Purpose, People and Profit

Safaricom exists to transform lives. This is our purpose; the driving force behind everything we do. It’s what guides us to deliver ourstrategy, which is founded on three pillars: putting the customer first, deliveringrelevant products and services, and enhancing operational excellence.

In the last year we showcased our commitment to implementing this strategy, overcoming economic and regulatory headwinds to post a strong financial performance, create great value for our shareholders and transform the lives of millions of Kenyans every day.

Within the same year I also took some much-needed time off to receive specialised medical treatment. I however continued to work closely with my Executive Team through face-to-face meetings in London and remotely using our Virtual Private Network as we guided the business through a rather tough period.

While they handled the day-to-day business operations, I had time to reflect on a subject that has become very dear to me: our company culture. Safaricom is a high performing organisation powered by over 6,000 men and women dedicated to ensuring that we achieve our brand purpose of transforming lives. But we often forget to highlight one of the most critical elements contributing to our success, and that is people.

These men and women, majority of whom our shareholders and other stakeholdersnever get to interact with, are the secretingredient to our success, and the engine behind our continued growth.

People and Culture

It is through investment in a strong, competent body of staff that our business continues to enjoy its position as the market leader, guided by a sharp focus on our strategy. So this year, we will be realigning and refreshing our corporate culture to meet our business goals, with focus on four key elements: purpose, humanness, growth and trust. We are on a journey to creating a workplace that promotes productivity, beginning by taking care of the needs of people.

We have begun to do this by investing more in staff wellness through the 100% Human at Work initiative, which seeks to encourage businesses to recognise their staff members as human beings, not just resources, in order to create a happier, healthier, more productive workforce.

Having had the time to really reflect on the role of employee wellness on a business’ performance, I am particularly passionate about investing in initiatives that will ensure that we deliver great value for our shareholders and continue to transform lives.

Diversity and Inclusion

As a business, we have also committed to pursuing true diversity and inclusion, which means elevating more women to leadership positions and absorbing more people living with disabilities into our organisation.

While we are proud of achieving a 1:1 male to female employee ratio, there is need to create more opportunities for more women to transition into leadership positions. In line with this, we have committed to matching the number of women in senior management to that of men by 2020. In addition to that we have pledged to increase the number of staff with disabilities from the current 1.7 per cent of our employee population to five per cent by March 2021, and to work closely with partners to advocate for the full inclusion of people with disabilities within the public and private sectors.

Delivering the Strategy

At Safaricom, we like to speak about the 3P’s that support our strategy: Purpose, People and Profit – that when you put purpose and people first, then profit always follows. It’s a mind-set that has led us to achieve remarkable results each year, reminding us that our business exists to transform lives; from the communities we serve to the people who serve.

Under the guidance of a strong leadership team and dedication of our staff, we diversified the business to support revenue generated by voice and SMS, which continued to defy global trends to report a blended growth of 2.9% YoY. Despite this performance we remain alive to the global decline of voice and SMS usage, and are readying the business by introducing more innovative products and services.

We see a consumer-led future in data and mobile money buoyed by the attendant value propositions that we will continue to offer our customers. In light of this trend we are moving towards a more resilient business model that will drive sustained business growth by leveraging new opportunities in mobile and fixed data, and mobile money transfer and payments.

As demand for these services grows, we are positioning ourselves to tap into opportunities that arise so that we can
narrow the gaps to accessibility presented by physical and geographical barriers. This includes: continued investment in the expansion of our 4G footprint; provision of fast, affordable Internet to retail and commercial
customers through Safaricom Business and Safaricom Home fixed data propositions; and building partnerships that will enable us offer high quality, local and international content.

In addition, we continue to explore new innovations around the latest technologies built on Internet-based solutions. The Internet of Things (IoT) presents exciting new opportunities for us to showcase the power of collaboration and technology, and we’ve already began experimenting with it in the areas of sports and healthcare. Also leading our growth is M-PESA, which has maintained a steady momentum to contribute 28 per cent of our service revenue.

In the last financial year, we maintained our focus on democratizing M-PESA by reducing Lipa Na M-PESA merchant fees by 50 per cent, and scrapping transaction fees for amounts lower than KES 200 in order to encourage adoption of service, which we view as a huge untapped opportunity. We also continue to improve the customer experience on M-PESA through system enhancement, additional security features and mySafaricom App, so as to ensure the long-term sustainability of this ecosystem and business stream.

As part of our sustained push to offer disruptive products and services, we are also looking forward to delivering success on Masoko, the e-commerce platform we launched last year. We intend to do this by streamlining its operations to meet market demand and shake up the local online trading industry.

Beyond our borders, we continue to monitor and explore new areas of opportunity in keeping with our strategy, which in 2016 we aligned with the Sustainable Development Goals (SDGs).

Sustainable Growth

Aware of the reality that our business cannot thrive independent of the communities we operate in, we have adopted and began to pursue the achievement of nine of the 17 SDGs: Good Health & Wellbeing (Goal3); Quality Education (Goal 4); Affordable & Clean Energy (Goal 7); Decent Work & Economic Growth (Goal 8); Industry, Innovation & Infrastructure (Goal 9); Reduced Inequalities (Goal 10); ResponsibleConsumption & Production (Goal 12); Peace, Justice & Strong Institutions (Goal 16) and Partnerships For The Goals (Goal 17).

These goals represent our commitment to mobilizing global efforts towards realising shared prosperity for all, and present significant opportunities for our business to make a greater contribution to equal socio-economic growth. Guided by the SDGs, we are investing in initiatives that are transforming lives, collaborating with partners to deliver essential services in sectors such as healthcare, education and agriculture, and empowering Kenya’s youth. Looking ahead, we see great opportunities for sustained growth. One of our goals is to transform Safaricom into a truly agile organisation, by creating an environment where decisions can be made quickly and mistakes viewed as opportunities to learn fast.

It all begins with investing in our people, whose job it is to ensure that Safaricom remains the leading mobile network operator, and who prove to us every day that when we come together, great things happen.

Twaweza!

Bob Collymore

CEO