Safaricom pumps Sh601bn into economy in one year

Safaricom #ticker:SCOM injected Sh601 billion into the Kenyan economy in the year ended March 2019, making the telecommunications giant one of the single-biggest contributors to the country’s GDP.

The economic contribution came in the form of jobs, value chain opportunities for other businesses, taxes and dividends to shareholders.

The telco’s capital expenditure, which stood at Sh37.2 billion in the period, also contributed to the economy through payments to suppliers and contractors.

Safaricom says in the self-appraisal that it supported an estimated 979,000 direct and indirect jobs, up from 897,372 in 2017.
The Nairobi Securities Exchange (NSE)-listed company disclosed in its 2019 annual report released Wednesday that its value to the Kenyan economy rose by 11 percent or Sh58 billion in the year from Sh543 billion the previous year.

“Our latest True Value Report indicates that the value to the Kenyan society created by Safaricom increased by 11 percent to Sh601 billion, 9.6 times the financial profit the company earned during the same period,” says Safaricom in the annual report.

The firm’s operations contributed an equivalent of 6.3 percent of GDP in the period.

The growth in the job count came even as other sectors of the economy continued to shed workers, citing a tough economic climate.

Safaricom’s rival Telkom Kenya Wednesday announced it would lay off 575 staff while beer maker EABL also notified its staff of a redundancy plan that sources indicated would target more than 100 employees.

Stanbic Bank is also in the process of exiting an estimated 200 workers.

The telco is the largest listed firm on the NSE, with a current market capitalisation of Sh1.099 trillion.

The company paid Sh98.13 billion to the government in duties, taxes and licence fees last year, having made gross revenue of Sh250.96 billion and net profit of Sh63.4 billion.

“This increased the total duties, taxes and fees paid since inception to Sh698.52 billion,” said Safaricom in the report.

The telco’s payout to shareholders for the 2018/19 financial year included a special dividend of Sh0.62 per share, amounting to Sh24.84 billion, which was in addition to the first and final dividend of Sh1.25 per share totalling Sh50.08 billion.

The cash will be remitted to the company’s 560,018 shareholders on November 30.

The Treasury, which holds a 35 percent stake in the firm, will take a slice of Sh26.22 billion, while South African telco Vodacom and its parent Vodafone UK will earn Sh29.97 billion from their combined stake of 40 percent in Safaricom.

Safaricom was founded in 1997 as a wholly-owned subsidiary of Telkom Kenya, and in June 2008 listed on the NSE where the government offloaded a 25 percent stake to the public.

The company had an employee headcount of 6,323 (permanent staff and contract) by the end of March, which was an increase from 6,130 the previous year.

They were paid a total of Sh16.93 billion, which included salaries, pension contributions, medical cover, employee performance share awards and other benefits.

Its mobile money platform M-Pesa also supports thousands of jobs, both directly and indirectly.

By the end of March, Safaricom had on its books 167,000 M-Pesa agents, up from 156,000 a year earlier, while the Lipa na M-Pesa merchant count stood at 123,000.

The company had 31.8 million customers at the end of March, with 71 percent or 22.6 million of them being active users of the M-Pesa service.

Other jobs are derived from indirect activities such as suppliers, airtime dealers, distributors and users of the company’s various products.

By easing payments, the mobile money platform has opened up new business avenues in the country, and has also helped increase trade volumes.

In the one year to March 2019, Kenyans transacted a total of Sh4.09 trillion through their mobile phones, equivalent to Sh11.19 billion a day.

This has contributed significantly to the rapid rise in the number of Kenyans who are accessing formal financial services.

According to the 2019 Financial Access (FinAcess) Household Survey done by Financial Sector Deepening (FSD) Kenya, Central Bank of Kenya and the Kenya National Bureau of Statistics (KNBS), the proportion of Kenyans accessing financial services has risen to 82.9 percent from 75 percent in 2016 and 27 percent in 2006.

Safaricom also banks on its digital platforms for farming (DigiFarm) and healthcare (M-Tiba) to support indirect jobs.

The annual report shows that Safaricom had registered one million farmers on the DigiFarm platform by the end of March, with over 300,000 using the service daily and 52,000 having their loans approved for purchase of seeds, fertilisers and pesticides.