Safaricom (NSE: SCOM), Kenya’s most profitable telco, is officially in the market looking to borrow cash, and for the first time, they are asking the public to lend it to them specifically for environmental projects.
In a landmark financial move, the telco has launched the first tranche of its Domestic Medium-Term Note Programme, seeking to raise KES 15 billion immediately. This is part of a larger KES 40 billion borrowing plan approved by regulators.
But this isn’t just a standard corporate bond. It is the largest Green Bond issuance in Kenya’s history, and it comes with a sweetener that will catch the eye of every retail investor: The interest income is completely tax-free.
Here is a deep dive into what this bond offers, why Safaricom is issuing it, and how you can invest using the device in your pocket.
The Deal: 10.4% Interest, Zero Tax
For investors tired of the 15% Withholding Tax eating into their returns on dividends and standard bonds, this offer is a breath of fresh air. Under Kenyan law, interest earned on certified Green Bonds is exempt from tax.
The Key Numbers:
• Target Amount: KES 15 Billion (with an option to take an extra KES 5 Billion if demand is high).
• Interest Rate: 10.4% per annum.
• Tax Status: 0% Tax on interest.
• Minimum Investment: KES 50,000.
• Top-ups: Multiples of KES 10,000.
• Offer Period: November 25th – December 5th.
By offering a tax-free return, the effective yield for an investor is significantly higher compared to a standard taxable bond or fixed deposit account offering the same headline rate.
Why Is Safaricom Borrowing?
Safaricom is cash-rich, so why the debt? The answer lies in diversification and strategy.
According to Dilip Pal, the Group Chief Finance Officer, this move allows Safaricom to stop relying solely on traditional bank loans and instead tap into the “local debt capital market.” In simple terms, they are spreading their risk by borrowing from a wider pool of lenders, including you.
“The new bond creates a flexible funding framework to support long-term investments in connectivity, fixed broadband, and financial services,” Pal explained.
Furthermore, the “Green” label isn’t just for show. The proceeds are strictly ring-fenced to finance or refinance eligible green projects. This aligns with CEO Peter Ndegwa’s vision to transform Safaricom into “Africa’s leading Purpose-led Tech organization” by 2030.
“This Green Bond underscores our commitment to embedding sustainability at the heart of our business,” Ndegwa stated. “We create long-term value for our stakeholders while delivering positive environmental and social impact.”
A “Digital First” Bond Issuance
In a move that mirrors the Fintech 2.0 innovation discussed in recent company updates, Safaricom has made this the first bond in Kenya that allows for mobile-based subscriptions.
While institutional investors usually dominate the bond market, Safaricom is democratizing access by allowing retail investors to buy in via USSD.
How to Invest in Safaricoms Green Bond
If you have KES 50,000 and want to participate in this green issuance, the process has been streamlined. The offer closes on December 5th, so the window is short.
3 Ways to Buy:
1. Via USSD: Dial *483*810# on your mobile phone and follow the prompts.
2. Online: Visit the e-offer platform at safaricombond.e-offer.app.
3. Via Agents: Visit any licensed stockbroker or investment bank (the authorized placing agents include SBG Securities, Stanbic Bank, Standard Chartered, and Dyer and Blair).
This issuance represents a maturing of the Kenyan capital markets. By combining a tax incentive with mobile accessibility, Safaricom is testing the appetite of “Wanjiku”. For Safaricom, it is cheap, long-term capital to fund their green future. For the investor, it is a chance to earn a double-digit, tax-free return backed by the most stable corporate balance sheet in the region.
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