Wanted: Cabinet Secretary for Safaricom Affairs!
By MUNGAI KIHANYA
The Sunday Nation
Nairobi,
27 May 2018
When Safaricom
Limited announce its financial results for the year ending 31st
March 2018, many people were quick to do what is done every year:
divided the company’s profit by 365, then by 24, again by 60 and finally
by 60 yet again to get the income per second. This time round, the
answer was Sh1,744!
I was disappointed
to see two national newspapers covering this story with similar
headlines saying: “Safaricom nets Sh1,744 per second”. Now this is a
tired heading having started many years ago when this company’s annual
profit went above Sh3 billion.
Furthermore, simply
dividing the annual profit many times over does not help in giving the
public a proper perspective of the company’s income. The arithmetic
ignores the fact that Safaricom is a very large company.
It has 30 million
customers in country that has a population of 45 million. That is;
two-thirds of all Kenyans – including babies and toddlers! If you pick
any three people from anywhere in the country, two of them will have a
Safaricom connection. That’s very big indeed.
The annual profit
was after tax Sh55 billion. When this is divided by the number of
customers (30 million), we get Sh1,833 per person per year. In other
words, the company made about Sh5 every day from each of its 30 million
customers.
When viewed from
that perspective, it doesn’t seem “too much”, does it? In fact, there is
no point dividing this number any further (to get income per second)
because Sh5 is just too small for that kind of analysis.
But there is another
side of Safaricom that has been largely ignored in the mass media: its
expenses. In the 2017/18 financial year, the total sales generated was
Sh234bn. Citizen TV was quick
to notice that this figure was more than double the direct revenue
generated by the entire tourism industry (Sh120bn)!
My thoughts were:
perhaps the president of Kenya should start thinking about creating a
new position of Cabinet Secretary for Safaricom Affairs! After all,
there many economic sectors with full ministries and they generate far
less revenue that this company.
And if a Cabinet
position is deemed too much, perhaps the Kenya Revenue Authority should
create post of Commission of Safaricom Taxes.
Out of the Sh234bn
in sales, the total profit before tax was Sh80bn.Thus, the expenses were
Sh154bn. Where did all this money go?
A significant part
of it went back into the Kenyan economy. It is difficult to work out how
much since the financial report does not show what was spent on
importing goods and services from abroad. But I suspect at least half –
Sh80bn – remained here.
It appears, then,
that Safaricom is doing more in redistributing wealth than many
government ministries charged with that function. And all this is done
in the process of running a profitable, sustainable business!
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