“I am proud of what we have been able to achieve and most importantly the critical role that we played in keeping the country connected during the pandemic.”
PETER NDEGWA
Chief Executive Officer
Safaricom PLC
Last financial year was an extremely challenging period. I joined Safaricom at an extraordinary time when the COVID-19 pandemic was at its peak and majority of our members of staff had transitioned to working from home. I am grateful for the warm welcome and support accorded to me by the Board and staff of Safaricom PLC as I settled into my role.
The COVID-19 pandemic altered the environment for all businesses and ours was no exception. In responding to the pandemic, we remained true to our purpose of Transforming Lives. I am pleased with the work we have done to support our stakeholders, especially our customers and communities, to navigate through this difficult period. I am proud of what we have been able to achieve and most importantly the critical role that we played in keeping the country connected during the pandemic and in delivering a sound return to our investors.
KEEPING THE COUNTRY CONNECTED DURING THE PANDEMIC
The onset of the COVID-19 pandemic last year brought to the fore the importance of keeping humanity connected. The pandemic forced many Kenyans to work and learn remotely. I am incredibly proud of how we stepped up to meet the sudden spike in the demand for connectivity across the country. To accomplish this, we had to accelerate network roll out, connecting 94% of the population to 4G. We are grateful to our regulator for the support accorded to us and for the allocation of an extra 3G frequency to help us meet the demand for mobile internet. Through our fibre optic network, we supported our customers to transition to the new normal and sustain high levels of productivity despite being away from their workplaces.
The COVID-19 pandemic is far from over as evidenced by the recurrent waves of infection which have necessitated restriction measures such as lockdowns by the government in a bid to control the spread of the new variants. We remain committed to supporting our stakeholders to navigate through the pandemic. Businesses such as ours will continue to play an important role in the society through driving digital lifestyles and investing in solutions that address the most pressing societal needs.
The pandemic has also highlighted the wide gaps that exist in access to internet especially among low income households. Despite the high mobile penetration rate, only 40% of Kenyans own a smartphone device giving them access to high quality internet. Handset costs and data bundle pricing remain some of the key barriers to access. Addressing these barriers is part of our commitment to supporting the Sustainable Development Goals, in particular SDG 9 – Industry Innovation and Infrastructure. Last year in partnership with Google, we launched a device financing initiative called Lipa Mdogo Mdogo, which offers a flexible payment plan with an 85% reduction in the upfront cost. Through Lipa Mdogo Mdogo, customers pay an initial KShs 500 for a 4G smartphone followed by an affordable daily fee of as low as KShs 20. As at March 2021, 247 379 customers had upgraded to 4G enabled devices through this device financing initiative.
SUPPORTING MSMES
Last year I committed to spearhead the business into developing solutions to support the Micro, Small and Medium Enterprises (MSMEs). Small businesses are the lifeblood of our economy, yet they are the worst hit by the COVID-19 pandemic. It’s therefore imperative for businesses like ours to support them to get back onto their feet as a strategy for building the resilience of our economy. We launched Pochi la Biashara which is a product that allows business owners such as: food vendors, small kiosk owners, boda-boda (motorcycle taxis) operators, second-hand clothes dealers among others to separate business funds from personal funds on their M-PESA wallet. We also recognize that small businesses face several challenges in managing the money received from their sales such as keeping track of their transactions, making payments to their suppliers and paying wages through M-PESA to their workers. To address these challenges, we launched the M-PESA Business Till which addresses these needs by providing a one stop solution for receiving and managing payments for small businesses.
This is just the beginning of our journey in becoming the platform partner of choice for SMEs and micro-SMEs. Later this financial year, we will unveil revamped products, offering connectivity solutions for this important segment of our enterprise business customers.
TOWARDS A CUSTOMER OBSESSED AND DIGITAL FIRST ORGANISATION
Last year, we rolled out our new five-year strategy which spells out our vision of becoming a purpose-led technology company by 2025 and re-affirms our commitment to our purpose of transforming lives. One year later, we can proudly say that focus on our purpose and vision is leading to desirable results.
In order to bring our vision to life, our mission is to establish a customer obsessed, digital first organisation by the end of financial year 2022. Customer obsession is our main effort and we are working to ensure that we fix the pain points in our customer journeys, resolve customer issues at the first point of contact and ensure safety for our customers when transacting on M-PESA.
Our goal is to continue to deliver a wide range of products and services designed to present sustainable solutions to some of society’s most pressing challenges through being a digital-first and insights-led organisation.
To support the achievement of our vision, we are evolving our organisation model towards becoming an agile organisation. We are changing our ways of working to ensure we are more agile in responding to the rapidly evolving needs of our customers. The Agile way of working will also ensure that our approach in developing products and solutions is in line with the needs of our customers. It will foster collaboration across the organisation, speed up decision making and bring us closer to our customers. I am pleased with the progress we have made so far, in transitioning the key product teams to the agile approach which is already having an impact in achieving collaboration and speed in responding to customer needs. We continue to integrate agile across the business.
Our people are the driving force behind the delivery of the strategy. To build a future fit workforce, we will continue to invest in building capabilities for our people especially on key digital skills such as machine learning, IoT, Artificial Intelligence and Fintech.
BEYOND 20 YEARS
In October 2020, we marked our twentieth anniversary. Since inception, Safaricom has enjoyed tremendous success by leveraging the power of the mobile technology and innovation to transform lives. As we mark 20 years, I’m confident that we have embarked on the right strategy to pivot into the next twenty years and beyond.
Our new strategy is anchored on four pillars – strengthening the core, becoming a fully-fledged financial services provider, winning in select digital ecosystems and staying prudent in our cost management to be able to fund a sustainable growth into the future which includes new markets and areas of business. These pillars will ensure that we run a holistic technology business for the future.
These pillars will be enabled by five key strategic enablers including; people, Network and IT, partnerships, mergers and acquisitions and data and analytics. As we pursue new areas of growth, we will continue to solidify our market position through our traditional products such as voice and mobile data. Verticals such as agriculture, MSME focused opportunities and education amongst others will drive retention and continue to power our growth. We will also play a key role in driving healthcare inclusion and enabling smallholder farmers to become wealthier and commercially sustainable.
“Since inception, Safaricom has enjoyed tremendous success by leveraging the power of the mobile technology and innovation to transform lives.”
At the start of the year, in partnership with our parent company Vodacom, we acquired the M-PESA brand, product development and support services via the newly formed M-PESA Africa joint venture. Through this, we plan to scale the success we have achieved on mobile money and payments by going beyond our borders to the rest of Africa.
ACCELERATING OUR SUPPORT FOR SDGS IN THE DECADE OF ACTION
The year 2020 marked the beginning of the Decade of Action which calls for reaffirmation of the global commitment through accelerated efforts and sustainable solutions to the world’s biggest challenges. These range from eradicating poverty, reducing gender inequality and addressing climate change. Despite the progress made in the implementation of the Sustainable Development Goals, globally we are behind on most of the targets. The private sector and businesses like ours will need to step up our contribution and support to the SDGs, if we are to close the gap by 2030.
Mobile technology contributes to SDG 9 – Industry Innovation and Infrastructure, significantly both as a provider of critical infrastructure and as a catalyst for other sectors; by providing connectivity solutions and platforms which other businesses can leverage to scale their products and services. Moreover, the industry fosters the research and development of cutting-edge technology and services, enabled by the low latency and high bandwidths that technologies such as 5G provide.
We remain focused in our sustainability agenda covering key issues such as addressing our impact on the climate and building an inclusive business that not only meets the needs of our customers, but also reflects the diverse nature of our society.
Last year we made progress in some areas such as our target to grow 5 million trees in 5 years as part of our carbon offset program. I am pleased with the approach we have taken to streamline diversity targets across all functions in the business to ensure we achieve gender parity at all levels by 2025. We continue to integrate our nine material SDGs which are directly linked to our business growth strategy. Adoption of the SDGs has enabled us to become a more sustainable company, creating meaningful impact for communities that we serve.
“Adoption of the SDGs has enabled us to become a more sustainable company, creating meaningful impact for communities that we serve.”
Last year we launched the Safaricom Sustainable Future Series which is a thought leadership platform that seeks to convene business leaders to discuss and identify solutions to the various sustainability challenges facing our society. The forum aims to identify ways of accelerating private sector’s contribution to the Sustainable Development Goals. Through this platform, we aim to inspire more business leaders to embark on the bold leadership needed to re-ignite the crucial private sector’s role in achieving the targets set under the 2030 Agenda.
EXPANDING TO NEW TERRITORIES
At the start of FY21, we submitted a bid for a telecommunications operating licence in Ethiopia. In May 2021, Ethiopia Communications Authority announced that Global Partnership for Ethiopia which is a consortium led by Safaricom and comprised of Vodacom, Vodafone, Sumitomo and CDC had formally been granted one of the licences to offer telecommunications services in Ethiopia. We are excited at the growth prospects that this opportunity presents as this opens for us a new market with over 4 million SMEs and a population that is projected to hit 150 million by 2030. We hope that our entry into the Ethiopian market will usher in a new dawn of digital revolution that will transform the lives of the Ethiopian people. We are currently focused on setting up operations and rolling out the network ahead of our commercial launch in 2022. I wish to thank the team that was actively involved in delivering this bid leading to the licence award, and the members of the consortium for their dedication and support in seeing this process through.
STANDING TOGETHER, GOING BEYOND
In closing, I would like to thank my team who have each held their inch not only to deliver on our business objectives, but also in keeping the country connected during the difficult period occasioned by the COVID-19 pandemic. As articulated in the theme of this report “Standing Together: Going Beyond,” I am excited about what the future holds and what lies ahead in the coming days. Projections show strong signs of economic recovery as the government continues to source and provide vaccines for Kenyans; which will in turn ease restrictive measures. Businesses like ours, in the technology space, will play a key role in rebuilding through inclusive business models and partnerships that scale up innovations and enable digital lifestyles. I’m confident in the new strategic direction that we have taken. We are in a good position to pivot into the next phase of growth in becoming a purpose-led technology company.
Peter Ndegwa
Chief Executive Officer
Safaricom PLC
