The boardroom test
By Muturi Githae
Safaricom has a simple test for its corporate purpose: “Transforming Lives”. The phrase appears in its strategy, sustainability reports and annual accounts. More importantly, the company says the purpose “serves as the framework for all our actions”. That is a rather more exacting claim than the usual corporate promise to make a difference.
The distinction matters.
African companies have become adept at talking about purpose. Banks promise inclusion. Telecoms promise connectivity. Manufacturers invoke shared prosperity. Energy companies speak of communities, transition and resilience. The vocabulary is now familiar; the governance less so.
Purpose is cheap to announce. Governing it is harder.
A useful test is whether the idea changes what happens inside the company. Does it influence capital allocation? Executive incentives? Risk management? Product design? Procurement? The decisions made when the finance director wants one thing and the sustainability report promises another?
If not, purpose is little more than corporate stationery.
Safaricom offers one of the continent’s more developed experiments. Its purpose strategy rests on four pillars: creating shared value, protecting the planet, operating responsibly, and investing in its people and communities. The company says its purpose strategy incorporates sustainability and “serves as the framework for all our actions”.
It has also tried to put some machinery behind the rhetoric.
In its 2021 reporting, Safaricom said the board had approved a five-year strategy whose goal was to make the group “a purpose-led technology company by the end of 2025”. The strategy was not presented as a philanthropic add-on. It was tied to customer experience, financial services, connectivity and new products.
That is the important bit.
A company’s purpose should be visible in its business model before it is visible in its advertising.
Peter Ndegwa, Safaricom’s chief executive, has described the company’s approach in similarly commercial terms. Its work on products addressing social challenges, he said, had helped position Safaricom “as a partner of choice for our customers, community and Government”.
The formulation is revealing. Purpose is being treated not simply as a moral obligation but as part of the company’s competitive proposition.
Other African businesses are reaching similar conclusions, though with varying degrees of rigour. The reason is partly practical. Companies operating in developing markets often encounter social problems not as distant policy questions but as operating constraints. A bank confronting financial exclusion is confronting a market opportunity. A mobile operator facing a digital divide is confronting an addressable customer base. An agricultural company dealing with weak smallholder productivity is dealing with its supply chain.
The boundary between commercial and social value is therefore unusually porous.
That should make purpose easier to govern. It may instead make the language more slippery.
A company can call almost anything purpose. A new lending product becomes financial inclusion. A solar installation becomes climate action. A training programme becomes empowerment. The annual report fills up; the underlying economics remain much as they were.
Investors should be suspicious of this abundance.
The Capital Markets Authority in Kenya is becoming more demanding about corporate governance. Its latest assessment has moved beyond disclosure towards implementation, a distinction that sounds bureaucratic until one considers how many corporate failures begin with policies that existed perfectly well on paper.
The regulator’s chief executive, Wyckliffe Shamiah, described the governance assessment as a “crucial roadmap for issuers”, aimed at strengthening transparency, accountability and investor confidence.
The quotation matters because accountability is where corporate purpose becomes uncomfortable.
A board can approve a sustainability policy without changing much. It is harder to approve a target that affects executive remuneration. Harder still to accept a lower return because management has decided that a social or environmental cost is material to the business.
This is where African boards should become more exacting.
If a company says inclusion is central to its purpose, how much capital is being directed towards underserved customers? If it says it is committed to a low-carbon economy, what happens to projects whose returns depend on ignoring environmental costs? If employees are described as stakeholders rather than expenses, how does that affect pay, safety and retrenchment decisions?
The questions are mundane.
They are also the ones that matter.
Safaricom’s reporting provides an unusually clear example of what integration can look like. The company says its purpose of “Transforming Lives” is supported by initiatives ranging from product development to its foundations and its Ndoto Zetu programme. Its 2024 reporting also says the purpose is reflected in efforts to address societal needs through M-PESA and Safaricom Foundations.
The company goes further. Its sustainability reporting says the selected Sustainable Development Goals have been integrated into strategy and operations, with SDG-related commitments included in employees’ annual performance objectives since 2018.
That is closer to governance than marketing.
It is also a useful warning. A purpose cannot simply be delegated to a foundation. If the social mission lives in the company’s charity arm while the commercial business behaves differently, the purpose is decorative.
The harder standard is consistency.
Safaricom’s former chairman Michael Joseph once put the philosophy bluntly: “We reject the idea that business is about choosing between having a purpose or making a profit.” The company instead described its model as “Purpose, People and Profit”.
That formulation is particularly relevant to African business.
The continent does not need companies to abandon profit. It needs them to understand what profit depends upon.
A bank depends on trust. A manufacturer depends on workers and suppliers. A telecoms company depends on affordable infrastructure, spectrum and customers who can actually pay for its services. A mining company depends, among other things, on communities accepting the presence of an industry whose effects they cannot simply opt out of.
Purpose, properly understood, is therefore less about virtue than about the conditions for durable value creation.
That makes the board’s role unavoidable.
Directors should know what the company’s purpose requires, who owns delivery, which indicators matter and what happens when performance falls short. Sustainability committees can help. Reporting standards can help. Regulators can prod. None substitutes for directors willing to ask inconvenient questions.
The next stage of corporate responsibility in Africa should therefore be less enamoured with declarations and more interested in evidence.
A purpose should leave fingerprints on the balance sheet.
It should appear in investment decisions, incentives, risk registers and products. It should survive a bad quarter. It should even survive a change of chief executive.
Otherwise it is merely a sentence.
And there are already enough of those.
