Message from the Chairman

As Chairman of the Board of Safaricom, it is my great pleasure to present to you our ninth Sustainable Business Report. The theme of this report is ‘resilience through transition’ and, as the report describes, the fundamentals of our business were tested during the reporting period. Early in the year, we were tested by an unexpected leadership transition when our CEO, Bob Collymore, suddenly and sadly passed away. We are being tested now, at the close of the year, by the global health emergency created by the COVID-19 pandemic.

We had expected the economy to recover during the year, but the economic turnaround did not materialise and, even before the pandemic reached Kenya in early 2020, we were facing the economic headwinds of rising costs, reduced consumer spending power and slowing economic growth. Against this challenging economic backdrop, we had to rely on the strong foundations of the company as we sought to rebuild customer trust and win back market share.

While the full impact of the pandemic will only become apparent in the next financial year, we have risen to the challenges we have had to confront during the period under review and I am satisfied with how resilient we have proven to be.

Stability and strength in leadership

On behalf of the Board, I would like to take this opportunity to welcome our incoming CEO, Peter Ndegwa, to the team. Peter joins us at a challenging time, but the Board and I are confident that his enthusiastic vision of the pioneering role Safaricom can play in developing our collective digital future makes him the ideal person to lead us forward. We would also like to thank Michael Joseph for his capable and stable leadership during this period of disruption and transition. The strong performance of the business and the delivery of earnings ahead of projection is testament to his exacting focus, determination, and drive.

Supporting the government and people of Kenya

We remain committed to supporting the government and people of Kenya. We have contributed more than KSh 6.5 billion in money, goods and services to the fight against the COVID-19 pandemic so far and we appreciate that part of the reason why we have been able to offer this support is because we operate in a regulatory environment that allows pioneering companies to succeed. As the independent True Value assessment featured in this report highlights, we sustained more than one million jobs directly and indirectly this year and spent KSh 58 billion, or 74%, with local suppliers. We remain committed to supporting the government during these unprecedented times and, as we look ahead to the post-pandemic revival of the economy, we urge the government to balance revenue recovery with encouraging business renewal and growth.

Nicholas Nganga, Chairman and Non-Executive Director, Safaricom PLC

Ensuring the stability and resilience of our network

It seems fair to say that our commitment to sustainable business practices and recognition of our interdependent relationship with the society within which we operate have guided us even more proficiently this year. We have redoubled our dedication to keeping Kenya connected and ensuring the stability and resilience of our network in the face of dramatic changes being wrought by the pandemic. We invested KSh 36 billion during the year in the modernisation of equipment and expanded our reach through 2 284 additional Base Transceiver Stations and 2 300 kilometres more of fibre optic cable, which not only enabled us to meet the surge in demand for voice and data triggered by the lockdown, but to support remote workers and families as well – by doubling the speed of broadband bandwidth available to residential customers without charge. Despite the uncertainty that lies ahead, we expect to increase our YoY investment in the network in the coming financial year.

Regulatory highlights

With regards to the regulatory environment, there were two key highlights during the year. The first was the signing of the Data Protection Act into law in November 2019. The Act has introduced a set of laws that provide clarity and certainty regarding the collection and use of personal information. We welcome this legislation and believe that it will promote greater trust between customers and companies, which, in turn, will enable innovation and progress to flourish. The second highlight was the progress made regarding the new Quality of Service (QoS) framework. We believe that the new methodology being developed by the Communications Authority of Kenya (CA) represents a significant improvement on the previous testing metrics and processes.

Embracing shared value thinking and sustainable business practices

While external events have overshadowed the year to a great extent, I am pleased to report that, internally, we continued to consolidate the gains made in terms of embedding the United Nations (UN) Sustainable Development Goals (SDGs) into our strategic thinking and corporate DNA. The SDGs continue to develop as a guiding influence for us as individuals, with SDG-related objectives successfully included in the annual performance targets of every employee. We also hosted the 2019 Africa Shared Value Summit in partnership with the Africa Shared Value Initiative and brought together more than 300 business leaders and delegates to discuss ways of enhancing inclusive business and shared value practices in Africa. We believe that the pandemic has made embracing shared value thinking and sustainable business practices even more imperative.

“We believe that the pandemic has made embracing shared value thinking and sustainable business practices even more imperative.”

Gratitude and thanks

With my retirement scheduled for August 2020, I would like to take this opportunity to thank my colleagues on the Board and every member of staff. It has been a wonderful 13 years and I will leave with many happy memories of our achievements together. Of course, our growth as a company since I joined – from 6 to 35.6 million customers and from 1 000 to 4 515 employees – is a source of great pride for me. I am also pleased that we have continued to improve the representation of women and persons living with disabilities among our employees. We should also be proud of the fact that we have increased shareholder value by 607 per cent since listing in 2008; at the same time, though, we should be pleased that we have done so while focusing on our purpose of transforming lives and our commitment to responsible business. In that regard, I am satisfied that our integrating of nine SDGs into our daily operations and performance targets will stand us in good stead and ensure that we remain a company of purpose.

In closing, the Board and I would like to extend our gratitude and thanks to every member of staff and management. We appreciate that it has been your resilient energy and efforts throughout the year that have helped us navigate the internal and external challenges of this disrupted transitional period successfully.

Nicholas Nganga, Chairman and Non-Executive Director, Safaricom PLC