2019 Sustainable Business Report

SAFARICOM SUSTAINABLE BUSINESS REPORT 2019 INTRODUCTION OUR BUSINESS OUR MATERIAL TOPICS STAKEHOLDER ENGAGEMENT CONCLUDING REMARKS 24 THE 2019 TRUE EARNINGS BRIDGE The economic impact made through our operations is the greatest contributor to the value we create. This has grown ten per cent since FY18. The value created through capital expenditure also increased in the year under review, by 18 per cent. This graph demonstrates how all factors have contributed towards the “True Earnings” of Safaricom for this period. Most noteworthy was the growing contribution from social externalities, particularly in terms of the social value created by M-PESA as the product grew and evolved. Throughout the period, the greatest contribution to “True Earnings” came from the economic value created through the operations and capital projects of Safaricom, whereas the negative environmental externalities, though recognised as a material topic, continue to have minimal impact. Safaricom’ s contribution to the Kenyan economy, which takes into account economic value generated, tax paid and the estimated value eroded by corruption in the economy, amounts to KSh 317.6 billion. The “Total Economic Value added” on the Safaricom True Earnings Bridge includes only the direct and indirect GDP impact associated with Safaricom operations and capital expenditure. The following is a breakdown of the total GDP impact if the wider effects on the economy are included: The economic impact of the KSh 250.3 billion in annual revenues generated from Safaricom operations resulted in an estimated KSh 531,067 million contribution to Gross Domestic Product (GDP). This GDP impact can be separated into a direct impact of KSh 147,029 million, an indirect impact of KSh 91,818 million and an induced impact of KSh 292,220 million. The total economic impact of our estimated KSh 37.3 billion capital expenditure resulted in Safaricom resulted in a total estimated GDP contribution of KSh 20.1 billion. This GDP impact can be separated into a direct impact of KSh 8.2 billion, an indirect impact of KSh 3.5 billion and an induced impact of KSh 8.4 billion. Each year, a portion of the economic value generated by Safaricom is lost as a result of corruption that takes place in the Kenyan economy. It is important to note that this is not directly connected to the activities of Safaricom, but rather acknowledges the unfortunate reality that not all of this value is retained. This graph provides a high-level overview of the annual contribution to employment. The numbers are derived from a Kenya-specific economic impact assessment (EIA) model and include direct and indirect contribution to employment, as well as the wider induced effects on employment in the economy. The positive social impact associated with the direct and indirect jobs sustained as a result of our business has been included in the True Earnings bridge. FY16 845,846 823,243 897,372 978,633 FY18 FY17 FY19 700,000 650,000 750,000 800,000 850,000 900,000 950,000 1,000,000 Number of jobs sustained Financial Year Jobs Impact FY16 FY18 FY17 FY19 50,000 0 100,000 150,000 200,000 250,000 300,000 350,000 KSh million Financial Year True Earning: FY16 – FY19 Financial Economic Social Environmental 104.3 48,444.4 55,289.0 62,491.0 224,772.5 267,967.9 288,594.3 317,602.0 151,239.3 170,018.9 199,493.6 221,500.5 (259.6) (305.3) (258.5) (412.3)