Pioneer M-Pesa dealer rides the telecoms wave

Posted In Business, Technology - By admin on Wednesday, April 30th, 2014 With No Comments »
Esther Muchemi, founder and chief executive Samchi Telecom

Esther Muchemi, founder and chief executive Samchi Telecom

After working for nearly two decades as an auditor, Esther Muchemi decided to venture into Kenya’s nascent telecommunications business where she saw many opportunities.

Ms Muchemi founded Samchi Telecom in 2000 to sell airtime, mobile phones and SIM cards, with hopes of cashing in on the imminent mobile revolution that was to sweep the country.

“Telecommunication business was on the verge of exploding. I had an instinct that IT was going to be a big thing in Kenya,” says the University of Nairobi accounting graduate.

Samchi Telecom was in 2009 and 2010 honoured as the top M-Pesa agent by Safaricom, based on transaction volumes. The company has severally been ranked as top airtime dealer for the telco.

Earlier in 1996, Ms Muchemi set up an auditing firm, Esther Muchemi & Co, but the venture was not raking in enough cash like she wanted.

“I decided to get into entrepreneurship. I knew I would get what I want by being self-employed,” she says.

Ms Muchemi says she used Sh800,000 to set up her first outlet at Nginyo Towers along Koinange Street in Nairobi.

Successful businesses

At first, Samchi Telecom was a retailer of both Safaricom and Kencell (now Airtel) airtime and SIM cards, but Ms Muchemi made a decision in 2001 to be an exclusive Safaricom dealer.

“The commission structure was very great in the early years,” says the entrepreneur.

Samchi Telecom is a wholesaler, retailer and distributor of other product lines such as modems, USB flash drives and wireless devices such as tablets and Webbox.

“We’ve grown organically. I have relied on credit from suppliers and my bank to grow the business,” she says.

In 2002, she opened Samchi Telecom’s second shop in Nairobi’s Eastleigh estate. The business is now a network of 42 outlets countrywide, a great feat that has seen Samchi open at least two new shops every year.

She declined to disclose the firm’s turnover but it is believed to have grossed the billion shilling mark.

Ms Muchemi’s efforts to set up one of Kenya’s most successful businesses saw her named as a finalist in this year’s Ernst & Young (EY) Entrepreneur of the Year Awards (EOYA), Eastern Africa chapter.

She was honoured for the financial performance of her companies and her entrepreneurial spirit, leadership, community impact, innovation and personal integrity in running her business.

“It was humbling. I’ve never thought that I’m a successful entrepreneur,” she says.

Ms Muchemi says the secret behind the company’s success is being dynamic to market changes and quickly adapting to new trends.

She has also perfected the art of being first to join a business, rather than taking a wait-and-see approach to see if others are successful.

Samchi was the pioneer M-Pesa dealer when the mobile money innovation was tested for six months before it was formally launched in March 2007.

“M-Pesa was piloted at Samchi for six months. It was a big risk. We didn’t know how it would go,” she says.

The firm’s distribution network was used by Chinese handset maker Tecno to enter and penetrate the Kenyan market.

The company has also signed deals with PC and phone manufactures including Samsung and Nokia to directly receive devices and distribute them in the Kenyan market.

The entrepreneur says in the formative years of the business, airtimes sales accounted for almost the entire turnover but this changed with the introduction of M-Pesa and sale of devices.

“Airtime sales have slowed down compared to the early years,” she says.

However, Samchi Telecom continues to earn residue income based on spending from SIM cards it connected to the Safaricom network.

This means Ms Muchemi would still rake in millions even if she didn’t make any sales in a year, given her early entry into the business.

Growth frontiers

Samchi is now banking on M-Pesa and data business as the next growth frontiers.

“I have aligned the business strategy to the growth plan of Safaricom. The next level of growth is data,” she says.

This is why she is now driving sale of smartphones, data-enabled feature phones and modems as more Kenyans turn to their phones to access the Internet.

Samchi Telecom says it sells an average of between 700 and 1,000 phones monthly.

The company is also spearheading the recruitment of merchants to sign up to Safaricom’s Lipa Na M-Pesa service to allow retail payments via mobile money.

It has also diversified into selling micro-insurance cover Linda Jamii, a health insurance scheme targeted at the mass market where customers pay premiums via M-Pesa. The health cover is a partnership between Britam and Safaricom.

“We have a target of selling 1,000 covers monthly,” Ms Muchemi says.

The business is named after her son Sammy Muchemi. “Some people think Samchi is an Asian company,” chuckles the mother of two.

Ms Muchemi plans to open more outlets across Kenya, but says some of the challenges affecting the business are the high cost of loans in the country, security concerns and poor infrastructure, which makes distribution costly.

The seasoned entrepreneur has also diversified into real estate, hospitality, IT and microfinance as new income streams.

“There are still enormous growth opportunities in the telecom industry in Kenya,” she says.


About -