Message from our Chairman

ACKNOWLEDGING OUR PEOPLE AND OUR CEO

The Board is encouraged by the recovery from the COVID-19 pandemic in the past year and the return to pre-pandemic growth. This upward recovery will unlock opportunities, especially for micro, small and medium enterprises (MSMEs) who lie at the heart of Kenya’s – and Africa’s – economy.

Our strong financial and ESG performance over the last year are the result of placing our customers at the heart of our business priorities and are due, in no small part, to the commitment of our employees, ably led by our Chief Executive Officer, Peter Ndegwa. From the time of his appointment, Peter has demonstrated that he truly understands the DNA of Safaricom – that our purpose is not just about profits and that we are not just a utility, but that we are focused on transforming lives.

Under his guidance, we have made significant progress in realising our strategy of transitioning from a telco to a technology company. We have also demonstrated resilience in living true to our commitment of being a sustainable purpose-driven business – one which has delivered consistent returns to shareholders. During the year, the Board declared an interim dividend of KSh 0.64 per ordinary share amounting to KSh 25.64 billion.

The Board recommended to shareholders a final dividend of KSh 0.75 per ordinary share amounting to KSh 30.04 billion that was approved in the last AGM held in September 2022.

LIVING UP TO PREVIOUS COMMITMENTS

A significant development in FY21 was that we were the first operator in East Africa to launch 5G with the aim of empowering our customers with super-fast internet at work, at home and on the move. 5G can support up to 1 million connected devices per square kilometre compared to 4G which can only support up to 100 000 connected devices in a similar area. This makes 5G suitable for providing super-fast internet speeds in high density areas and for linking thousands of connected devices in a manufacturing environment and supply chain management for businesses

We are confident that we have overcome the regulatory challenges and consumer’s suspicions associated with 5G and we believe that traction is set to accelerate, positioning us ahead of the curve as a company and as a country.

One of the highlights of FY22 was the announcement at the beginning of the year that the consortium led by Safaricom had won the bid for a telecommunications operator licence in Ethiopia. I am delighted to be able to report progress in this regard:

We have signed a five-year lease agreement with Ethiopian Electric Power (EEP), the Ethiopian state-owned power utility company, to share fibre optic infrastructure. Under the deal, Safaricom will use an existing network of fibre optic ground wire cables along high voltage transmission lines – currently standing at 15 000 kilometres – owned by EEP.

We have also built two data centres, made the first test call, sent the first SMS, completed the first data session and successfully tested the SIM card registration process. We remain more committed than ever to establishing a foundation for a digital society in Ethiopia and to providing quality, competitive technology services across the country. Both the Board and I have confidence that getting in on the ground floor will have significant benefits for our investors and for Ethiopian society.

“We have signed a five-year
lease agreement with Ethiopian Electric Power (EEP), the Ethiopian state-owned power utility company, to share fibre optic infrastructure.”

IMPACTING LIVES THROUGH OUR FOUNDATIONS

Our Safaricom and M-PESA Foundations continued their work to transform lives, partnering with local and national authorities and others to make a tangible difference across all levels of society.

The Foundations have now impacted over 4.2 million lives over the past three years in areas such as education, health and economic empowerment.

While agriculture is integral to the Kenyan economy, productivity in the sector is low. Accordingly, we are more determined than ever before to play an enabling role in the success of small-scale farmers by providing end to end products and services and scaling the Digifarm model. Our overarching aim is to have a million farmers active on the platform.

CELEBRATING 15 YEARS OF M-PESA

In 2007, we made a significant investment to establish M-PESA which today is a household name. At the time, no one thought it would be viable but today, I think it’s safe to say, M-PESA has revolutionised the financial services sector – particularly for lowincome people living in remote areas. M-PESA has opened new avenues for people to interact with financial services, providing access to affordable, convenient finance; enabling people to make financial transactions remotely; removing the necessity for travelling long distances to bank outlets and avoiding the risks of transporting physical cash from one place to another.

That initial investment has continued to show rewards with M-PESA revenue growing 30.3 % year-on-year. We continue to invest in new products and services on M-PESA that include savings, wealth management and insurance. At year end, downloads for the M-PESA Super App stood at 5.3 million while M-PESA Business App downloads were recorded at 462 000.

“The Foundations have now impacted over 4.2 million
lives over the past three years in areas such as education, health
and economic empowerment.”

LOOKING FORWARD

There are several important local and international events set to take place in the year ahead, among these the national 2022 elections. I am encouraged by the fact that, unlike other years, there appears to be no downturn in tourists and no sign of let down in economic activity. There could be some tension around local issues, but I anticipate legal challenges rather than rigging challenges.

The Ukraine-Russian crisis was still dragging on at the end of our financial year. This has had a major impact on oil supply and prices, agricultural commodities and metal prices around the world. Spikes in global oil prices have resulted in inflationary pressures that are currently being experienced through increased food, transport and manufacturing costs – all of which have been exacerbated by poor rains in Kenya. Once again, Safaricom has stepped in to help. Shortly after year-end we will be launching the Pamoja Tuungane initiative to provide a vehicle through which Kenyans can support others in areas affected by drought.

A key event on the international calendar is COP 27 in Egypt – the third time this event has taken place on the African continent. The frequency and intensity of extreme weather events has increased in Kenya over the past decade, with mean surface temperatures projected to increase 1°C to 1.5°C by 2030.

While Kenya accounts for a miniscule percentage of global greenhouse gas (GHG) emissions, the country is working to tackle climate hazards head on. The most recently submitted Nationally Determined Contribution (NDC) targets commits to abate GHG emission by 32% by 2030 relative to the business-as-usual scenario of 143 MtCO2e in line with the sustainable agenda and national circumstances.

As a responsible corporate citizen and in line with our commitment to SDG7: Affordable and Clean Energy, we are determined to help drive emissions abatement by increasingly moving to sources of green energy and planting five million trees by 2025.

CONTINUING TO TRANSFORM LIVES

The digital economy has played and will continue to play a key role in overcoming socio-economic challenges by expanding regional business networks, making local communities become more resilient against economic threats. As outlined in this report, Safaricom is helping to accelerating the digital economy not only in terms of economic empowerment, but also across areas as diverse as agriculture, education and healthcare.

We recognise that the digital landscape is constantly shifting and in response, we are constantly innovating, refining and redesigning the digital experience as we work to realise our strategy of becoming a technology company by 2025.

This, Safaricom’s 11th Sustainable Business Report articulates how we are doing so as we continue to deliver new innovative products and services that help to drive inclusive sustainable development and transform lives.

Michael Joseph

Chairman & Non-Executive Director
Safaricom PLC