Safaricom PLC, Kenya’s leading telecommunications company, has taken another significant step towards cementing its position as a sustainability leader in the region. On 23rd September 2024, the company announced that it had secured an additional KES 15 billion in Sustainability Linked Loan (SLL), effectively doubling its green financing portfolio to KES 30 billion. This latest financing round comes just a year after Safaricom secured a similar amount, further advancing its commitment to environmental, social, and governance (ESG) standards.
The newly secured facility is being touted as the largest Sustainability Linked Loan in East Africa, underscoring the company’s deep-rooted ambition to integrate sustainability into its core operations. The loan was provided by a consortium of four leading banks: KCB, ABSA, Standard Chartered, and Stanbic. These financial partners are poised to play a critical role in supporting Safaricom’s strategic sustainable investments, which align with both the company’s growth ambitions and the global shift towards responsible business practices.
“This deal paves the way for the advancement of our sustainability agenda. This funding will be channelled towards strategic and significant investments in technology and services which will enable us to unlock our ability to transform lives by elevating our ESG objectives,” said Peter Ndegwa, CEO of Safaricom. Ndegwa emphasized that this financing would also enable Safaricom to fast-track its long-term goal of becoming a fully-fledged technology company while reducing its carbon footprint and promoting gender diversity.
Advancing the Sustainability Agenda
The core of Safaricom’s sustainability agenda lies in reducing its environmental impact and fostering a responsible business culture. The company has already set its sights on achieving Net Zero carbon emissions by 2050, an ambitious target that is in line with global climate goals. The fresh funds from this loan will be crucial in advancing its Net Zero strategy, supporting projects that prioritize clean energy, waste reduction, and overall environmental preservation.
Additionally, the company’s social initiatives, particularly in enhancing gender diversity, are set to benefit from this facility. Safaricom has been a vocal advocate for equal opportunities and inclusive policies in the corporate world. By focusing on diversity and inclusion, the company aims to create a more equitable workforce and enhance its social impact across the region.
“This facility accelerates our transition into a technology-driven, environmentally conscious company. It reinforces our commitment to sustainability, which will in turn enable us to have a more profound impact on society,” added Ndegwa. He further expressed optimism that this partnership with leading financial institutions would bolster Safaricom’s ESG reporting and accountability.
What’s Next for Safaricom?
Safaricom’s CFO, Dilip Pal, highlighted that this transaction signifies more than just financial gain; it reaffirms the company’s commitment to aligning its financial strategies with sustainable practices. “This deal highlights our commitment to sustainability and the inherent alignment of our sustainability and financing strategies,” noted Pal.
The loan agreement also involves several key financial institutions playing crucial roles. Standard Chartered acted as the Mandated Lead Arranger and Bookrunner for the transaction, while Kenya Commercial Bank (KCB) stepped in as the Mandated Lead Arranger. Stanbic Bank Kenya and ABSA Bank Kenya were key players in this consortium, ensuring the smooth arrangement of the facility.
Impact on Kenya’s Sustainability Financing Landscape
Safaricom’s move represents a significant milestone in Kenya’s green finance space, sending a strong signal to other corporates about the increasing relevance of ESG factors in the business world. The growing appetite for sustainability-linked financing in Kenya, and indeed Africa, underscores the shift in global investment trends where sustainability is becoming a core pillar of business strategy.
As Safaricom continues to make strides in its sustainability journey, the broader market is also taking notice. The company’s leadership in ESG reporting and financing initiatives provides a blueprint for other Kenyan firms looking to integrate sustainability into their financial and operational frameworks.
With this fresh injection of funds, Safaricom is well-positioned to continue pioneering ESG-driven projects, creating long-term value for both shareholders and the community at large.
