Safaricom 2018 Sustainable Business Report

24 INTRODUCTION OUR BUSINESS OUR MATERIAL TOPICS STAKEHOLDER ENGAGEMENT 2018 SUSTAINABLE BUSINESS REPORT THE FY18 TRUE EARNINGS BRIDGE The economic impact made through the operations of Safaricom is the greatest contributor to the value created and has grown (7 per cent) since FY17. The value created through capital expenditure also increased and was 11 per cent higher in FY18, largely as a result of the investments in network infrastructure over the period. The total economic impact of the estimated KES 233,717 million annual revenues generated from the operations of Safaricom results in a total estimated Gross Domestic Product (GDP) contribution of KES 484,969 million. This GDP impact can be separated into a direct impact of KES 134,563 million, an indirect impact of KES 83,680 million and an induced impact of KES 266,726 million. The total economic impact of the estimated KES 36,308 million capital expenditure in Safaricom results in a total estimated GDP contribution of KES 17,319 million. This GDP impact can be separated into a direct impact of KES 7,280 million, an indirect impact of KES 2,649 million and an induced impact of KES 7,390 million. The 'Total Economic Value- added' on the Safaricom True Earnings Bridge only includes the direct and indirect GDP impact associated with Safaricom operations and capital expenditure. The social value of M-PESA remains a significant creator of value for Kenyan society, increasing by 20 per cent in the last financial year. The major drivers for this growth have been the increase in customer, agent and merchant numbers, the increase in the average number of transactions per customer, as well as the increased value paid to M-SHWARI users in interest. The greatest value continues to be felt by the customer stakeholder group. Customers benefit from improved ability to manage and save money, as well as the wellbeing that comes with access to goods, services and opportunities that would not previously have been available to them. The overall negative environmental impact on the Safaricom True Earnings was reduced. Total water consumption decreased, and the amount of water harvested by Safaricom has increased year on year. Carbon emission increased in FY18, but the negative impact of the carbon emissions on the results was reduced through the use of an updated, lower electricity emission factor (IEA 2014). There were also no recorded fatalities in FY18, further reducing the negative impact on the Safaricom True Earnings for the period. All financial information was derived from the 2018 annual financial report, including the taxes paid by Safaricom and the actual direct employment. Both the capital expenditure, as well as the operational expenditure were run through the Kenyan national economic impact assessment model. The model was set up to accept the economic structure of the communication industry as is contained in the Kenyan Social Accounting Matrix (SAM).