2019 Sustainable Business Report

SAFARICOM SUSTAINABLE BUSINESS REPORT 2019 INTRODUCTION OUR BUSINESS OUR MATERIAL TOPICS STAKEHOLDER ENGAGEMENT CONCLUDING REMARKS 25 3 Social Return on Investment (SROI) principles were used to quantify the social value created for stakeholders through our M-PESA product offering. The social value of M-PESA 3 remains a significant creator of value for Kenyan society, having increased by 12 per cent in the last financial year. The major drivers of this growth have been the increase in numbers of customers, agents and merchants; the increase in the average number of transactions per customer; and the increase in the average value of transactions made per customer. The social value created by M-PESA in FY19, excluding transaction fees, has been calculated at KSh 213.5 billion. This is 3 times the total amount of transaction fees earned by Safaricom in the same period. The greatest value continues to be felt by customers, who benefit from their improved ability to manage and save money, lower transaction costs, less theft, and the wellbeing that comes with access to goods, services and opportunities, and increased safety and security. There were two recorded contractor fatalities in FY19, which negatively impacted the Safaricom True Earnings for the period. The overall negative environmental impact on the Safaricom True Earnings increased. Our total water consumption increased due to the inclusion of a new call centre in Eldoret and a reduction in the amount of water we harvested. Carbon emissions increased in the year under review; the negative impact of these on the results was further increased by the higher cost of carbon. All financial information can be found in the 2019 annual financial report, including taxes paid by Safaricom and actual direct employment. Both capital and operational expenditure have been processed via the Kenyan national economic impact assessment model, set up to accept the economic structure of the communication industry according to the Kenyan Social Accounting Matrix (SAM). How we arrive at these numbers KPMG first carried out a “True Earnings” exercise for Safaricom in 2015 to identify the most material socio-economic and environmental impacts of Safaricom and to quantify them in financial terms. During that year, Step 1 of the True Value methodology was carried out to estimate the True Earnings of Safaricom for the year in question. Primary research enabled us to complete this exercise and to ascertain the social value created by M-PESA in particular. To quantify this social value, principles from the Social Return on Investment (SROI) methodology were used. SROI is an open- source, principles-based method used to account for social change. More detail regarding the 2014/15 True Earnings exercise can be accessed at: https://home.kpmg.com/content/dam/kpmg/ pdf/2016/07/case-study-safaricom-limited.pdf Since 2014/15, True Earnings has been used by Safaricom as a way of understanding and expressing the value that the company creates for society. A decision has been made not to carry out the same level of primary research in the following years, but to extrapolate existing primary data and research points from 2014/15, or other years in which relevant data has been publicly available, to create a picture of the relevant period that is as accurate as possible. This has necessitated making certain informed assumptions, all of which have been interrogated internally and confirmed to be the most appropriate in the specific Kenyan context. For the 2018/19 True Earnings update, secondary data was updated with the latest available information. The update for 2018/19 did not include new/additional M-PESA products, new primary data, nor a renewed examination of any of the activities of the company. Further research will be undertaken in the current financial year and the assumptions updated accordingly. This will be reflected in the 2020 True Value bridge.