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