I am not leaving, says Safaricom CEO Ndegwa amid departure speculation

Safaricom CEO Peter Ndegwa has downplayed persistent speculation about his future at the colossal telco as he approaches three years in the job, the minimum tenure granted by the firm’s board to corner office holders.

Mr Ndegwa told the Business Daily in an interview that his employment terms with Safaricom are not tied to the three-year contract cycle offered to his predecessors, both of whom were expatriates (Michael Joseph and the late Bob Collymore).

He has been the CEO of East Africa’s most profitable company since April 1, 2020, but he has recently become the subject of speculation as a vicious game of musical chairs unfolds at the company’s headquarters in Nairobi.

Mr Ndegwa termed the “noise” regarding his future at the helm of the telco as “an unnecessary distraction”, saying he has been achieving the targets the board gave him at the telco.

“The right position is that, unlike my two predecessors who came in as expatriates, I am a Kenyan and so the issue of contract didn’t have to apply. So, when I was joining, we sat with the Board of Directors and agreed on a number of deliverables against which they would track my performance,” said Mr Ndegwa.

That, he added, is the basis against which his tenure at Safaricom would be evaluated, noting bullishly that “I can assure you that I have in the past two years achieved those key deliverables”.

“As we exit this financial year, I don’t see this being different,” he said. “So, really, there should be no question about continuity.”

Safaricom’s net profit for the fiscal year ended March 2022, Mr Ndegwa’s second year at the company, fell 1.7 percent to Sh67.49 billion, dragged down by investments in Ethiopian operations and additional tax payments.

It suffered a loss of Sh4.8 billion from the Ethiopian firm in which it owns 55.7 percent, and its tax payments increased 39.1 percent to Sh34.7 billion following the removal of tax breaks attached to the Covid-19 economic stimulus package.

In the previous year, net profits fell 6.8 percent to Sh68.67 billion, the first full-year earnings drop in nine years.

As expatriates, the late Collymore, a Briton born in Guyana, and Mr Joseph were given three-year contracts that could be renewed.

Mr Joseph’s, who was born in South Africa, had his three times renewed, while Mr Collymore’s had been extended twice by the time he died in 2019.

“My predecessors [Joseph and Collymore] were expatriates and so had to be on strict contractual terms because of our immigration laws,” Mr Ndegwa said. “I am a Kenyan and so I am not tied to the same conditions.”

Mr Joseph and Mr Collymore later obtained Kenyan citizenship in accordance with Kenyan law, which allows for dual nationality.

On the side-lines of a relief food distribution and community outreach program under the auspices of the National Steering Committee on Drought Response, which he chairs, Mr Ndegwa spoke to the Business Daily in Mombasa on Friday.

He laughed at the idea that while he was fighting hunger as a result of one of the country’s worst droughts in 40 years, the rug was being pulled out from under him at Safaricom.

On October 24, 2019, the Safaricom board of directors appointed Mr Ndegwa as the telco’s new CEO, effective April 2020, without making his tenure public.

However, according to the telco’s board charter—a document that provides guidance on key boardroom matters such as the appointment and removal of chief executives—a CEO serves between three and seven years, raising the possibility that Mr Ndegwa’s tenure will not end this month.

“The CEO shall be on a fixed-term contract of not less than three years and not more than seven years. The CEO’s contract may be extended beyond the stated duration as may be deemed necessary by the board of directors,” says the charter.

The charter was used to extend the tenure of Mr Collymore twice. His contract, which had run from November 1, 2010 was extended for two years in 2015 and by another year in 2019 when he died.

“As far as I know, his term does not end in April this year. He is employed by Safaricom and is not an expat as previous CEOs were,” said a Safaricom director in reference to Mr Ndegwa’s term while speaking on condition of anonymity.

Speculation about Mr Ndegwa’s future at the company began earlier this year, following changes on the board that saw Mr John Ngumi step down as chairman after only five months.

Mr Ngumi was replaced by Adil Arshed Khawaja, a lawyer whose career was described as “highly distinguished” by the board when he was appointed.

Mr Khawaja joined the board as a non-executive director on December 22, the same day Mr Ngumi, a close ally of President Uhuru Kenyatta, announced his resignation.

Safaricom is the region’s largest and most profitable company, which makes the CEO position appealing.

Mr Ndegwa earned Sh288.93 million, including a bonus of Sh178.88 million, in the fiscal year that ended in March of last year.

Stanbic CEO and former KCB Group CEO Joshua Oigara shot down speculation that he was in line for the top job at Safaricom last week.