Safaricom 2023 Sustainable Business Report

29 OUR STAKEHOLDERS KPI SUMMARY OUR MATERIAL TOPICS PATHWAY TO A PURPOSE-LED TECHNOLOGY COMPANY OUR BUSINESS TRUE VALUE ASSESSMENT Since 2015, we have used a structured impact modelling tool – the KPMG ‘True Value’ methodology – to quantify the positive and negative impact of our organisation on society, the environment and the economy. True Value enables us to combine financial earnings data with monetized externality data and to quantify the likelihood and impact of the latter becoming the former. The ‘True Earnings’ bridge highlights both our resilience as a business and our strong fundamentals by showing that the total value we created for Kenyan society in FY23 was KSh 909.5 billion, approximately fifteen (14.6) times greater than the financial profit we made during the year. This year, our cumulative value-add to Kenyan society increased by 7.41% from FY22 to FY23. The following is an independent analysis of Safaricom’s True Earnings by KPMG. KPMG’s True Value methodology quantifies the True Value to Profit ratio as True Earnings divided by financial profit. Safaricom’s True Value to Profit ratio has increased from 12.2x 2 in FY22 to 14.6x in FY23. This fluctuation is largely driven by a 25% decrease in company profit and a 7.41% increase in True Earnings year-on-year. The increase in True Earnings is largely attributed to the value created for customers, agents and merchants through M-PESA (17% increase from 2022), as well as the growth in economic impact created through Safaricom’s CAPEX and OPEX during this financial year. True Value: A three-step methodology that enables companies to (i) assess their ‘true’ earnings including externalities, (ii) understand future earnings at risk and (iii) develop business cases that create both corporate and societal value. True Earnings: Monetization of the company’s externalities attributable to shareholders over and above profit. Total Economic Value: The nature and magnitude of the contribution Safaricom makes to the Kenyan economy. Direct Impact: Represents the additional gross value added to the Kenyan economy through our capital and operational expenditure capturing additional employment, income and trade. Indirect economic impact: Our direct expenditure also adds more widely to economic activity through the additional inputs purchased from suppliers. Initial demand for inputs results in heightened production and employment stimulating additional demand for goods and services along their own supply chains. Induced economic impact: Our expenditure creates additional employment and benefits our suppliers’ employees. A proportion of the additional income generated in this way is spent on the consumption of goods and services. Through linkages and multiplier effects, this positively impacts the broader economy by stimulating additional demand for the products and services produced within the economy. TRUE VALUE: IMPACT ON SOCIETY & ECONOMY The True Value assessment calculates that Safaricom sustained over 236 674 direct and indirect jobs during the year and, if the wider (induced) effects on the economy are included, this number increases to over 1 159 309 . Impact on society • 14.6 times more than profit generated (profit of KSh 62.3 billion) • Total True Earnings (  7.41%) Economic value added through operations • KSh 542 billion (  3.42%) Social value M-PESA • KSh 325 billion (  17.66%) Environmental externalities • KSh 1.14 billion (  4.27%) DEFINITIONS 2 For best practice purposes, the Economic Value Added through Operations includes a multiplier tax impact compared to the actual taxes paid by Safaricom which has been used in subsequent years. As a result of this methodological change, the 2022 True Value to Profit ratio has been restated from 10.4x to 12.2x.