• Business Partners

Our business partners include suppliers, dealers and agents. We rely heavily on our partners from both an operational perspective and in terms of our reputation as they are our interface with many of our other important stakeholders. We also understand that we can play an important role in encouraging sustainable practices throughout our business ecosystem and value chain by engaging with our partners in this regard. Our business partner network is currently comprised of 1,200 suppliers, 400 ‘active’ dealers and 130,000+ M-PESA agents.

SUPPLIERS

As the following table shows, we partnered with 1,200 providers and spent a total of just under KES 84.4 billion on products and services during the reporting period. This represents a 10% growth in our supplier network and total spend, with the on-boarding of 110 additional suppliers and an increase of KES 7.6 billion in spend from FY16 levels. We continue to give preference to local suppliers where feasible and we are satisfied with the weighting towards Kenyan companies achieved during the year, with 84% of our providers remaining local.

DEALERS

We have a network of 400 ‘active’ dealers across Kenya that sell data, devices and airtime on behalf of Safaricom, which is a reduction from the 456 dealers we had last year. We believe that this is the right size of network to support the market at the moment so we are not actively on-boarding new dealers and expect this number to remain fairly stable in the near future. Our current focus is not to increase the number of dealers, but to help each individual dealer achieve greater volumes and success. It is more important to review the infrastructure growth created by our dealer network, rather than the number of active dealers. In FY17, dealers employed an additional workforce of approximately 1,500 people.

AGENTS

As the following table shows, we also have 130,000+ M-PESA agents who support and administer M-PESA-related transactions for customers. Our network of agents grew by nearly 40% during the year in response to growing demand for M-PESA products and increased usage because of the accelerated rollout of the network in remoter areas, which facilitated the creation of additional M-PESA outlets, and our regionalisation programme. The increase also reflects the efforts of Area Sales Managers and Relationship Managers in helping dealers and agents identify new areas of opportunity and potential expansion.

MONITORING OUR PERFORMANCE

We meet with our suppliers every year at our Annual Suppliers Forum to hear their concerns and exchange ideas and information with them. During the event, we conduct a survey to assess their perceptions and levels of satisfaction and confidence regarding Safaricom.

We use the feedback gained through the survey to adjust our processes and offerings to partners. We engaged with our principle dealers and agents during the year through 25 Principle Forums and over 200 Agent assistance training sessions nationwide. Our Principle Forums address a range of issue, including: how to grow businesses, new investment opportunities, new products, the Know Your Customer (KYC) initiative, security of outlets and emerging types of fraud. Through these and other channels, we seek to discover and address business partner concerns and frustrations.

We insist that all suppliers sign up to the Code of Ethics for Business in Kenya. The Code is based on the principles of the United Nations Global Compact (UNGC). By the end of the financial year, 317 or 98% of suppliers with running contracts had signed up to the Code. The remaining 2% of suppliers will not be invited for new business opportunities until they sign up to the Code.

We also undertake performance evaluations of all of our suppliers on a quarterly or bi-annual basis. Suppliers are measured against a variety of indicators (e.g. cost, quality, delivery, responsiveness, flexibility, value-add, health and safety) and a performance score is calculated.

Suppliers whose performance is below the required threshold (<60%) are assisted with customised performance improvement plans (PIP) and mentored towards achieving acceptable levels of service. In case of lack of improvements after a PIP has been implemented, the contract is recommended for termination and no invitations are sent for participation in future business opportunities.

While the number of suppliers evaluated increased to 1,099 during the year, it was still short of our internal target of 1,200 evaluations. It was satisfying to see the average score improve from 78% to 82%, which can be attributed to closer collaboration with suppliers, the inclusion of service level agreements in supplier contracts and sensitisation of internal contract owners regarding the need to objectively and consistently evaluate our suppliers. Unfortunately, one of our suppliers suffered fatalities during the year and so was issued with a ‘red card’ for health and safety standards and suspended from providing us with services for 12 months.

FY17 HIGHLIGHTS

A significant change in our relationship with our dealers and agents this year was the separation of dealer and agent Relationship Managers (RMs). Previously, both agents and dealers were managed by the same RMs, with a single RM handling up to 500 dealers and 3,500 agents. The separation of agent and dealer RMs has not only made workloads easier, it has improved availability and made us closer to these two tiers of business partners. We now have 6 RMs handling the top 1,200 agents.

A highlight of the year has been the continued popularity of our Mobility Scheme for dealers. With as many as 10 outlets to manage, our dealers need to be mobile and we help them achieve this by providing them with subsidised motorbikes. Dealers invested in an additional 849 motorbikes during the year. Since the beginning of FY17, there has been a lot of close focus on Dealers and there have been many initiatives to support them. Some of the support programmes include: dealer working capital financing, county engagements for a healthier business environment for the partners, dealer activation van branding support and Joint market activations.

Recovering commissions paid on withdrawals and deposits made by customers outside the permitted 20 kilometre radius of an outlet remained a source of frustration for agents during the year and we are considering implementing velocity checks to mitigate against the issue. Security is also a concern for agents with theft and losses from armed robberies a growing issue and, in response, we will be rolling out affordable CCTV Cameras to key M-PESA outlets in the near future. The first 1,000 cameras will be provided for free to the top segment of agents while the rest of our agents will receive the cameras at subsidised prices. We are also in discussions with insurance companies to negotiate affordable premiums for agents to cover their losses.

During the year, we extended our e-cash/ weekend capital financing service to agents to KES 600 million (that can be borrowed on Friday and returned the following Monday) and introduced Float Automation for agents as well, allowing those who maintain float levels of KES 20,000 and above in 70% of their network to apply for additional tills automatically instead of manually.

We also expanded our Regional Agent Awards events during the year and 201 outlets were awarded KES 27 million in cash prizes.

The supplier portal continued to be a success during the year, with more suppliers registered and encouraged to post their invoices before close of a calendar month for payment the following 15th day. The CEO also passed an executive order that all local suppliers be paid on 30 days after delivery of goods and services and after receipt of invoice at Safaricom.

Looking Ahead

FY18 GOALS

  • Segmentation of dealers and their shops to provide more targeted support and reward.
  • Segmentation of dealers and their shops to provide more targeted support and reward.
  • Rollout of CCTV cameras to agent outlets and the introduction of affordable insurance to cover losses from theft.
  • Increase the weekend capital financing service for agents to KES 1 billion.
  • Partnering with banks and micro finance institutions to offer short-term financing to agents.
  • Increase participation of Special Interest Groups (such as women-owned and differentlyabled suppliers) from current level of 2.7% of procurement opportunities to 10% by 2020.
  • Include end-of-life e-waste disposal considerations during procurement deliberations.