Covid-19 to bite chunk of Safaricom’s pie, says CEO
Zachary Ochuodho @zachuodho
Safaricom is staring at a possible dip in earnings for the coming financial year as the global health crisis continues to affect its key consumers amid economic slow down and curfew.
The telco estimates that between March and May this year about Sh5.5 billion in earnings will be wiped out due to waivers rolled out to cushion consumers, as dwindling transactions on the Lipa na M-Pesa platform threaten to soar amid reduced movement of goods and services.
Speaking on K24 Punchline talk-show programme on Sunday night, Safaricom chief executive Peter Ndegwa said business will definitely slow down because most sectors like agriculture, tourism, entertainment, hospitality, retail and wholesale have been affected by the virus.
He said that measures taken to cushion the country against coronavirus, particularly waiving of all charges on individuals who send less than Sh1000 would certainly hurt the firm.
Cost of business
“We have zero-rated transfers on M-Pesa, but also reduced the cost of doing businesses.
So, by and large, we are enabling a whole ecosystem to be able to serve Kenyans during this period – whether they are on voice, data, SME or M-Pesa services,” said Ndegwa.
Ndegwa said Safaricom has seen fewer transaction on the Lipa na Mpesa platform.
But with Safaricom, being one of the largest business in the region, he expects more resilience against the novel coronavirus, adding that the telco realises that the commercial reality is reflected in every decision it makes.
He said although the move taken by the company to offer its products at subsidised charges will cost the company a huge chunk of revenues in the next 90 days, it was a noble move aimed at stopping the spread of the disease and reducing its impact.
To further cushion the economy, Safaricom and other like-minded firms including banks are currently looking into measures that will put up structures to prop up small and medium enterprises (SMEs) recovery, including funding.
“We are working with like-minded entities to structure a way through which we can support SMEs especially our customers to get back to business as fast as possible,” said Ndegwa.
“We believe that during the recovery period, we need to start supporting SMEs because the only way we can conduct business is if the country’s economy recovers,” said Ndegwa.
He says the Covid-19 has taught the country a few lessons including working from through use of technology and innovation.
“The use of technology can reduce cost of doing business for companies. People can work from home as long as they are facilitated,” he said.