Safaricom eyes start up acquisitions in profit drive
Peter Ndegwa, the Safaricom chief executive officer.
The Board of Directors of Safaricom Plc has recommended the acquisition of startup tech firms that would boost the company’s financial growth.
In a recommendation to the telco’s shareholders, the directors target the creation of a special subsidiary company to drive the initiative.
“That the incorporation of a company limited by guarantee to invest in seed stage startups to support the development and growth of technology entrepreneurs and build reputation and trust within the tech community in Kenya is hereby ratified and approved,” the directors said in an agenda ahead of the company’s annual general meeting scheduled for Friday, July 28, 2023.
“That the incorporation of a private limited company (or the repurposing of an existing subsidiary) to invest in growth stage startups(scale-ups) and initiatives that enable achievement of Safaricom Plc’s strategic mission for a financial return (profit) be and is hereby ratified and approved” the directors further said.
The Kenyan tech scene remains awash with would-be entrepreneurs who have brilliant ideas but cannot fully execute them partly due to a lack of adequate financial base.
The latest global jobs purge by giant tech firms since the second half of 2022 has also triggered a surge in tech startups as displaced employees turned to developing their own companies but often short of investment funds.
Analysts said former employees of big tech firms are suitably placed to start their own companies and deploy creative ideas after years of experience drawn from how the big firms operated. They also enjoy access to their network of highly skilled colleagues.
If approved by shareholders, the proposal by Safaricom shareholders could see many creative techies get a lifeline to grow their trade through partnerships with the telco.
Safaricom posted a 22.2 per cent decline in net profit for the full year ended March 2023, the third consecutive drop in earnings on heavy capital investments in Ethiopia. Its profitability stood at Sh52.48 billion, down from Sh67.49 billion posted in the previous period.
