In my capacity as Chairman of the Board I take pleasure in welcoming you warmly to our 2021 Annual Report.
I would like to thank my predecessor, Nicholas Nganga, for his wisdom and dedication over the past 13 years. Safaricom blossomed under his chairmanship, growing from a customer base of around 6 million to almost 40 million. This remarkable achievement has grown our shareholder value by over 650% and Safaricom now accounts for 62.4% of the total value of all listed firms at the Nairobi bourse. Mr Nganga’s influence has not only grown Safaricom financially; he also made a substantial contribution to improving gender equality at all levels and has placed us in the spotlight for our commitment to the Sustainable Development Goals. He leaves me with large shoes to fill and we all wish him well in his retirement.
I also take this opportunity to thank our former Chief Finance Officer (CFO), Sateesh Kamath, for his valuable service, while welcoming our new CFO, Dilip Pal, who joined the Company at a particularly difficult time and is doing a sterling job.
The year under review was an important milestone in the history of the Company, marking two decades of providing critical services to Kenyans. We celebrated Safaricom’s track record of innovation and social upliftment by showcasing the power of mobile technology in transforming lives through our brand campaign: Twende Tukiuke – a call to go beyond what is thought possible.
Like any major milestone, this prompted us to reflect on where we have come from and where Safaricom is heading, particularly in a year when Kenya’s entire operating environment changed.
Safaricom again operated and traded through an extraordinary year. We started the financial year under a government-imposed lockdown and closed the financial year in yet another lockdown.
Throughout this year, the Board closely followed management actions taken to ensure the wellbeing of our staff and customers. These included making it possible for staff to work from home and instituting preventive actions in our shops to ensure our staff and customers remained safe.
Although the year was marked by a slowdown of economic activity due to the COVID-19 pandemic, I am proud of Safaricom’s actions in standing in solidarity with the country and helping enable social distancing measures. Our contribution went a long way to helping Kenyans work and school from home, and use mobile money for payments, thereby curbing the spread of the virus. To cushion Kenyans from the rapid transmission of the Coronavirus, guided and in collaboration with the Central Bank of Kenya, the industry waived fees on Person to Person (P2P) transactions below KShs 1,000, as well as M-PESA wallet to bank and bank to M-PESA wallet (C2B and B2C) transfers. In addition, we zero-rated paybills and tills for hospitals and dispensaries as well as Lipa na M-PESA transactions below KShs 1,000. We also launched our Bonga for Good initiative in April 2020, which empowered customers to donate their Bonga Points to those in need. We also continued offering double bandwidth to our fibre customers, donated KShs 200 million to the National COVID-19 Emergency Fund and partnered with the Ministry of Health to provide a 24/7 COVID-19 Information Centre which has served close to 40 million Kenyans since its launch.
While the pandemic has had – and may continue having adverse effects across Kenya, it has certainly awoken our resilience.
We began the year acutely aware that the pandemic would dominate the forthcoming months, or even years. Safaricom had no options apart from facing the challenges head-on. We amended our course and strategies as necessary to engage the new realities.
The Board takes note of our business resilience during this time and is pleased with Safaricom’s overall performance, which was boosted by a recovery trajectory in the second half of the year.
In recognition of our solid half-year performance and in support of our shareholders during these tough economic times, we were able to issue our first-ever interim dividend at KShs 0.45 per share, totalling KShs 18.03 billion. The Board remains committed to investing in the business and maintaining a consistent dividend payout ratio. A final dividend of KShs 0.92 per share amounting to KShs 36.86 billion is to be proposed for approval at the Annual General Meeting bringing the total dividend payout for the financial year to KShs 1.37 amounting to KShs 54.89 billion.
The disruption prompted Safaricom’s Board and management to deeply reconsider the future focus of our business. The Board, together with Peter and the management team, discussed how to position Safaricom for future-readiness. The leadership approved a new strategic positioning that will move Safaricom from a telecommunications business into a fully purpose-led technology organisation.
This strategy will see Safaricom focus on new business areas such as agribusiness, education, healthcare, financial and SME services, while considering opportunities beyond Kenya’s borders. The Board will continue to monitor the execution and implementation of this strategy closely. As
we head into the future, the Board is optimistic about the opportunities arising from the new strategic direction as a purpose-led technology company.
As part of the objective to consider opportunities beyond Kenya’s borders, Safaricom and its consortium partners submitted, a USD 850 million bid for, and was awarded one of two full service mobile telecommunication licences advertised by the Ethiopian Communications Authority. Safaricom is the lead in a consortium that includes Vodacom Group Limited, Vodafone Group PLC, CDC Group PLC, and Sumitomo Corporation. At this stage, the licence is for GSM services and doesn’t include mobile money, but the Ethiopian Government has indicated mobile money may be allowed within a two to three year period for duly authorised licences.
We are excited about the award of this licence as it gives us an opportunity to seek growth in a country that is the second largest country in Africa and one of the only remaining countries that has a single player. We believe that our consortium which combines expertise of Vodacom in the region, Vodafone globally, Sumitomo internationally, and CDC brings together a really strong consortium, which has been successful across various markets and adds to our expertise in Kenya as a mobile operation that has proven successful in Kenya and in the region.
As Kenya’s largest corporation and taxpayer, we are aware of the importance of Safaricom to this country. The Board is equally cognisant of how Kenya’s various arms of government have played key roles in enabling Safaricom to grow and thrive. Safaricom will need a conducive regulatory framework in place to effectively execute our new strategic direction, which will amplify Safaricom’s contributions to the Kenyan community and economy. We look forward to engaging with the relevant government entities to ensure awareness of this strategy and to seek support in areas such as legislation, taxation and interpretation of laws. Safaricom is committed to growing our contributions to Kenya without abusing our leading corporate status.
I wish to express my sincere gratitude and appreciation to our employees, management and executive team for their exceptional efforts in the past year to ensure Safaricom thrives and grows as we emerge from the COVID-19 pandemic. This Board has been privileged to support them in this quest. I also thank my fellow Board members for their timely inputs during a time when major and quick decisions needed to be made.
We thank public representatives and civil servants at all levels for enabling Safaricom to assist them in their mandate to support Kenyans during this crisis.
We thank our investors and shareholders for their confidence in us, which will be deservedly rewarded over time.
Over the last 20 years, Safaricom has always been a supporter and enabler of Kenyans’ dreams. The Board is committed to working with management to deliver value to our shareholders but, most importantly, to ensure Safaricom continues to be there FOR YOU, Kenya – our customers, staff and the community – and in transforming lives.
Chairman of the Board