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Economy

Safaricom stake in Kenyan economy rises to Sh543bn

Safaricom shop
A Safaricom Shop in Nairobi. FILE PHOTO | NMG 

Telecoms operator Safaricom #ticker:SCOM deepened its contribution to the Kenyan economy in the year ended March 2018, having grown its value chain by Sh57 billion to Sh543 billion, the company’s latest annual sustainability report says.

The latest report says Safaricom’s economic activities sustained nearly 897,372 jobs, bucking the trend in corporate Kenya that saw many businesses freeze employment or send hundreds of workers home as profitability fell in a tough economic environment.

Safaricom says that 171,369 jobs are directly related to the company, while the rest are derived from indirect activities such as suppliers and users of the company’s various products.

At Sh543 billion, Safaricom’s contribution to the economy was equivalent to 6.5 per cent of GDP, the report says of the value that the telecoms operator creates outside of its bottom-line.

This is an improvement from last year when Safaricom said its activities supported more than 682,000 jobs and contributed Sh486 billion to the economy.

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The firm had 5,556 employees as at March 2018, who earned a total of Sh10.23 billion in salaries, bonuses, pension contributions and employee performance share awards.

Safaricom, which is this year celebrating its 18th birthday, is the largest listed firm on the Nairobi Securities Exchange (NSE) with a market capitalisation of Sh941.5 billion and Kenya’s most profitable.

It made a Sh55.3 billion profit in the year to March 2018.

“When monetised, the net value of the most material social, environmental and economic impacts of the company, both positive and negative, gives an indication of the total value that Safaricom creates for the people of Kenya,” the company says in the report prepared by consultancy firm KPMG.

Safaricom paid a total of Sh40 billion to the exchequer for the financial year ended March 2018 — Sh24.6 billion in tax and Sh15.4 billion in dividends for the Treasury’s 25 per cent stake.

Besides, the telecoms operator pumped Sh36.4 billion into capital expenditure, mainly deployed to expand its fibre network for high-speed data to homes and businesses.

M-Pesa and the economy

In addition to the traditional voice, messaging and data services, Safaricom has used its mobile money platform M-Pesa to extend its economic reach.

M-Pesa alone employs thousands of agents and is used by a large number of merchants to process payment, making it a key player in the national payments system.

The platform accounts for the bulk of the other direct jobs associated with Safaricom, including 156,534 M-Pesa agents countrywide.

Safaricom also supports 485 dealers, who sell data, devices and airtime on its behalf.
The operator, however, says in the report that it has achieved the optimum number of dealers, and is therefore not looking to bring more on board.

The report also indicates that Safaricom is slowing down on its hiring of new M-Pesa agents and is planning to add just 14,000 in 2019 and 10,000 in 2020.

Safaricom’s more than 1,000 suppliers, and its 102,337 merchants who accept Lipa Na M-Pesa account for most of the indirect jobs count in the report.

“We partnered with 1,164 providers and spent a total of just over Sh85.6 billion on products and services during the reporting period. We continue to favour local suppliers where feasible and are satisfied with the weighting towards Kenyan companies achieved during the year,” the report says.

The value of Lipa Na M-Pesa transactions rose 37.4 per cent in 2018 to hit Sh390.6 billion, a growth that is attributed to the 50 per cent reduction in merchant fees and the removal of charges on transactions below Sh100.

Utility firms, insurers and mobile money lenders are also increasingly using M-Pesa to process payments.

Safaricom has 29.6 million customers, of whom 20.5 million use M-Pesa at least once a month, while 17.7 million use the firm’s data services.

The company is also banking on its digital platforms for farming and healthcare to support indirect jobs.

The sustainability report shows that Safaricom registered 700,000 farmers on the DigiFarm platform during the year, with over 200,000 using the service daily and 7,000 successfully taking loans to purchase quality seeds, fertilisers and pesticides.

Safaricom says has a target to register 1.4 million farmers on the platform by December 2018.

On its healthcare payment solution M-Tiba, the firm has registered nearly one million users, linked to more than 400 medical facilities in Nairobi, Mt Kenya, Western and Nyanza regions.

On the platform, users (mainly low-income earners) are able to save towards their medical expenses.

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