What Safaricom’s Sh1.2 trillion net profit means to Tanzanian firms

Dar es Salaam. Kenya’s giant telco Safaricom announced a net profit of Ksh55.3 billion (Sh1.2 trillion) on Wednesday for the year ended March, 2018, with analysts saying the money is a wakeup call to Tanzania’s companies.

The money--fueled by mobile money (M-Pesa) and data revenues--represents a 14 per cent growth from the Ksh48.4 (Sh1.065 trillion) that was registered during the preceding year.

Analysis by The Citizen shows that the Sh1.2 trillion is twice as much as what 14 of Tanzania’s top notch companies registered in net profits last year.

Some of the largest and most profitable companies in Tanzania--whose profits can be traced--include TBL Group, TCC, Vodacom, Tanzania Portland Cement Company Limited (TPCC) and Swissport Tanzania.

The list also includes banks such as NMB Bank, CRDB Bank, Citibank Tanzania, Barclays Bank Tanzania, Stanbic Bank Tanzania, Standard Chartered Bank Tanzania, NBC Bank, TPB Bank and Bank M among others.

The 14 companies registered a total of Sh592.893 billion in net profits last year, signaling that their combined profits reached about just half of that of Safaricom alone.

TBL, which is arguably the most profitable company in Tanzania, registered a net profit of Sh161.44 billion during the year ending March 31, 2017.

TCC, which, like TBL Group is also one of the most profitable firms in the country, registered a net profit of Sh45.4 billion during the year ending December 31, 2017. As for Vodacom Tanzania, its net profit was Sh47.55 billion in the year ending March 31, 2017.

Tanzania Portland Cement Company Limited (TPCC), which also trades as Twiga Cement, recorded a net profit of Sh35.5 billion during the 2017 calendar year while Swissport Tanzania’s net profit was quoted at Sh11.93 billion in 2017.

As for the banking sector, NMB’s profit after tax for 2017 was Sh95 billion while CRDB Bank Group’s profit dropped to Sh69.13 billion during the year ending December 31, 2017 from Sh74 billion in 2016.

Citibank’s annual profit fell to Sh14.3 billion last year from Sh20 billion in 2016 whereas Barclays Bank Tanzania, Stanbic Bank Tanzania, Standard Chartered Bank Tanzania, NBC Bank, TPB Bank and Bank M registered Sh10.9 billion, Sh25 billion, Sh39 billion, Sh15.4 billion, Sh12.8 billion and Sh12.143 billion in net profits last year respectively.

Analysts are of the view that the massive gap would explain the difference in size and thus profitability levels of Tanzania’s companies compared to peers within the region.

“Although I have not done my own analysis of the figures, such a difference would theoretically be explained by the fact that the companies we deem to be large locally may not be that huge within the region or internationally,” said Prof Honest Ngowi of Mzumbe University.

He noted, however, that several marketing and operational aspects would have to be considered to come up with concrete responses on reasons behind the huge difference in profitability.