Championing women in business via supply chain finance
The challenge
Following the launch of the UN’s Sustainable Development Goals (SDGs) in 2015, Safaricom decided to integrate sustainability deep into its business decisions by adopting nine out of the 17 SDGs. After critically analysing the procurement process and the number of business opportunities available to women, Safaricom’s procurement team realised that women-owned businesses were not well represented. In response, the company started the Women in Business (WIB) programme in March 2017, anchored on SDG number 10: ‘Reduce inequality within and among countries.’
Though the WIB programme provided more opportunities for women-owned businesses, the true challenge for micro, small and medium sized enterprises (MSMEs) in Kenya is lack of access to affordable financing – the majority self-finance their businesses. Safaricom therefore needed a unique and cost-effective financing solution which would enhance the WIB’s cash conversion cycle and provide them with much-needed capital to deliver their goods and services.
The solution
To help support suppliers’ working capital needs, Safaricom worked with Citi and two other local banks to structure a supply chain finance programme that would allow suppliers to unlock their working capital. This would be achieved by giving suppliers access to a financing solution that would enable them to turn their receivables into cash at preferential rates.
To ensure the programme adequately catered to and supported women-owned suppliers, Safaricom put in place preferential discount pricing for all suppliers that were majority-owned by women, allowing them to access much-needed liquidity and working capital support at an affordable rate.
To automate the disbursement process, Safaricom worked with Citi to integrate with Citi Supplier Finance, a proprietary web-based technology platform that interfaces with back-office systems at both the bank and Safaricom, enabling the efficient exchange of electronic files and the delivery of invoice and payment information to suppliers. All suppliers enrolled in the programme have access to the platform, where they can view details of future payments and make automatic or manual discounting requests. They can also use the platform to view reports on invoices, which they can choose to discount immediately or wait for payment on the due date.
Best practice and innovation
It has become normal practice for companies to have programmes in place to manage the environmental, social, and governance (ESG) risks in their supply chains. Safaricom has taken this to the next level by implementing the WIB supply chain finance programme.
In line with Safaricom’s goals, sustainable supply chain financing provides all the benefits of supply chain finance, with the additional benefit of rewarding sustainable behaviours in the supply chain. The programme reinforces Safaricom’s commitment to sustainability, strengthens expectations for suppliers, and has contributed to better representation of women-owned businesses in Safaricom’s supply chain. It also puts a value on the sustainability efforts of suppliers, providing them with an internal business case for making improvements in this area.
Key benefits
The programme has no impact on existing credit facilities and has strengthened Safaricom’s relationships with suppliers.
In addition, by supporting women in business, Safaricom’s platform is financially empowering women, leading to an increase in female representation in Safaricom’s supply chain.
Last but not least, Safaricom’s sustainable supplier financing programme has reinforced the security of its supply by strengthening the financial sustainability of suppliers.
Marianne Kilonzi
