INNOVATION

We continuously challenge ourselves to extend our innovative approach to problem-solving and meeting the needs of our customers and society at large. In FY19, we focused on learning more about our customers’ needs, by assessing how we can leverage the capabilities required to create products and services that meet them.

Data gathering has proved far more reliable than experiential or anecdotal reporting in identifying new markets. Now we use analytics to scope out new business and markets and design bespoke solutions to fi t the market, taking care to ensure our focus groups, market visits and surveys are representative of the customers we aim to serve.

MONITORING AND MANAGING INNOVATION

Innovation is a multi-dimensional topic. At a strategic level, we manage and monitor this aspect of our business using several sets of indicators, including:

Net Promoter Score (NPS) and Brand Consideration (BC) score (tracking customer satisfaction with, among other things, our new products and services)
Mobile data usage and revenue (tracking how well data-related product and service innovations are being adopted and used)
M-PESA usage and revenue (tracking whether new products and services are helping to deepen fi nancial inclusion)
Users of/subscribers to technology for development (T4D) products (gauging the impact and success of social innovations through active users/subscribers).

A NEW STRUCTURE FOR STRATEGY AND INNOVATION

In FY19, we created the new role of Chief Business Development Offi cer and restructured our Strategy and Innovation Division. Now known as the Business Development Division, this includes five teams:

Strategy
Innovation
Big Data and Analytics
Market Research and Consumer Insights
Regional Expansion

“We continously challenge ourselves to extend our innovative approach to problemsolving and meeting the needs of our customers and society at large.”

The Business Development Division reviewed the existing plan and tactical challenges in our evolving operating environment to develop our priorities for the year under review. The resulting changes in structure will change how we innovate.

SLOW GROWTH FOR MOBILE DATA

Our mobile data subscriptions and revenue grew relatively slowly (by 6.4%) in the year under review. This can be attributed to numerous factors, including:

increased tax on mobile data;
revised data prices to cushion customers against inflation;
shifting market trends – high-value customers who have home fibre
internet services are switching to home internet when they are there; and
shrinking of the consumer wallet.

* Assessment of customer satisfaction
**Assessment of likelihood of customer choosing Safaricom in the future

Our NPS score for overall consumer customer satisfaction was 61 per cent in March 2019 (the end of the reporting period). The score trend was steady earlier in the year, but plunged into a steep dip in September 2018 , which we attribute partly to customers being disgruntled at the prices of our data offerings. This was followed by a gradual growth post-October 2018, and a strike of 64 per cent in February 2019 – backed by our excellent mobile money services, good network quality and effective turnaround plans that put our performance on track. Our Brand Consideration score recorded a more stable trend, with marginal improvement from 60 per cent earlier in the year and constant performance at 63 per cent towards the final quarter of the year.

Harsh economic conditions in the first half of the year reduced disposable income, and hence the spend on our products. For customers on a tight budget, mobile data was a luxury. A key initiative taken to combat was the repackaging of our data plans, which saw a drastic reduction in the cost of data per MB by 41.9%. Our customers enjoy worry-free experience through WhatsApp Kadogo, which allows customers to use WhatsApp services at no cost when their data bundle has run out. This resulted in a surge in the rate of uptake of these products by 6.6% and 150% respectively, within a short span of time between February and May 2019.

* 30-day active

M-PESA RECORDS IMPRESSIVE GROWTH

M-PESA, our mobile money transfer and payments platform, remains a large component of our business. In this fi nancial year we launched two exciting new services:

M-PESA GLOBAL
Our push to take M-PESA beyond Kenya’s borders, M-PESA Global includes partnerships with Google, PayPal and Western Union to enable seamless international money transfer and payments.

* 30-day active
As the preceding table shows, there was a signifi cant amount of activity and movement through the M-PESA mobile money platform during the year. Revenue from the service grew from KES 62.9 million in FY18 to KES 75 million during the year and the number of users (active in the last 30 days) increased from 20.5 to 22.6 million by March 2019.

Our Lipa Na M-PESA merchant service, supports and enables entrepreneurial and SME activity across the economy. This service allows our enterprise customers to buy and make payment for retail purchase of goods and services. As shown in the table below, our Lipa Na M-PESA merchant service enjoyed solid growth of 41% increase in value of transactions this year.

Case Study: Fuliza
The world’s fi rst contextual mobile overdraft facility, Fuliza launched in January 2019. It allows M-PESA customers to complete transactions even if they have insuffi cient funds in their M-PESA accounts.

New devices & technologies offers visually impaired customers independence and convenience

We are making our products and services more accessible for persons with disabilities through the facilitation of affordable and accessible assistive devices and technologies. An example is our partnership with Dot Incorporation for the development of Dot Braille Watch (smart watch) for the visually impaired. The device enables the visually impaired/Braille users to read all SMS notifications in Braille. It also has an additional functionality that enables them to manage calls, set time and alarm in braille.

CONSUMER INNOVATION

Our consumer business unit (CBU) continues to focus on driving the uptake and growth of internet usage by lowering the cost of data per MB and working with partners to make affordable devices accessible to the Kenyan market, continuously reducing the cost of 4G enabled devices. The number of smartphones connected to the network grew this year by 12 per cent, and the number of 4G-enabled smart phones by 50 per cent.

The technology team worked to enhance coverage of the 4G network and deliver faster internet speeds. Data speeds improved from 54Mbps in March 2018 to 65Mbps in March 2019.

In FY19, we rolled out a campaign to increase the penetration of 4G devices and ease congestion on the 3G network by migrating more customers to the 4G network for a superior user experience.

Case Study: DigiFarm

DigiFarm is an integrated agriculture platform that helps agribusinesses and smallholder farmers share information and transact. It won the Shared Value Award at the August 2018 Loeries Awards held in South Africa.

Our vision is for DigiFarm to increase the income of small scale farmers using the same piece of land by addressing:

Knowledge gaps on best farming practices
Shortage of quality, affordable inputs
A lack of access to financial services such as credit and insurance
Difficulty finding access to markets

DigiFarm has over a million farmers on its platform, more than 300,000 of whom are 30-day active customers. DigiFarm has opened 144 depots around the country to enable farmers to access quality inputs. To date 61,435 loans have been approved, and 23,107 loans have been redeemed at DigiFarm depots.

DigiFarm’s buyer-driven model seeks to drive behaviour change by encouraging smallholder farmers to grow crops based on market demand. This allows them to produce with a level of certainty, with a minimum price guaranteed before planting commences. Farmers also receive:

Soil testing services
Check off loan for inputs needed
Yield insurance on the farm
Extension services through DigiFarm Village Advisors
A ready market for their produce

In FY19, we partnered with the Makueni County government to pilot the buyer-led model, resulting in over 600 sunflower farmers signing up to produce raw material for purchase by Bidco Africa, a leading manufacturer of fast-moving consumer goods including edible oils.

DigiFarm is expected to transform the lives of smallholder farmers by enabling them to produce optimally and make farming a profitable business. This will help to ensure food security in Kenya and provide an opportunity for Africa to feed the world.

ALL-IN-ONE BUNDLE

The All-in-One Bundle provides our customers with discounted data and calling minutes based on their usage and how much they would like to spend. Customers may choose from fi ve price points — KSh 1,000, KSh 2,000, KSh 3,000, KSh 5,000 or KSh 10,000 — for a 30 day bundle. At each price point, they may then customise their bundle to optimise their usage:

Data only: for those who prefer to spend all their usage on data.
Data heavy + voice light: for those who prefer a mix of data and calling minutes with an emphasis on data.
Voice heavy + data light: for those who prefer to talk more but also to use some data.
Other offerings: free WhatsApp services and football passes that enabled customers to stream World Cup matches on their smartphones.

EDUCATION: SHUPAVU291

Now transitioned into the Consumer Business Unit (CBU), Shupavu291 is a learning programme that incorporates game-style incentivisation to help students learn and study. The platform has a growing subscriber base, currently at 580,126 subscribers, and has 4,129,058 learners since its launch in 2016.

M-TIBA

M-TIBA, a mobile-based health proposition developed in partnership with CarePay and PharmAccess, provides easier access to affordable healthcare for Kenyans on a lower income. M-TIBA enables them to register for NHIF and provides an electronic wallet system to help them save towards healthcare. We provide the backbone technology on which M-TIBA runs.

The scheme has over 4,270,844 subscriptions, injecting more than KSh 200 million in savings into the healthcare system, and provides services at over 400 accredited clinics.

E-COMMERCE PARTNERSHIPS

We partnered with Lynk, an online platform that showcases and promotes Kenyan artisans’ products and services, and through which Masoko will be the fi rst e-commerce platform in Kenya to sell spa and beauty treatments. Another key partnership was formed between M-PESA and Alipay to enable international payments for purchases via AliExpress.

Masoko
Launched in 2017, Masoko is our e-commerce platform, whose vision is to “Africa’s Lifestyle Marketplace”. The online marketplace creates opportunities for customers to access locally manufactured goods from anywhere in Kenya. Sixty-four per cent of vendors on the platform are SMEs, and we work with local manufacturers to help them grow their businesses through e-commerce. In addition to high performing e-commerce categories like phones and electronics, home and living, fashion and accessories, our Made in Kenya category helps craftspeople sell online to a wider market.

CONTENT PARTNERSHIPS
We are very proud to work in partnership with major content providers in the entertainment market.

In mid-2018, we partnered with Kwesé ifl ix, StarTimes and DSTV to bring the soccer World Cup to our subscribers on mobile – a first for Kenya – at an affordable KSh 99/- per day.
Our expanded offering provides Kenyan content (in partnership with Showmax), something not offered by our South African competitor, DSTV.
Songa by Safaricom, launched in February 2018, now has 3,000 users and a revenue share of 75:25 in favour of the content provider, Radio Africa Group.
The Beatz app, delivered in partnership with Spice, offers universal music content.

INNOVATION

The Innovation department within Safaricom explores and establishes new ways to meet the evolving needs of our customers. It consists of two collaborative and interdependent functions:

Products – build and experiment; fail fast and often to develop new, dynamic products and services that might otherwise be considered too risky or timeconsuming for the business.

Strategic partnerships and engagement – facilitates investment in start-ups through the Safaricom Spark Fund to cultivate partnerships and create an ecosystem in which start-ups may thrive.

TECHNOLOGY FOR DEVELOPMENT

Our Technology for Development (T4D) unit designs, co-creates and develops products and services that deliver social impact in health, education, agriculture and other areas aligned to the SDGs. The team uncovers new opportunities and unmet needs, then incubates relevant products and services and scales them through the relevant business units.

The key focus area for T4D this year has been to extend our existing portfolio of products and services.

ENTERPRISE INNOVATION

Our enterprise business unit (EBU) delivers enterprise grade services on expansive 4G LTE infrastructure. These aim to grow access to reliable broadband connectivity for both small and large businesses across the country. We started by delivering fixed internet over LTE, then added various enhancements to improve the experience.

In addition to increasing the capacity of our product, we delivered advanced functionality including:

Port forwarding, a way of making a computer on an enterprise network accessible to computers on the internet, even though they are behind a router;
Traffic shaping, a means of managing network bandwidth to prioritise network traffic and reduce the impact of heavy use cases on other users; and
Bandwidth burstability, a cost-efficient solution that allows our customers, for a time, to exceed the usual maximum bandwidth during peak usage periods at no additional charge.

A key result of these initiatives has been a sudden surge in the number of 4G LTE Enterprise Customers to 3,744 in FY19, from only 70 customers in FY18.

“We continue to work with US tech giants Amazon and Microsoft to drive a number of areas of innovation, co-creating new products and building capacity.”

LOOKING AHEAD TO 2020
The next financial year presents exciting new opportunities in the following areas:

Content bundling
With customers using so much of their data to browse social media, we plan to bundle capabilities with content, such as talk time + Facebook, data + WhatsApp, All-in-One + YouTube and so on. Facebook Kadogo (“small”) will allow customers to enjoy some of the features of Facebook free of charge.

“Internet of Things” (IoT)
We aim to be a digital partner of choice for businesses by providing solutions that improve the effi ciency with which they do business, saving them money and creating additional value for their end users. Examples of areas where we bring valuable solutions by leveraging on IoT is smart water metering and animal tracking system.

Zwuup
Zwuup is a WhatsApp-style messaging platform and entrepreneurial tool for small business owners. It includes M-PESA integration for peer-to-peer payment capabilities, bringing together the convenience of mobile messaging and the security of digital payments. Zwuup is undergoing public data testing, with a market launch planned for FY20.

International partnerships
We continue to work with US tech giants Amazon and Microsoft to drive a number of areas of innovation, co-creating new products and building capacity.