A Snapshot of Safaricom in FY2024
This Annual Report is the primary report of Safaricom PLC (the Company) and its subsidiaries (together, the Group) to its stakeholders, and is a concise, material and honest assessment, reviewed and authorised by our Board of Directors (the Board) of how we create long-term value and how we deliver on our purpose of Transforming Lives. The report provides an overview, in terms of the six capitals of our strategy and business model, risks and opportunities, operational and governance performance and activities for the financial year 1 April 2023 to 31 March 2024. Our intention in this report is to describe both our financial and non-financial activities and performance during the year.
Safaricom is one of a select group of about 400 companies across Africa whose annual revenues exceed USD1 billion. Many of these companies are pan-African in their operations and are active in increasingly diverse sectors. Safaricom Group operates in Kenya and Ethiopia via Safaricom Telecommunications Ethiopia Limited, being our latest expansion since July 2021.
Message from the Chairman
It has been a year in which a dynamic operating environment has posed several challenges for both Safaricom and its customers. The year under review was characterised by a tough operating environment both for Safaricom and our customers. However, I am encouraged by the resilience demonstrated to deliver a very strong set of financial results. This success is attributable to strong strategy execution which has seen us through the difficulties of pandemic, drought and global uncertainty, and has once again guided our decisions to deliver for our shareholders while giving more value to our customers.
Adil Arshed Khawaja (MGH)
Chairman
Message From The CEO
In the financial year under review, we experienced a challenging operating environment. Nonetheless, the business displayed significant resilience in producing outstanding growth in both our top and bottom lines. This enabled us to achieve a major milestone, attaining – in our Kenyan business alone earnings of more than USD1 billion before tax and interest (EBIT). Safaricom is the first company in the Eastern Africa region to attain this landmark number.
Peter Ndegwa
Chief Executive Officer
Our strategic approach is informed by all six of our capitals, while comprising a fundamental part of our intellectual and financial capitals. It constitutes an integral part of the thinking, planning, procedures and implementation of all the elements that underpin the way we do business. Together with our strategic framework, it includes our material matters, risk and opportunity management, as well as our business model and the way we conduct and foster the relationships with our key stakeholders.
We strive to continually embed value within our organisation by aligning all our activities with our purpose, mission, vision and values, through the Spirit of Safaricom, Customer Obsession and our agile way of working. Together, these efforts and commitments constitute the culture that helps underpin our strategic pillars, business model, stakeholder relationships and diligent governance, which in turn, enable us to create and deliver value to our stakeholders. At the same time, we reaffirm through this approach, our commitment to making contributions towards the realisation of five of the UN SDGs*.
During the year under review, the world economy showed resilience despite monetary tightening, an increase in geopolitical conflicts and greater economic uncertainty. In several developed and developing countries, economic growth exceeded expectations, with labour markets supporting consumer spending, global inflation showed a significant decline with lower energy and food prices, allowing central banks to slow or pause interest rate hikes.
On the demand side, stronger private and government spending sustained activity, despite tight monetary conditions, while on the supply side, increased labour force participation, re-established supply chains and cheaper energy and commodity prices contributed to easing of conditions, despite renewed geopolitical uncertainties and conflict in the Middle East.
While we may not have reached our customer acquisition targets in the year under review, we have made some significant progress in that our actual customer base has increased to 4.4 million, which we believe represents about 10% of the market. Moreover, in the crucial area of network roll-out, with more than 1,500 sites added since March 2023, we have demonstrated our ongoing ability to add around 125 new sites per month, even if our expectation had been to achieve a level of 200. Our EBIT of negative KShs 45 billion was also well in line with our guidance.
At Safaricom, in realising our social and relationship capital we embrace as an obligation a commitment to being a responsible corporate citizen. This is fully in alignment with our purpose of transforming lives, and it underpins our determination to foster and promote a society which is not only inclusive, but itself fosters opportunities through education, health and economic empowerment and the conservation of our natural environment. In undertaking this responsibility, we seek also to strengthen and contribute towards the implementation of relevant UN SDGs.
The Constitution of the Company’s Board as stipulated by its Articles of Association is 11 Directors. There are currently nine Non-Executive Directors and one Executive Director, the Chief Executive Officer.
This Report of the Directors is submitted together with the audited financial statements for the year ended 31 March 2024 which disclose the state of affairs of Safaricom Plc (the “Company” or “Safaricom”) and its subsidiaries (together, the “Group”).