Creating shared value in the era of mobile phones

Africa, with its population of nearly 1.3 billion people, is a vibrant continent bursting with opportunity, fuelled by the dreams and aspirations of a youthful, energetic, ambitious and connected population.

Digitalisation across the continent is ushering in a new era of connectivity.

It is also offering new and exciting opportunities for telcos, and other players within our ecosystem, to use technology to drive sustainable social and economic development, and to address some of the most pressing challenges we face today including rising inequality and youth unemployment.

The simple truth is that our businesses cannot thrive when the societies around us are failing. Which is why the role of the responsible corporate citizen is evolving from one that is judged largely by its payment of taxes and the occasional corporate social initiative to one that is also judged by its ability to create shared value for a broader base of stakeholders.

But can businesses really remain profitable while at the same time addressing society’s challenges?

I believe they can, and a perfect example can be found in the palms of our hands, in the form of the mobile phone.

As a matter of fact, in Africa, the mobile phone is not just a communication tool; it is a vehicle for solutions in everything from education and agriculture to healthcare and disaster response.

According to the GSMA, there will be an estimated 634 million mobile subscribers in sub-Saharan Africa in the next six years, supporting a mobile eco-system that will add more than US$150 billion in value to the region’s economy by 2022, and much more by 2025.

With numbers such as these, imagine what we could achieve if we began to see our networks not just as conduits to carry voice and data traffic, but as creators of shared value.

The Shared Value approach is a business model developed by Michael Porter and Mark Kramer of Harvard Business School in 2006.

It urges companies to transition from a traditional exploitative, extractive approach to a “do no harm approach”, and implores us to look beyond philanthropy to creating shared business value for a broader ecosystem of stakeholders — from shareholders, business partners and suppliers, to customers and host communities.

This model is based on the premise that businesses can still remain profitable while addressing society’s most urgent needs through business-driven products and services, and creating additional economic value in a way that benefits society.

It is a different way of doing business, and one that has the potential to help more private sector players adopt sustainable business practices; do more inclusive business by driving new partnerships; produce relevant products and services; create meaningful employment and uplift the communities they operate in, and in that way become more accountable to more than just their investors and shareholders.

In the context of the telecommunications industry, it is an approach that can help us utilise our networks to deliver a broader range of solutions, empower populations, inspire innovation and drive change in Africa.

By embracing the Shared Value model at Safaricom, we have began to do this, and learnt a few valuable lessons along the way.

First, businesses should seek to create value by focusing on solving persistent problems for unserved or underserved customers.

M-Pesa, for example, deepened financial inclusion by reaching a large population of unbanked Kenyans and offering them secure, reliable mobile money transfer, credit, saving and payments services.

Twelve years after its launch, M-Pesa has a customer base of 22.5 million, and in FY2019 contributed 31 per cent of Safaricom’s Ksh240 billion service revenue.

Secondly, businesses should seek to grow their own value and contribution to the society by improving efficiency and driving productivity along the value chain.

By looking beyond core services such as voice, SMS and data, Safaricom has been able to leverage the power of mobile technology to deliver innovative services in mobile money and payments, healthcare, agriculture and education.

As detailed in our 7th annual "Sustainable Business Report", this approach in part helped the business deliver a total economic value of Ksh543 billion (close to 10 times the profit posted in the 2017/2018 financial year), and sustain close to 900,000 jobs both directly, and indirectly.

Thirdly, businesses should also contribute to solving the most pressing challenges existing in the country’s economy, through a strategic assessment of pain points and their potential solutions.

For instance, the global marginalisation of women with respect to accessing business opportunities is a widely acknowledged challenge.

To address this, Safaricom launched the ‘Women in Business’ initiative, designed to grow the number of women-owned and led enterprises we do business with.

We are now working with more than 100 female suppliers, up from just 27 in 2017, and supporting them to provide services in high value areas such as infrastructure equipment and energy, and are creating opportunities for many others to receive mentorship and grow their businesses.

These examples point to the opportunities that businesses like ours can tap into to solve challenges, develop future markets, earn social licence, and strengthen the economies within which we operate – all while turning a profit.

In a world in which private sector players are examined under the powerful lens of regulatory bodies, shareholders and consumers who want businesses to do more than the bare minimum, the concept of Shared Value has the potential to create more responsible and sustainable businesses: businesses that go beyond producing good products and services, to giving more than they take, connecting people with people, knowledge an opportunities, and balancing today’s needs with tomorrow’s promise.

The writer is the chief corporate affairs officer at Safaricom