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11 ways Safaricom contributes to the Kenyan econom...

11 ways Safaricom contributes to the Kenyan economy

Safaricom is on everyone’s lips, going its penetrative nature into our lives. Recently when it went down, Kenyans were furious at their inability to make simple transactions like communicating, enhancing their livelihoods and happiness.

In the Kenyan telecommunication market, Safaricom is the largest mobile operator, with 65.6 per cent market share in terms of the number of mobile consumers served. Kenyans benefit from its mobile and voice, SMS, data, internet and M-PESA services.

Last year, KPMG carried out a ‘True Earnings’ exercise for Safaricom’s 2014/15 financial year, which contributed towards a growing understanding within the organisation and amongst stakeholders as to what the ‘True Earnings’ bridge represents in terms of value being created for Kenyan economy by Safaricom.

The number of total customers increased from 13.4 million in 2008/92 to 25.2 million in 2015/16, signifying an 88.6 per cent increase. Approximately 96 per cent of these were prepaid customers, whilst the remaining 4 per cent, were post-paid customers

  1. M-PESA

Of all of Safaricom’s products, M-PESA is arguably the one that has had the greatest impact on Kenyan economy. From a relatively simple solution, launched in 2007, which allowed individuals to transfer cash to one another, M-PESA has grown into a sophisticated system with a number of functions catering to a wide range of needs and services, and accounting for 98 per cent of all mobile money transactions in Kenya. In 2013, it was calculated that 43 per cent of the Kenyan GDP flowed through M-PESA.

There are 25.2 million customers on the service. M-PESA customer base has grown by more than double over the eight-year period, from approximately 6 million customers in 2008/911 to 16.6 million 30-day active customers and 23.7 million registered users in 2015/16.12. Over the same period, the number of MPESA agents increased with 93.1 per cent, from approximately 7,000 registered agents to 100, 744 registered agents in 2015/16.

2. Gross Domestic Product (GDP)

The total additional GDP that was created due to the revenue generated by Safaricom over the 10-year period was in the order of approximately sh2,240 billion, an average of sh223 billion per annum.

The KPMG analysis states that for every sh1 revenue generated by Safaricom over the past decade, an additional sh2 was added to the economy. Safaricom’s contribution to GDP, from revenue generated over the past 10 years contributed on average 6 per cent towards total national GDP.

3. Jobs

Safaricom has created and/or sustained three kinds of jobs in the Kenya economy. They include the direct jobs created because of on-going operations, so-called indirect jobs resulting from multiplier effects of the operating expenditure and lastly induced jobs that occur due to the payment of salaries and wages to people directly employed by Safaricom.

Safaricom currently has 252 000 active retailers, 44 retail shops, and an extensive dealer network.

Its operations sustained on average close to 600 000 jobs per annum, directly and indirectly through the multiplier effects, in Kenya over the period 2006/07 to 2015/16.

The revenue generated over the past decade also helped create and sustain jobs in the country. Every sh1 million of revenue generated, 4 jobs were sustained per year.

Safaricom CEO Bob Collymore. Photo-MG

4. Revenue

Over the past decade, Safaricom’s revenue from Kenya’s operations increased by almost fourfold from sh47.5 billion in 2006/7, to sh94.8 billion in 2010/11 and sh195.7 billion in 2015/16.

Over the past 10 years, Safaricom has directly contributed on average about sh38 billion per year towards government revenue in Kenya. This accounted for approximately 6 per cent of total government revenue per annum. Through tax, VAT, duties and licence fees paid, has increased threefold over the past 10 years, from sh20 billion in 2006/07 to over sh60 billion in 2015/16. During this period, it directly contributed on average close to 6 per cent pa towards Kenya’s total tax revenue.

Safaricom continues to be a major contributor to the revenues of the Government and remitted more than sh62 billion in 2015/16, with incomes taxes and excise duties accounting for majority of the taxes, accounting for close to close to 70 per cent of the total taxes paid out by Safaricom.

5. Capital investments

Infrastructure development is critical in maintaining a competitive advantage and growing the economy. Investing in new networks and technologies increases the likelihood of new customers having coverage and of customers moving to a network from a competitor for better service and cheaper prices.

Investment in capital expenditure amounted to sh23.8 million in 2008/917 and increased by 34.9 per cent to sh32.1 billion in 2015/16. This expenditure included fibre installation in key metro areas, the upgrade and modernisation of 2G networks, investment in 3G and 4G networks, new M-PESA platform and upgrades to information systems.

Over the past decade, Safaricom invested close to sh245 billion in modernising its networks as well as making it more efficient to provide the best customer experience through improving network quality.

By investing in its networks, Safaricom has reached a larger portion of the population coverage of its 2G and 3G networks through increased quality of service and has been able to reduce the cost of communicating.

Safaricom Headquarters. Photo courtesy of globalriskinsights.com

6. Poverty reduction

According to the report, revenue generated by Safaricom helped fight poverty alleviation in Kenya, in that 6 per cent of additional household income generated flowed to low income households.

7. Employment

Safaricom has more than 4,200 employees directly through its operations in Kenya. This excludes the number of people they employ through franchises that operate under Safaricom. Over the past decade, Safaricom increased the number of people it directly employs by fourfold.

8. Education

The M-PESA Foundation Academy is the premier’s contribution to the education sector. According to the company, education is one of the interventions for which the Social Return on Investment is highest, amplifying the value created by this investment.

9. Health

The company launched ‘M-Tiba’ platform primed to deliver a mobile ‘health wallet’ that channels funds meant for health services directly to recipients –  allowing for effective tracking and monitoring of use of funds.

Using M-Tiba, funds will be placed in specialized health wallets through M-Pesa and their use will be restricted to conditional spending at select healthcare providers who form part of a nationwide M-Tiba network. Donors, governments and other funders, will receive real-time access to monitor the use of their funds.

Some marathons that Safaricom has contributed have also had a health implication. The Stanchart Marathon and Mater Heart Run among others are examples.

10. Sports

Not included in the report are the many marathons Safaricom contributes to. These include Kisii Marathon, Lewa Marathon among others. The Lewa Marathon is perhaps more profound as the funds go to conserve the Lewa Conservancy.

11. Music

The company also contributes to the growth of the music industry through the Safaricom Choir and Jazz. Jazz, which was not popular before investments from the telco, today hold frequent local and international festivals. The funds collected go to Ghetto Classics, to nurture more musicians.

For a company that is only ten years old, there is something to take home in how they do what they do. They pocket billions every year, have a monopoly in the market yet they have also significantly and positively contributed to almost every Kenyan life. They touch and reach the core of humanity through their business, something businesses should think about if they want to be successful.


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