Safaricom taps additional Sh15 billion sustainability loan
Telecommunications operator Safaricom has tapped an additional Sh15 billion to double its sustainability-linked loan from a consortium of local banks to Sh30 billion.
The additional financing, disclosed in the telco’s latest annual report, is the second tranche of the facility, the proceeds of which will be used to implement the company’s sustainability agenda.
The new Sh15 billion disbursement is, however, higher than the previous expectation of an additional funding of only Sh5 billion. The initial Sh15 billion loan was issued last year.
Safaricom tapped the facility from a consortium of local banks including KCB, Absa Bank Kenya, Standard Chartered Bank Kenya and Stanbic Bank Kenya.
StanChart has retained its role as the mandated lead arranger of the facility and bank runner, global coordinator and sustainability coordinator for the transaction.
KCB is also listed as a mandated lead arranger, while Absa and Stanbic acted as arrangers.
Safaricom is betting on the facility to accelerate its transition to becoming a technology company, reduce its carbon footprint, monitor its social impact and enhance its progress on gender diversity.
“We are delighted to have tapped into partnerships with key leaders in the region in the latest chapter of sustainability financing. It will improve our accountability measures on ESG reporting where we will have an opportunity to attract more investment and growth,” Safaricom’s chief executive Peter Ndegwa said in a statement.
Safaricom’s sustainability-linked loan is the largest environmental, social and governance (ESG) debt facility undertaken in East Africa.
The facility is also the first Kenyan shilling-denominated loan of its kind and has enabled Safaricom to manage its debt costs amid a high interest rate environment.
“We must deal with the challenge of managing the rising interest rates, which has led to a 45.3 percent year on year increase in our finance costs. We have already started taking some deliberate steps on this, with the recent sustainability linked loan of Sh15 billion,” Safaricom said in the report.
“The rate of this loan is linked to our sustainability targets and will therefore be below market rates.”
Safaricom’s debt and finance costs have increased recently, compounded by capital spending at its new business in Ethiopia.
The telecommunications operator closed its financial year ended March 2024 with a debt of Sh75.9 billion and net borrowings of Sh54.6 billion, after accounting for cash balances. The operator has been taking measures to reduce its forex exchange exposure due to the depreciation of the shilling last year.
