In the past year, we experienced tough headwinds in our operating environment. Similar to the global landscape, our country faced unexpected economic disruptions due to rapidly escalating global commodity prices and increasing energy costs, placing a strain on households. These challenges were further intensified by the adverse effects of climate change, including prolonged droughts and consecutive failed rainy seasons leading to extensive consequences which impacted both communities and businesses. However, we witnessed and benefited from the smooth political transition following the general elections.
Notwithstanding, our commitment to transform lives and build a sustainable business remained resolute. Our dedication to this purpose was acknowledged and endorsed by various stakeholders, exemplified by my appointment as the chair of the private sector-led National Steering Committee on Drought Response, known as “Wakenya Tulindane.” This appointment followed Safaricom’s innovative initiative launched in April 2022 to unite the private sector in providing critical support to vulnerable communities affected by drought across Kenya. Notably, Safaricom PLC and the Safaricom and M-PESA Foundations generously contributed over KSh 300 million towards this noble cause. This cross-sectoral collaboration not only aimed at raising vital funds for drought-stricken areas but also inspired Kenyans to contribute their Bonga points to the “Pamoja Tuungane” initiative, further strengthening our impact.
Thanks to our collective efforts and those of our partners, we successfully raised more than KSh 860 million to make a meaningful difference.
For Safaricom, sustainability is not just a good thing to do, but the right thing to do. We have formalised this approach by prioritising nine of the 17 United Nations Sustainable Development Goals (UN SDGs) which we use as a framework to deliver our purpose, adopting a co-creation approach. The bottom-up approach empowers all employees from all levels and functions of the organisation to interpret what the goals mean for their day-to-day work and the functioning of their respective divisions. The top-down approach means we actively track and report on progress on our SDG commitments. Embracing the SDGs has ensured that we stay true to our promise of putting people and planet before profits. During FY23, as outlined in this report, we achieved major milestones under these commitments.
Due to the economic shocks, customer disposable income decreased, leading to a higher demand for better value and improved experiences in our products and services. To address this, we launched an ambitious efficiency plan, focusing on price reductions and harmonization across key categories.
We conducted a comprehensive pricing review at the start of the fiscal year, resulting in approximately 30% reduction in mobile data rates and 15% in Voice rates. These reductions were achieved through a combination of above-the-line and personalized offerings. Additionally, we made significant reductions in affordable credit “Fuliza” and paybill charges during the same period. These achievements were possible through prudent cost management, allowing us to provide substantial value to our customers.
We are committed to strategic investments in new growth areas like in IoT and ICT, proactively addressing potential risks and emerging challenges to continually create value for our shareholders. We understand that private sector-driven growth plays a pivotal role in achieving long-term economic sustainability and improving living standards. Consequently, we continue to invest in sectors that foster our country’s economic sustainability. Notably, a significant 78% of our suppliers are locally owned Kenyan organizations, representing 63% of our procurement spend in the reviewed year, showcasing our dedication to supporting local businesses and contributing to the country’s economic prosperity.
The economic shocks of FY23 meant that our customers had constrained levels of disposable income. Accordingly, they sought more value and enhanced experience in our products and services.
We responded by delivering more value to our customers through tailored offerings and significantly reducing our charges for M-PESA and mobile data. On the latter, we reduced the cost of data by 25% per MB which led to over 30% of mobile data customers consuming over 1GB data monthly. This means the price has reduced by up to 75% per MB over the last three years. In addition, over 70% of our voice customers are now on personalised pricing such as Stori ibambe.
We are investing heavily in the Internet of Things (IoT) and Information and Communication Technology (ICT) while remaining ahead of potential risks and emerging issues to ensure we consistently deliver value to our shareholders.
We recognise that private sector-led growth is critical to economic sustainability and a steady increase in household living standards over time. Accordingly, we continue to invest in growth areas that contribute towards the country’s economic sustainability. For example, 78% of our suppliers are Kenyanowned organisations, accounting for 63% of our procurement spend in the year under review.
We continue to increase our capex spend year on year as part of our strategic intent to enhance quality, coverage and overall experience.
Currently, 97% of our coverage is 2G/3G/4G. A total of 2.3 million 4G devices were added to our network in FY23. We rolled out 205 active 5G sites to 23 of the 47 counties and plan to roll out more in the coming year. The 5G network offers our customers higher speeds, lower latency and increased bandwidth compared to 4G.
Our IoT use case continued to offer business and company owners the opportunity to realise the efficiencies created by technology. Over 1.2M IoT connections are in asset management, utilities and telematics.
We have now rolled out over 14 000 kilometres of fibre across all 47 counties, with 75% of our sites on fibre. In addition, our network has the capacity to transact 2 600 M-PESA transactions per second.
“By continuing to invest in our network infrastructure, we are broadening our product range and leveraging emerging technologies.”
Safaricom has successfully positioned itself as a partner of choice for Government. We have partnered with both the national and county governments to deploy solutions that benefit the public and contribute to societal progress. One such example is the Hustler Fund, a loan initiative targeted at micro, small, and medium-size enterprises as well as individuals wanting to start up their own ventures. Over KSh 24 billion had been disbursed to over 15 million Kenyans as at end of March 2023.
Another example is the national fertiliser e-subsidy programme aimed at addressing the challenge of food insecurity by helping farmers access fertiliser at lower prices. Farmers receive vouchers on their phones to redeem for subsidised fertiliser.
We have also partnered in the digitisation of more than 6 000 Government services through eCitizen. In addition, through the myCounty app, we are working with county governments to digitise their services and offerings that is aimed at increasing visibility on revenue collection, easing methods of payment, as well as making it possible for citizens to give feedback to their Governors.
We have been proactive in collaborating with both national and county governments to implement solutions in healthcare, education, and economic empowerment, fostering public welfare and advancing societal development. In terms of our impact, we have positively transformed over six million lives, primarily focusing on the economic empowerment of youth, integrated conservation, livelihood, and water programs.
We remain committed to environmental sustainability and to undertaking several key projects aimed at furthering the interests of people and the planet.
This is highlighted by the upgrade of 23% of our Base Transceiver Station (BTS) sites to solar and our drive to eliminate the use of diesel in the medium term.
To date, we have grown 1.3 million trees, thereby impacting 12 000 direct and indirect livelihoods and restoring 1 300 hectares of degraded land. Our target is to grow five million trees by 2025 to offset 26% of our carbon emissions.
“Our target is to grow five million trees by 2025 to offset 26% of our carbon emissions.”
Given our focus on decarbonisation, it was gratifying to see states at the United Nations Climate Change Conference (COP 27) in Egypt agree to the establishment of a loss and damage fund to support countries vulnerable to climate change.
Financial inclusion in Kenya is currently at 84% with M-PESA directly impacting 32.1 million lives and over three million businesses.
“M-PESA directly impacts 32.1 million lives and over three million business.”
To further enhance financial inclusion, we are innovating beyond payments and consumer credit.
During this period, we worked across the industry to introduce merchant interoperability and launched a national QR code which eases payments.
We also introduced the merchant credit proposition in partnership with the KCB Group. The facility will provide access to affordable credit especially for small and micro businesses that have previously been excluded.
M-PESA Go, for children and the Global Pay virtual card are some of the latest offerings that support our customers’ digital lifestyles.
As part of our diversity, equity and inclusion efforts, our senior leadership now comprises 40% women, while the percentage of women on our Board currently stands at 45%.
In a further effort to drive inclusion, persons with disabilities (PwDs) make up 3% of our workforce, which is within our target of 5% by 2025. In addition 5.1% of our procurement spend is with local marginalised groups including women, youth and PwDs.
We partnered with key industry stakeholders to develop the Industry Digital Talent Programme whereby 617 students graduated with technology and digital related courses. The programme provides relevant work experiences for digital talent through upskilling and employment opportunities.
The significance of our expansion into Ethiopia cannot be underestimated. We launched operations in October 6, 2022 and are pleased to announce the acquisition of a license to provide M-PESA services. In the seven months since commencing our commercial operations, we have achieved notable milestone:
The liberalisation of key industries by the Ethiopian Government is a positive move that will open new avenues of opportunity for Ethiopians.
Looking ahead, we have identified the need to accelerate network rollout to meet demand. In addition, we have noted low smartphone penetration which is both a challenge and opportunity for Safaricom.
From a reporting perspective, expansion has increased our boundary and scope. In this year’s report, we are sharing key performance indicators related to our Ethiopian business and will cover ouroperations in the country more comprehensively in our 2024 Sustainable Business Report.
We welcomed Adil Khawaja, as the Chairman to the Board, as well as Ory Okolloh and Karen Kandie. Our Chair and our new directors all have impeccable credentials. Following a rigorous induction, the Board has settled in well and assimilated the new members. I am confident that their experience and expertise will bring important insights and significant value to Safaricom.
Our Board is proud of its gender balance, its wide range of perspectives, experiences, and skills, all of which enrich the decision making and oversight functions.
We will continue deepening our sustainable business and social responsibility agenda focused on healthcare, education, economic empowerment, the environment and reducing our carbon footprint. Our focus is on scaling technology solutions that will see us fully transform into a tech organisation in the next two years and improving our various digital maturity indices. Through data and analytics, we served our customers better, reduced pain points and enhanced their experience.
I 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 believe that our business is well positioned to unlock Kenya’s economic growth, solve customer and societal issues, as well as deepen digital and financial inclusion. Safaricom will continue to take our place as a leader in this space as we accelerate our progress towards a purpose-led technology organisation.