Safaricom - 2021 Sustainable Business Report

28 SAFARICOM SUSTAINABLE BUSINESS REPORT 2021 //// STANDING TOGETHER: GOING BEYOND / OUR MATERIAL TOPICS / OUR STAKEHOLDERS / KPI SUMMARY THE FY21 TRUE EARNINGS BRIDGE The economic impact made through Safaricom operations is the greatest contributor to the value we create. This has increased by 2% since FY20. The value created through operational expenditure increased marginally (1%) in the year under review, while the value created by capital expenditure decreased by 2%. This was anticipated as the overall capital expenditure for FY21 had decreased by 3%. This chart demonstrates how all factors have contributed towards the “True Earnings” of Safaricom for this period. Most noteworthy was the growing contribution from social externalities, particularly through the social value created by M-PESA as the product grew and evolved. Throughout the period, the greatest contribution to “True Earnings” came from the economic value created through Safaricom’s operations and capital projects, whereas the negative environmental externalities, though recognised as a material topic, continue to have minimal impact. The economic impact of the estimated KSh 264 billion in annual revenue generated from Safaricom’s operations resulted in an estimated KSh 557.1 billion contribution to Gross Domestic Product (GDP). This GDP impact can be separated into a direct impact of KSh 155.7 billion, an indirect impact of KSh 100.3 billion and an induced impact of KSh 300.9 billion. The total economic impact of the KSh 34.96 billion capital expenditure in Safaricom resulted in a total estimated GDP contribution of KSh 19.96 billion. This GDP impact can be separated into a direct impact of KSh 8.4 billion, an indirect Impact of KSh 3.2 billion and an induced impact of KSh 8.3 billion. The “Total Economic Value added” on the Safaricom True Earnings Bridge only includes the direct and indirect GDP impact associated with Safaricom’s operations and capital expenditure. Each year, a portion of the economic value generated by Safaricom is lost as a result of corruption that takes place in the Kenyan economy. It is important to note that this is not directly connected to Safaricom’s activities, but rather acknowledges the unfortunate reality that not all of this value is retained. The graph on the right provides a high-level overview of the annual contribution we made to employment. The numbers are derived from a Kenya-specific Economic Impact Assessment (EIA) model and include direct and indirect contribution to employment, as well as the induced wider effects on employment in the economy. The positive social impact associated with the direct and indirect jobs sustained as a result of the existence of Safaricom has been included in the True Earnings bridge. The social value of M-PESA remains a significant creator of value for Kenyan society, increasing by 3.5% in FY21. The major drivers of this growth were the increase in the numbers of customers, agents and merchants, the increase in the average number of transactions per customer, as well as the increase in the average value of transactions made per customer. The greatest value continues to be felt by customers, who benefit from their improved ability to manage and save money together with lower transaction costs and reduced levels of theft, and the wellbeing that comes with access to goods, services and opportunities, and increased safety as well as security. There were three recorded third-party fatalities in FY21, and a 36% year-on-year decrease in the number of lost-time injuries. Our thoughts and condolences go out to the grieving family and friends. TRUE EARNINGS (FY18 - FY21) FY18 FY19 FY20 FY21 55 289 288 594.3 199 493.6 (258.5) 62 491.0 317 602.0 221 500.5 (412.3) 73 658.0 68 676.2 338 529.6 344 580.3 241 980.1 251 097.2 (413.1) (419.0) FINANCIAL SOCIAL ECONOMIC ENVIRONMENTAL JOBS IMPACT (FY18 - FY21) FY18 FY19 FY20 FY21 897 372 978 633 1 013 728 1 003 669