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 1,164 suppliers, 440 ‘active’ dealers and 156,000 M-PESA agents.

SUPPLIERS

We partnered with 1,164 providers and spent a total of just over KES 85.6 billion on products and services during the reporting period. As the following graphics (overleaf) show, we continue to favour local suppliers where feasible and we are satisfied with the weighting towards Kenyan companies achieved during the year, with an 8 per cent increase of spend with local suppliers and 83 per cent of our providers remaining local companies.

We increased the number of women-owned businesses from which we purchase from 20 to 39 during the year and they now represent 9.1 per cent of all vendors, although only 2.3 per cent of procurement spend. Our target is to ensure women-owned businesses account for 10 per cent of procurment by 2020.

Encouraging sustainable practices among our suppliers

We continue to undertake performance evaluations of all of our suppliers on a quarterly or bi-annual basis. Suppliers are measured against a variety of indicators — including 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 cases 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.

The number of suppliers evaluated this year was greatly reduced as the majority of contracts was expiring in the last quarter and, thus, evaluations were not required, only the issuing of notices of expiry. We missed our target of an average score of 80 per cent by two per cent, which we attribute to the onboarding of new suppliers, who often require a transitional period to adjust to our performance thresholds and requirements.

We continue to insist that all suppliers sign up to the Code of Ethics for Business in Kenya as well. The Code is based on the principles of the United Nations Global Compact (UNGC). We maintained the same level as FY17 this year, with 98 per cent of suppliers with running contracts having signed up to the Code. Suppliers are not invited to take up new business opportunities until they sign up.

Total Spend ( Local vs Foreign Suppliers)

Delivering value to our suppliers

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.

This year, we commissioned an independent firm to survey our suppliers and the overall ‘satisfaction with Safaricom’ level reported was 94 per cent. Reasons offered for the high level of satisfaction included the improved payment turnaround time through the iSupplier portal of 19 days on average, and our more straightforward contracts, with clearly defined service levels.

Areas for improvement that were raised by suppliers during the survey included the tendering process — from submission periods to the communication of outcomes and negotiated rates — and the level of communication provided by Safaricom staff.

We have already begun to address these concerns by introducing a dedicated helpdesk to respond to supplier queries and we intend to improve our levels of communication through periodic emails to suppliers, mini-forums for specific supplier groups, and by holding debriefing sessions with suppliers at the end of tender processes.

Delivering value to our dealers

The elections and prolonged drought constrained the trading environment during the year and so we supported dealers with capital financing to cushion them against these effects and decreased consumer purchasing power, in particular. We undertook country-wide training of our key dealer outlet managers during the year as well, providing them training in basic finance skills and book-keeping, stock management and customer service skills. We also hosted our Annual Dealer of the Year Awards (DOYA) to recognise and reward dealers who have excelled in different areas of the sales environment while maintaining high standards.

We branded an additional 47 dealer activation vans during the year and have branded 200 vehicles in total to date. The vans were especially useful this year as dealers were able to participate in our successful joint market activation road shows, such as Safaricom Mtaani.

We also supported dealers in meeting the regulatory subscriber registrations requirements with our Know Your Customer awareness campaign and the Subscriber Registration App, which automates as much of the registration process as possible.

DEALERS

We have the same network of 400 ‘active’ dealers across Kenya that sell data, devices and airtime on behalf of Safaricom as we did in FY17. We continue to believe that this is the right size of network to support the market and so we are not actively on-boarding new dealers at the moment. Our focus remains on helping each individual dealer achieve greater volumes and success

AGENTS

After the significant growth experienced in FY17 and our successful regionalisation programme, our network of M-PESA agents grew slightly in size during the year to 156,000 agents. As with our dealer network, we believe that this is the right size of agent network to support the market and so our growth targets for the next two years are the on-boarding of only an additional 14,000 agents in FY19 and 10,000 in FY20.

Delivering value to our agents

The turbulence around the elections was a concern this year and our focus was on minimising disruption to our partners and keeping them safe. Some infrastructure was damaged, and we withdrew from the market in July, but we are pleased to report that perceptions and business levels have recovered since then.

Two of the ongoing ways in which we seek to discover, and address, agent concerns and frustrations are through hosting Principle Forums twice a year in all six regions and providing Agent Assistance Training sessions every quarter in all sales areas. Our Principle Forums address a range of issues, including: how to grow businesses; identifying new investment opportunities; new products; the Know Your Customer (KYC) initiative; security of outlets; and emerging types of fraud.

We also hosted our popular Regional Agent Awards during the year and rewarded our 98 top-performing M-PESA outlets with KES 2.8 million in prizes. A reflection of how our network is maturing, we doubled the number of care desks to 137 during the year, hiring and training members of the local communities as part of the process.

We also upgraded 3 strong performing aggregated outlets (subagents) to Full M-PESA agencies during the year, which entitles them to earn 100 per cent commissions. We continued to offer fl oat automation, through which agents who maintain fl oat levels of KES 20,000 and above in 70 per cent of their network can apply for additional tills automatically, and offered weekend capital financing of KES 1 billion to 1,324 agents.

We also continued to work with agents to address security concerns, with theft and losses from armed robberies a growing issue, and we installed 1,100 security boxes (safes) at 965 agent outlets and 135 care desks. We have also purchased an additional 2,000 security boxes and will offer these to agents on a subsidised basis (we will cover 40 per cent of the cost) during FY19.