something is not right with the charity/donor model. How
> can we receive so much "assistance" and yet we never seem to take off? How
> can countries that literally know everything important that happens within
> our territory (even before it happens) be completely inept and clueless
> when it comes to preventing proceeds of corruption from being laundered in
> their countries? Their economies benefit greatly from our fatuous
> practices.. could it be that some of them actually want us to stay corrupt?
> Food for thought.
>
> Modern day monopolies do not have to overtly abuse their dominance in
> order to damage the economy. Any mass-scale business model that is based on
> network effects is *inherently anti-competitive because it locks-in
> millions of customers* to one brand and its associated platforms or
> products - thereby severely limiting choice, stifling competition and
> blocking startups with better solutions from gaining market traction due to
> *gatekeeper-effect* (which prevents the rise of new ICT-related
> industries).
>
> This has a cascading effect of blocking TRILLIONS in *high quality FDI *
> that would have eventually come in via Venture Capital; it also limits the
> ability of the economy to create an export market - to beef up foreign
> reserves; limits the number of high-value formal jobs; reduces
> opportunities to lower government's reliance on debt for budget support;
> and suppresses the growth of a healthy middle class that is essential for
> economic and political stability.
>
> Anti-competitive practices also contribute to *increased economic
> hardships* for citizens (by limiting opportunities to a few connected
> individuals) and prevent governments from fulfilling their campaign
> promises to the people (thereby stirring dissent and political volatility
> risks).
>
> Products from dominant companies are *priced using anti-poor (zero
> empathy) methodologies* which makes them disproportionately expensive to
> the poor who comprise the majority (and who often have to make food v/s
> airtime decisions on a daily basis). The same companies offer *exponentially
> better value for money to the rich* (less than 1% of the population) to
> whom the discount has minimal life impact and who can afford to pay a
> premium anyway! Yet these companies brand themselves as pro-poor and
> pro-wananchi (which *is evidence of a loophole in advertising regulations
> that allows for deceptive PR practices*).
>
> Having *concentrated points of failure *in critical applications, like
> Mobile Money, puts our increasingly digital economy at significant risk.
> There needs to be innovations that *decentralize mobile money* and
> disrupt the current rent-seeking / price gouging model which offers
> ridiculous and unjust margins to companies that are already wealthy anyway. *Money
> is not a product* - even in digital form. Exchange of digital cash should
> be 100% free, with no rent-seeking intermediaries taking an undeserved
> "private tax" cut off every transaction; money should serve its proper
> purpose as an economic store of value and trade enabler. With the right
> framework, such socially beneficial innovations will have room to emerge.
>
> Economies grow when innovative MSMEs are given room to bloom, grow and
> thrive without being crushed by anti-competitive dinosaurs *who
> themselves had benefited from state protection and preferential regulation
> when they were startups* e.g. telecomms operators initially benefited
> legal limits on the number of competing mobile operator licenses - which
> gave them breathing room to reach scale and discover a working business
> model.
>
> Dominant corporations have highly competent teams that (ought to)
> understand the cyclical nature of markets and innovation. They are
> therefore not sincere when they play "victim" to block public-interest
> regulation that would be exceedingly beneficial to the overall economy.
>
> A big THANK YOU to all government stakeholders who are committed to doing
> the right (and smart) things for the economy and for wananchi in general.
> You are the true heroes that our country needs and your efforts are truly
> appreciated!
>
> Brgds,
> Patrick.
>
> Patrick A. M. Maina
> [Cross-domain Innovator | Independent Public Policy Analyst - Indigenous
> Innovations]
>
> *References / Links:*
>
> 1. Nunnenkamp P, Spatz J; 2004: Intellectual Property Rights and Foreign
> Direct Investment: A Disaggregated Analysis
> https://www.jstor.org/stable/40283951?seq=1#metadata_info_tab_contents
>
> 2. Contribution of IP in growth of FDI's in India
>
> https://www.lexology.com/library/detail.aspx?g=fa4da9e0-029d-4f0a-9f61-bf4213ef3d6c
>
> 3. The World's Most Valuable Brands
> https://www.forbes.com/powerful-brands/list/
>
> 4. Apple's Supply Chain From the Factory Floor to Retail Stores
>
> http://s354933259.onlinehome.us/mhi-blog/apples-supply-chain-factory-floor-retail-stores/
>
>
>
> On Saturday, June 22, 2019, 5:08:51 PM GMT+3, Mwendwa Kivuva via kictanet <
> kictanet at lists.kictanet.or.ke> wrote:
>
>
> The Kenya Information and Communications (Amendment) Bill 2019, which is
> sponsored by Gem MP Elisha Odhiambo, is seeking to compel mobile phone
> companies to form separate arms to manage any other business they engage in
> outside telecommunications services.
>
> They will also be required to "legally split or separate the
> telecommunciations business from such other business.
>
> Besides separating the revenue streams, telcos will also be required to
> compensate consumers for dropped calls at the rate of Sh10 for every call
> dropped for up to three dropped calls a day.
>
>
> https://www.businessdailyafrica.com/news/MPesa-Airtel-Money-set-for-split/539546-5165930-bbwvsfz/index.html
>
>
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> The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform
> for people and institutions interested and involved in ICT policy and
> regulation. The network aims to act as a catalyst for reform in the ICT
> sector in support of the national aim of ICT enabled growth and development.
>
> KICTANetiquette : Adhere to the same standards of acceptable behaviors
> online that you follow in real life: respect people's times and bandwidth,
> share knowledge, don't flame or abuse or personalize, respect privacy, do
> not spam, do not market your wares or qualifications.
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