Safaricom inks deal with Kenyan banks to fund sustainability agenda

Kenyan telecoms operator Safaricom has announced the closure of a significant sustainability linked loan (SLL) to strengthen its environmental, social and governance (ESG) agenda.

The 15 billion Kenyan shillings (US$103 million) deal – which is upscalable to KES20 billion (US$137 million) – is the largest ESG linked loan facility ever undertaken in East Africa, and the first of its kind for Safaricom as well as the first Kenya shilling denominated SLL in the market, the group said in a statement.

"In line with our focus to advance our sustainable business agenda, this funding will unlock our ability to create more diversified investments that will support transformative investments in new technologies, systems and services that allow us to comprehensively manage our ESG footprint," said Safaricom CEO Peter Ndegwa.

The investment is also expected to contribute to the growth of Kenya's sustainable financing market, which remains a key priority for the government of Kenya as part of its Vision 2030 plans.

Funding a sustainable future

The funding is provided by a consortium of four banks consisting of Standard Chartered, Standard Bank, ABSA and KCB, and will enable Safaricom to access funding based on its progressive achievement of set milestones across key ESG areas.

"This significant milestone indicates the continued momentum towards building a more robust sustainable, and diversified financial ecosystem in the region," Kariuki Ngari, CEO of Standard Chartered Bank Kenya, said on behalf of the consortium.

The SLL will help Safaricom deepen its focus on strategic sustainable investments as it continues to pursue more initiatives aligned to its sustainable business strategy as part of its ongoing transition to becoming a fully-fledged technology company by 2025.

In particular, the company will focus on reducing its emissions to reach Net Zero targets, tracking gender diversity and monitoring social equality impacts.

The deal also paves the way for further sustainability financing in the region as companies seek to become more accountable for their ESG reporting and financing.

"Across the market, we are seeing accelerated interest in sustainable finance products alongside more considered strategies for climate initiatives. We are enthusiastic about this partnership with Safaricom as it positions Kenya as a regional leader in inclusive and responsible investment," Ngari added.

Safaricom aims to deepen its focus on strategic sustainable investments as it moves towards reducing its emissions to reach Net Zero targets, tracking gender diversity and monitoring social equality impacts. (Source: Image by Freepik).

Standard Chartered Kenya acted as the Global Coordinator, Sustainability Coordinator and Mandated Lead Arranger for the deal while Kenya Commercial Bank acted as Mandated Lead Arranger. Standard Bank and ABSA Bank acted as Arrangers.

Ethiopia expansion

Safaricom is the biggest mobile operator in Kenya and expanded its operations into Ethiopia in August 2022, signing up more than 2 million active users so far.

Last month, Safaricom's operation in Ethiopia closed a deal with the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) which included an equity investment of US$157.4 million and a $100 million loan.

In June 2023, Safaricom announced that the IFC would become an investor in its Global Partnership for Ethiopia consortium to support the ongoing construction and operation of Safaricom's greenfield telecoms network in Ethiopia.

In August 2023, Safaricom launched its mobile financial services platform M-Pesa in Ethiopia, three months after it was given a Payment Instrument Issuer License from the National Bank of Ethiopia.

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*Top image is of Safaricom CEO Peter Ndegwa. (Source: Safaricom)

— The Staff, Connecting Africa