Message from our CEO

TRANSFORMING LIVES IN A CHALLENGING YEAR

The year under review was challenging for us as a company and a country as we shifted our focus from surviving the COVID-19 pandemic to co-existing with the disease. Economic growth slowed, due in large part to the impact of the war in Ukraine, the associated impact on commodity prices and the concomitant increase in import costs. In addition, another poor rainy season in Kenya hampered crop production, further compounding the economic situation.

Despite these challenges, I am pleased to report a financial year of strong performance with significant commercial momentum.

While I am proud of these results, I am even prouder of the resilience and commitment our people showed as they upheld the four cardinal virtues of the Spirit of Safaricom – namely Customer Obsession, purpose, innovation and collaboration.

Our Foundations, our people and our partners have leveraged these virtues to positively impact 4.2 million lives over the last three years.

PUTTING OUR CUSTOMERS FIRST

Our aim is to put our customers at the centre of everything we do. This means putting ourselves in the shoes of ordinary Kenyans, understanding what they go through and getting to know their needs, aspirations and priorities. This approach is anchored in our Agile way of working which fosters collaboration across the organisation and speeds up decision-making, bringing us closer to our customers.

In this way, we enrich our customers’ digital lifestyles and deliver a superior customer experience as we transition to become a purpose-led technology
company by 2025. Our focus this year was to embed Customer Obsession at the core of our culture by delivering superior customer experiences.

LEVERAGING THE INNOVATION EMBEDDED IN OUR DNA

Innovation helps us to stay ahead of the ever-changing environment and to be more responsive to customers, colleagues and community needs. As a sustainable business, we do not innovate simply because we have the resources, but because we want to combine technology and innovation to transform lives and the society in which we live and work.

The usefulness of technology does not lie in its uniqueness but in its ability to solve a pressing societal problem. While unique is good, a functional solution that solves a societal problem is better.

Our telemedicine initiative that targets over 32 000 children in Homabay, Samburu, Baringo and Lamu Counties is one example of solving a societal issue. It is also an example of the power of partnerships. As a technology company, we do not have the expertise to overcome healthcare challenges on our own. However, working closely in partnership with the national and county governments and others, we can scale solutions to support access to quality paediatric healthcare and a healthy workforce.

Yet another example is our partnership with Zeraki Learning to provide secondary school learners with access to affordable education services from well trained teachers leveraging informative video lessons on a digital platform. Education is one of our priority areas and we will continue to invest in this sector through our products, services and Foundations.

We want to continue to play a key role in driving healthcare and education inclusion as well as enabling smallholder farmers to become wealthier and commercially sustainable.

Innovation can also be leveraged to promote the inclusion of unserved markets, as we demonstrated in the reporting year with the launch of Halal Pesa, a shari’ah-compliant digital product for savings and credit. We saw over two million opt-ins on the product in the reporting period.

CELEBRATING LIFE-SAVING FINANCIAL SERVICES

The launch of M-PESA ushered in an era of life-changing financial services for millions of customers. In 15 years, M-PESA has served over 51 million customers in seven countries and has grown by 15% in the last five years to become the largest fintech platform in Africa. Today, M-PESA has evolved from a simple money transfer service to become a robust payment platform and driver of financial inclusion for Kenyans. During the reporting year, we reached the milestone of 30 million monthly active M-PESA customers in Kenya.

“We want to continue to play a key role in driving healthcare
and education inclusion as well as enabling smallholder farmers to become wealthier and commercially sustainable.”

“During the reporting year, we reached the milestone of
30 million monthly active M-PESA customers in Kenya.”

M-PESA is a genius invention. However, I believe we are yet to scratch the surface of its potential when leveraged as a platform that supports other fintech ideas. The M-PESA super-app which we launched in the past year is the start of this. The super app enables the use and completion of transactions without bundles or even when offline. Customers can download ‘mini-apps’ within the app to complete tasks ranging from ticket booking to shopping and licence applications. The super app also incorporates comprehensive security features.

The super app won a prestigious Global Mobile Award at the Mobile World Congress in Barcelona in the category ‘Best Mobile Innovation for Connected Living’.

The award builds on M-PESA’s legacy of consistently delivering innovations that meet the needs of our customers in line with our purpose of transforming lives. We will maintain this commitment into the future to deliver digital financial innovations and enhance our customers’ experience as more of our customers move to smartphones.

COLLABORATING TO ACCELERATE NEW GROWTH AREAS

In October 2020, we rolled out our new corporate strategy, the overarching aim of which is to Transform Lives. The third pillar of this strategy was based on ‘winning in select digital ecosystems’. Based on our view that we have progressed well in achieving this pillar, we have now recalibrated this ambition to ‘accelerate new growth areas’.

Partnerships are a key strategic enabler underpinning this ambition. This is highlighted by our collaboration with the Central Bank of Kenya to implement merchant interoperability between the various mobile money networks in the country.

Consumers want to be able to shop and pay anywhere, anytime, safely and at a low cost while also being able to spend and send money internationally as easily as at home. Safaricom has already transformed how money moves in Kenya. We are excited to be working with Visa to develop new and innovative payments products and services that can eliminate barriers to global commerce for merchants and consumers in sub-Saharan Africa, through Visa’s global footprint. We launched the M-PESA GlobalPay Visa Virtual Card in June 2022 to support international online payments.

“I am optimistic that our strategic partnership with Visa
will go a long way in opening the global e-commerce market to Kenya’s significant unbanked and underbanked population.”

Customers can now pay merchants regardless of which network the latter use – a development which benefits both merchants and their customers and aligns with yet another of our strategic pillars of being a ‘financial services provider’.

In July 2020, we partnered with Google to empower Kenyans to acquire smartphones that they can pay-as-they-use. Since then, over 600 000 Kenyans have benefitted from our Lipa Mdogo Mdogo initiative to enjoy the transformative power of the internet.

Yet again, this partnership demonstrates our commitment to bridging the digital divide and providing our customers with relevant solutions that enable them to unlock opportunities.

DECREASING OUR ENVIRONMENTAL IMPACT

The world has seen unprecedented climate events in the last few years. Climate change is having a growing impact on the African continent, hitting the most vulnerable hardest, and contributing to food insecurity.

We take our commitment to SDG7: Affordable and Clean Energy very seriously and are committed to becoming a net zero emitting company by 2050. We are achieving this in several ways which include solarising sites, modernising power systems and moving away from fossil power. Against the backdrop of rapidly rising energy costs, this makes sense from a financial, as well as an environmental perspective.

Our view is that environmental sustainability will boost our growth in various ways and positively impact our customers and the communities in which we operate.

Environmental consideration is strongly linked to our purpose. One of our ongoing priorities is our carbon offset reafforestation programme which aims to plant five million trees by 2025. In partnership with local communities and Kenya Forest Services, we planted 372 000 trees in FY22, bringing the total number of trees planted to date to just over one million. The programme is transforming lives through income generation, skills and climate mitigation.

EMPOWERING KENYANS TO DREAM… AND DREAM BIG

Under the auspices of the Safaricom Foundation, our Ndoto Zetu initiative partners with Kenyans to bring community dreams to life. I am inspired and humbled by the dreams Kenyans have for their communities. These range from beating stigma around cancer to providing equipment to youth clubs and schools enabling the differently abled to empowering young farmers, to cite just a few. Ndoto Zetu has reached approximately three million people over three years, with Phase 3 implemented in the reporting year benefitting approximately 1.2 million people.

Against this backdrop, the Safaricom Golf Tour Series that kicked off in January 2022, seeks to demystify the game, long seen a sport for the elite and to make it accessible for all. The series has drawn over 9 000 participants who have participated in various tournaments, junior clinics, caddies’ tournaments, and outreach programmes dubbed ‘Golf Mtaani’.

Our aim is to inspire ordinary Kenyans to dream big and see that anything is possible.

REACHING OUT TO DROUGHTSTRICKEN COMMUNITIES

As a purpose-led company, Safaricom cannot thrive when the communities around us are in anguish. Kenyans in 23 Arid and Semi-Arid Lands (ASAL) counties are suffering the effects of a prolonged drought. Accordingly, we launched the Pamoja Tuungane campaign which aims to complement the Government initiatives in tackling famine by providing emergency food relief to Isiolo, Samburu, Marsabit and Turkana Counties. We set aside KSh 100 million for relief food to kickstart the campaign and have appealed to Kenyans to join us in this initiative. They can do so by donating their Bonga points which will then be used to purchase food hampers for distribution to the communities hardest hit by drought.

“Our view is that environmental sustainability will boost
our growth in various ways and positively impact our customers and the communities in which we operate.”

EMPOWERING KENYANS TO DREAM… AND DREAM BIG

Under the auspices of the Safaricom Foundation, our Ndoto Zetu initiative partners with Kenyans to bring community dreams to life.

I am inspired and humbled by the dreams Kenyans have for their communities. These range from beating stigma around cancer to providing equipment to youth clubs and schools enabling the differently abled to empowering young farmers, to cite just a few. Ndoto Zetu has reached approximately three million people over three years, with Phase 3 implemented in the reporting year benefitting approximately 1.2 million people.

Sport is another area where we encourage people to dream. Over the last 20 years, we have been one of the biggest corporate sponsors of sports in Kenya, investing over KSh 1 billion in sports ranging from football, athletics, motorsport and rugby to golf and charity runs. Our deep involvement has helped us recognise the role sports plays in empowering people.
Against this backdrop, the Safaricom Golf Tour Series that kicked off in January 2022, seeks to demystify the game, long seen a sport for the elite and to make it accessible for all. The series has drawn over 9 000 participants who have participated in various tournaments, junior clinics, caddies’ tournaments, and outreach programmes dubbed ‘Golf Mtaani’.

Our aim is to inspire ordinary Kenyans to dream big and see that anything is possible.

This aim was given further impetus in the reporting year when we added music to Baze, our subscription based mobile-first, video-ondemand entertainment service. This has enabled Kenyan musicians to earn from their talent courtesy of a shared revenue model whereby 60% of income accrues to the artist. Baze has now joined Skiza Tunes as a key earning platform for content creators. The aim is to bring content to Kenyans by Kenyans for Kenyans and for creators to monetise their content.

PROGRESSING 5G AND OUR ETHIOPIAN EXPANSION

We were gratified by the granting of spectrum by the Kenyan Communications Authority to implement a commercial 5G network last year. The retail prices of 5G phones are more than KSh 100 000, putting them beyond the reach of most Kenyans.

Until handsets that can receive 5G are at a sufficient scale from an individual mobile perspective, there is an insufficient need to have lots of sites that offer 5G. Accordingly, we decided to slow down the 5G rollout in Kenya and focus on the 4G network.

However, we know that the 5G network heralds an era of intelligent connectivity and will be a key driver of our strategy going forward as we work to enable digital lifestyles for all Kenyans.

Across our borders, much of our Ethiopian infrastructure is already in place, including two data centres and a customer call centre, on track for commercial launch in 2022.

We expect to launch a phased national roll-out that will include 25 sites by April 2023.

We are excited for the opportunity to work with the people of Ethiopia to set up telecom networks to deliver a digital lifestyle, increase connectivity, provide best in class telephony services, create new digital businesses and generate new jobs. In past years in Kenya, we have seen the power of digital transformation and its impact on our customers. We believe that by working with all stakeholders in Ethiopia, we can deliver a similar transformation while achieving a sustainable return to our shareholders.

“Across our borders, much of our Ethiopian infrastructure is
already in place, including two data centres and a customer call centre, on track for commercial launch in 2022.”

SHARING RESPONSIBILITY FOR A BETTER WORLD

As one of the lead companies in the UN Global Compact, we are committed to integrating a purpose-based approach to sustainability and taking a shared responsibility for achieving a better world.

We continue to integrate nine material SDGs which are directly linked to our business growth strategy. Our priority SDGs have enabled us to become a more sustainable company and create meaningful impact in the communities we serve. Our alignment with our priority SDGs is detailed through this report.

PARTNERING FOR GROWTH

Our strong financial performance over the reporting period would not have been possible without our highly creative, innovative and exceptional staff who help us deliver our purpose of transforming lives every day in so many ways. I thank them for their commitment to our purpose and their dedication in making it come alive.

I would also like to thank our shareholders, communities, business partners, regulators and the Government who enable us to continue providing services that keep Kenya running.

I am grateful to our customers who remain at the core of everything we do.

Looking forward, we will continue to be intuitive to our customers’ needs, listen to their concerns and address them as effectively and efficiently as possible.
We will continue to combine the power of technology and innovation and leverage partnerships to reimagine ideas, products and processes and co-create solutions that meet the needs of our current and future customers over the next decade, for the future.

Through strategic partnerships we will continue to expand an all-inclusive ecosystem that speaks to the diversified needs of our customers, further broadening financial inclusion and transforming lives.

Together with all our stakeholders we have done and will continue to do great things. We are taking valuable lessons forward to unlock our next growth phase as we continue to meet the needs of our customers, protect the planet for the present and the future to become a purpose-led technology company by 2025.

Peter Ndegwa

Chief Executive Officer

Please share any comments, queries or suggestions you have with the reporting team by emailing sustainability@safaricom.co.ke

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