• Innovation

Innovation is central to achieving our strategic objectives, retaining our competitive edge and ensuring that we continue to grow. As a technology-based company, if we are not constantly innovating, we are, effectively, stagnating and not keeping in touch with the needs of our customers. If we do not keep up with the needs of our customers, we run the risk of losing market share and revenue.

In response to the SDG strategy, we have aligned our efforts with four of the goals this year and committed to creating an environment and culture conducive to creating innovative products and services (SDG9) that transform and empower the lives of our customers (SDG8). We have also committed to partner with members of staff, other business units and stakeholders to ensure our innovations are aligned with the ambitions set out in the goals and to leverage effectively off the core capabilities of other stakeholders so as to avoid duplication of effort (SDG17).

HOW WE MONITOR INNOVATION

Our response to this multi-dimensional material matter is primarily managed through four sets of indicators: Net Promoter Score (NPS) and Brand Consideration scores; mobile data usage and revenue; M-PESA usage and revenue; and social innovation users/subscribers. We use our NPS and Brand Consideration scores to track customer satisfaction with, among other things, our new products and services and, in particular, how well we are servicing the specific demands of the growing youth sector.

Mobile data usage and growth provides us with insight into how well our data-related product and service innovations are being adopted and used. As our M-PESA platform is the main way we drive financial inclusion, we use M-PESA usage and revenue indicators to help manage this aspect of innovation. In terms of our social innovations, we use numbers of active users/subscribers to gauge the impact and success of these new products and services.

CUSTOMER SATISFACTION IMPROVING

As the following table shows, our NPS score for consumer customer satisfaction improved from 66% in FY16 to 70% for the period under review. Much of this improvement can be attributed to the successful launch of BLAZE and other promotions, such as Shinda Ma Mili with Stori Ibambe, together with other 4G-related services and products. Conversely, our Brand Consideration score decreased from 82% in FY16 to 80% during the year and this can be attributed to the perception that Safaricom products and services are expensive, along with a dip in trust related to airtime and data bundles being consumed at more quickly because of the faster data transfer rates across the network.

4G ADOPTION DRIVING MOBILE DATA GROWTH

In terms of mobile data usage and growth, we enjoyed another year of solid progress. We grew our mobile data customers (who have been active within the last 30 days) from 14.08 million to 16.6 million. Likewise, our revenue from mobile data grew by 38.5%, from KES 21.15 to KES 29.3 million, and now accounts for 14.3% of our total service revenue.

We are particularly pleased to have been able to realise our ambitious target of KES 7 billion additional revenue for mobile data for the year. This achievement can be attributed to three main, interrelated initiatives: the expansion of our 4G network; the execution of several campaigns to raise awareness of the potential of 4G and stimulate usage; and a concerted drive to increase smartphone penetration and the number of 4G devices connected to the network.

The expansion of our 4G network was the first step towards growing our revenue from 4G services and we increased 4G network coverage by 9% in seven major towns (Nairobi, Mombasa, Kisumu, Kisii, Meru, Eldoret and Nakuru) during the year. We also successfully increased the number of 4G devices connected to the network from 400,000 to 1.8 million by introducing affordable devices through our in-house brand Neon (the most affordable unit currently retails at KES 3,499), holding open days in the regions to help raise awareness of the benefits of owning a smartphone and the available options, together with targeted promotions offering subsidies, Bonga points and vouchers to feature-phone owners to encourage them to upgrade. Overall, we increased the number of datacapable devices connected to the network from 7.8 to 11.5 million (both 3G and 4G-enabled) during the year.

We also ran several promotional campaigns to raise awareness of the potential of 4G and stimulate usage during the year, including the Don’t Wait and 360 campaigns, and successfully grew our 4G subscriber base from 200,000 to 658,000 users. Among the propositions included in the Don’t Wait campaign were 4GB of free data issued to first time users for use within 48 hours of activation, the introduction of a ‘SIM query’ enabling customers to establish whether their current SIM is 4G-ready, along with the introduction of bigger, more customer-friendly bundles of data.

M-PESA CONTINUES TO DEEPEN FINANCIAL INCLUSION

M-PESA continues to grow and a drive deeper financial inclusion. Revenue from the service leapt up by 32.7% from KES 41.5 million in FY16 to KES 55.1 during the year. Likewise, the number of users (active in the last 30 days) increased by 14.6%, from 16.6 million to 19.0 million by March 2017. Monthly usage per customer also grew by 35% to an average of 10.0 transactions per customer per month.

During the year, we introduced M-PESA Kadogo, through which transactions under KES 100 do not attract a service fee. This has further strengthened our position as pioneers in entrenching financial inclusion in Kenya.

TRANSFORMING LIVES THROUGH SOCIAL INNOVATION

We continue to take our promise to transform lives and contribute to sustainable living throughout Kenya very seriously and are committed to improving the quality of life of Kenyans wherever possible. One of the key ways we seek to achieve this commitment is through our social innovation initiatives. Our approach to social innovation is to empower and uplift communities and individuals through sustainable and value-adding commercial products and services. We acknowledge that technology and money alone will not solve deep social issues in the long-term and that we need to seek innovative ways of removing the barriers to access that prevent communities from economically empowering themselves.

During the period under review, we continued to build on our work in areas such as agriculture, education and health, where technology is a critical tool that can make a significant difference to people’s lives. We use numbers of active users/ subscribers as a primary gauge of the impact and success of the new products and services we develop, together with usage data.

Among the applications and programmes we continued to develop during the year were the following:

AQTap ‘Water ATMs’

A partnership with Ericsson and Grundfos AQTap systems, this…

Instant Network Schools (INS)

The INS programme transforms a basic classroom into a digital…

Telemedicine and Digital Clinics

A collaboration with the Government of Kenya and Huawei, this…

DigiFarm and Connected Farmer

DigiFarm offers smallholding farmers access to a suite of information…

M-TIBA

M-TIBA is a health payment application or ‘e-wallet’ that…

SPARK FUND CONTINUES TO IGNITE LOCAL INNOVATION

As part of our commitment to stimulating innovation within the developer community, we launched our venture capital fund, ‘Safaricom Spark Fund’ in 2014. The first corporate venture fund in East Africa targeted at local tech startups, the Safaricom Spark Fund aims to support the successful development and scaleup of high-potential, ‘late seed’ to ‘early growth’ stage, ICT start-ups in Kenya, through investment and in-kind support. The fund seeks to invest between KSh 6 and 22 million per start-up, for a minority stake in portfolio companies. In addition to the funding, Safaricom provides in-kind support, such as mentorship, technical assistance and access to Safaricom services such as SMS, SSD, cloud hosting and marketing opportunities.

During the period under review, the Spark Fund invested in the following startups: mSurvey (mobile phone-based market research); eneza education (virtual courses, assessments and live support over the internet and USSD/SMS); LYNK (marketplace for informal workers and customers); and FarmDrive (alternative credit scoring for small holding farmers).

BLAZE

Launched in May 2016, BLAZE is a network aimed exclusively at addressing the needs of the youth segment. By joining the BLAZE network, customers aged between 10 and 26 years old can access a variety of exclusive benefits and services, including the opportunity to attend the ‘Be Your Own Boss’ (BYOB) mentorship summits, shop with BLAZE Bonga, customise their own personal service plans and buy more affordable bundles with the ‘Create Your Plan’ application, and the possibility of participating in the BYOB TV show.
The BLAZE network has already proved to be a big success and has 1.6 million users, with youth segment customers growing by 33% or 0.9 million and revenues increasing from KES 1.4 to 1.8 billion per month. Our youth segment NPS has also increased by 14 points since the launch of the network. Over 50,000 customers have attended the six BYOB mentorship summits that have been held since the launch and the BYOB TV Show enjoys an average of 500,000 viewers per week.

LITTLE

We launched our ride-hailing (taxi) app, Little, in July 2016 and 1,600 drivers signed up within its first three months. A collaboration with Nairobibased software company, Craft Silicon, Little is not only the cheapest ride-sharing service in Kenya, with no flat rates or price surges, but it also ensures drivers earn reasonable incomes and only deducts 15% of fares to cover service expenses, unlike Uber and other rival apps, which deduct 25% and upwards. Little runs on iOS, Android, and Windows devices and will soon be available for USSD (nonsmartphone) users. The app accepts cash, card and M-PESA payments. It also offers free Safaricom Wi-Fi to passengers.

LOOKING AHEAD

FY18 GOALS

  • 50% tariff reduction on all Lipa Na M-PESA merchant fees and M-PESA Kadogo tariff extended for Lipa Na M-PESA Buy Goods.
  • 50% tariff reduction on all Lipa Na M-PESA merchant fees and M-PESA Kadogo tariff extended for Lipa Na M-PESA Buy Goods.
  • Over 400,000 Shupavu 291 users .y Achieve at least 100,000 users for Fafanuka, Jamiismart, Telemedicine, and Totohealth projects.
  • At least 100,000 M-Salama customers.
  • At least 100,000 M-Salama customers.
  • Provide affordable 4G LTE internet connectivity to SME customers.
  • In the next year, Safaricom will be setting up an Innovation Hub to drive data analytics and strategic partnerships for innovation.
  • Democratise data and voice services for SME customers to assist them to reach more of their customers and grow their businesses.
  • Democratise data and voice services for SME customers to assist them to reach more of their customers and grow their businesses.
  • Committed to provide enterprise customers with a Self-Service portal to view and manage IoT SIM cards.