From Competition to Cooperation – Co-Opetition: (A Case of Safaricom’s Mobile Money Transfer (MPESA) and Commercial Banks in Kenya)

Abstract

It has always been common that competitors will always find ways of beating each other and using all resources to succeed and wrestle the competitor but never before have we seen the type of coming together that was witnessed in Kenya recently.  Safaricom which is a mobile provider introduced the money transfer service in the year 2007 which has been a preserve of the banks and the banks went up in arms and resisted the move by advising the regulator the Central Bank of Kenya (CBK) not to allow Safaricom the licence.  However after a long drawn battle safaricom finally won and was allowed to deal in the money transfer business.  Given the volume of money it transacts on a daily basis it was evident that it was really the main transfer service in the country.  In this paper we try to show that competing firms can still find a middle ground where both of them can still benefit and resort to a win-win situation.  They do not always have to fight with an objective of eliminating the competition.  The main theme of this study was that later on the same banks which were fighting Safaricom found a way of using safaricom’s success to also make money, the banks quickly moved in and worked with the company to make the customer withdraw the money in mpesa (mobile money transfer) through the Automatic Teller Machines, that was the first of the things to follow, they later on worked with Safaricom to allow their members to access their accounts and directly send their money into their accounts.  The procedure now is that any customer with a bank account does not have to go to the bank to withdraw the money then convert it into mpesa by going to the mpesa agent, now what the customer does is in the comfort of his sitting room, get his phone, connect to the bank and transfer his money to his or her mpesa and finally send the money to whomsoever he/she needs.  The contribution of this paper is that it looks at co-opetition in Kenya where companies have not been working together.  The recommendations will go a long way in making companies not compete fiercely thus raising the prices of the products and making consumers suffer by the high prices of the products.

Keywords: Competition, Cooperation and Co-opetition