Changing face of business

Tuesday March 12 2019

Family Bank, KCB, Co-operative Bank and Equity run scholarship

Many financiers such as Family Bank, KCB, Co-operative Bank and Equity run scholarship programmes for education. FILE PHOTO | NMG 

PATRICK ALUSHULA
By PATRICK ALUSHULA
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Cut-throat competition among companies in an attempt to catch the eye of the customer is pushing more firms into new business models that are making the line between chasing profits and funding social programmes increasingly foggy.

Corporates are investing heavily in social-impact projects to win new patronage as well as make their business sustainable.

To live the mantra of “people, place and profit”, more firms are now spending millions of shillings in sustainable programmes that help solve societal problems while, at the same time, earning them revenue.

The advent of Sustainable Development Goals (SDGs) has pushed companies to refocus their businesses on making society problems such as poverty and poor social amenities a full-time concern.

Giants such as Safaricom and Equity Group have been at the forefront in embedding social programmes into their business models, using them to make profits while at the same time improving the well-being of wananchi.

At an open session with the press last year, Safaricom officials stressed this changing face of business, that is, moving away from corporate social responsibility as it has always been.

Sanda Ojiambo, who heads the corporate responsibility department at Safaricom, said that since social programmes cost money, they have to be embedded in businesses if they are to be sustainable.

“The business of business can no longer be just to do business. Businesses that exist for the profit motive alone do so for only a short while,” she said.

“It is going to cost you to build a sustainable business. But you have to look at how that cost pays you in the long term. As much as there is a cost in implementing SDGs, there is a substantial cost for not doing it.”

For Safaricom, it started integrating nine of the 17 SDGs into the business strategy. After about 17 years of using the catchphrase “The better option”, the telco switched to “Twaweza” in 2017, Kiswahili for “We can”.

Chief executive Bob Collymore said the new focus would be on building a more human network that leverages the strength of individual talent and the overall power of community.

To promote access to health, the firm launched the M-Tiba platform, which enables low-income earners to save for health services.

While this promotes access to health, it has also seen more than 916,000 people enrol for the service, offering Safaricom more customers as well as increased use of the M-Pesa platform, a revenue part of the business.

It also rolled out Shupavu 291, targeting students to access education materials. The platform, which runs on USSD code, has been a win-win situation for Safaricom and students.

The same model works for Digifarm, which offers smallholder farmers access to information as well as allowing them to take loans to fund farming.

In addition, Safaricom Blaze, which targets subscribers below 26 years, has been able to train and mentor young people on various skills but has also helped the company win more young subscribers.

Many financiers such as Family Bank, KCB, Co-operative Bank and Equity run scholarship programmes for education. For instance, Equity’s Wings to Fly pays for the education of bright and needy students but also absorbs many of them into employment.

This has not only earned it new customers but also connected the brand to families whose children are sponsored. The 2017 annual report shows that the Equity Foundation had a budget of Sh2.4 billion for 2018.

Since 2010, the foundation has raised about $230 million (Sh23.4 billion) to implement programmes spread in education, entrepreneurship, health, energy and the environment.

KCB also started a foundation in 2007 and has so far invested an estimated Sh1 billion in community programmes in Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda.

Its flagship activities include 2jiajiri, Mifugo ni Mali and KCB scholarships. It uses the 2jiajiri programme to close skills and financing gaps for small business owners through training and loans. Over 10,000 people have so far received vocational skills.

“We believe responsible business is about establishing and nurturing the foundation of growth for the next generation,” KCB chief executive Joshua Oigara said of the social programmes that they run.

Livestock owners are also helped to come together and register with cooperative societies through their county livestock ministries. The bank then lends money to them. About Sh100 million has been advanced to livestock farmers to support enterprises and cooperative societies.

Such programmes deepen brand visibility and also help create a new crop of customers, especially those running small businesses with the potential to grow.

The role of foundations in driving the direction of strategy for companies is deepening, with some firms opting to start community projects even before recouping investments.

For instance, the Lake Turkana Wind Power project, which expects to hit break-even point in 2024, has already spent Sh243.6 million on social programmes since 2015.

Through the corporate social responsibility arm, christened Winds of Change, the project has pooled funds for social programmes in health, education, water and road infrastructure, opening up Marsabit. For the next 20 years, it is expected that the LTWP foundation will contribute about Sh1.13 billion (€10 million). The social programmes have helped improve security in the area and also won the support of locals, giving the project ample time to operate.

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