Safaricom signs $103m loan deal with lenders for sustainability growth

Tuesday September 05 2023

Safaricom PLC CEO Peter Ndegwa at a past event at the Michael Joseph Centre in Nairobi, Kenya on August 1, 2022. PHOTO | DIANA NGILA | NMG


Safaricom says it has signed an agreement to raise Ksh15 billion ($103 million) worth of loans from a consortium of local and foreign banks to fund its sustainable growth strategy.

The credit facility, which can be expanded to Ksh20 billion ($137.2 million), has been signed with KCB Group, Absa, Standard Bank of South Africa and Standard Chartered.

The agreement will enable Safaricom to access funding based on its progressive achievement of set milestones across environmental, sustainability and governance (ESG) areas.

In the deal, Standard Chartered will act as the global coordinator, sustainability coordinator and mandated lead arranger while KCB will act as the second mandated lead arranger.

Standard Bank and Absa Bank will, on the other hand, act as arrangers.

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


Read: Safaricom bags Unep, investors award on sustainability

The financing claims its place as the largest ESG-linked loan facility ever undertaken in the East African region and the first of its kind for Safaricom as well as the first Kenya-shilling-denominated sustainability-linked loan in the market.

“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 in a statement.

The telco said the loan would help deepen its focus on strategic sustainable investments as it pursues more initiatives aligned with its business strategy to becoming a fully-fledged technology company by 2025.

In particular, the company said it would 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,” said Safaricom.

By July last year, the telco was among the first seven listed firms to comply with the Nairobi Securities Exchange directive to make ESG disclosures six months following the release of the guidelines in December 2021.

Read: Regulators want reforms to make NSE attractive

In recent days, the Nairobi Stock Exchange (NSE) and the Capital Markets Authority have intensified calls for companies to widen disclosures as a means to attract investors amid a renewed push for new listings at the bourse.

In Kenya, ESG reporting is increasingly gaining traction due to an improved appreciation of its impact on business sustainability and how it is beginning to shape decisions among investors at both institutional and retail levels.

Experts opine that disclosures by companies should go beyond just attracting financial investments and instilling confidence in stakeholders, but should be used to foster a culture of accountability and responsibility.