ZAIN 2022 All Rights Reserved
17
Our Economic Impacts
The Challenge
According to Acuant, an inclusive digital identity authenticator solutions provider, just 8.6% of the adult population in South Sudan own a bank account.
Our Response
Zain South Sudan partnered Trinity Technologies Limited (TTL) and launched m-Gurush, a mobile money platform. As at end of 2021, the platform counted 617,000 registered customers.
The Challenge
The global disruption of supply chain due to the pandemic highlighted the increase in Environmental, Social, and Governance (ESG) operational and reputational risks.
Our Response
This year, the company developed a human rights policy statement in which 100% of newly registered suppliers are signatories to the policy statement.
The Challenge
Globally, 1.7 billion people do not have access to bank accounts and are not able to conduct safe financial transactions.
Our Response
Zain continued to establish a unified approach to financial technology services by launching mobile money platforms in Iraq, Jordan, Saudi Arabia and South Sudan.
COVID-19 highlighted the need for the MENA region to invest in digital infrastructure and innovation. This attracted global investors to partner with private and public entities to serve the region. Governments in the Middle East are emphasizing the need to diversify their economies with a focus on digital transformation across multiple streams.
As Zain cements its position as the leading digital service provider in the region, it recognizes its role in ensuring it adopts a comprehensive approach to digital transformation. Zain’s wide range of products and services aim to serve all customers inclusively despite differing levels of digital literacy and expertise.
During the year, the pandemic continued to raise challenges that Zain needed to overcome and remain resilient and agile in its approach in proactively investing in shared-value opportunities. This allowed the company to adapt to the needs of its communities with a focus on digital enablement, services that provide advanced analytics, and simplification and optimization resources.
Financial Performance
In 2021, Zain achieved a solid financial performance showcasing a 2.2% year-on-year (Y-o-Y) growth that represents a consolidated revenue of USD 5 billion.
Financial Performance: Direct Economic Value Generated and Distributed
2021 | 2020 | |||
|---|---|---|---|---|
KD m | US$ m | KD m | US$ m | |
Revenues | 1,520 | 5,044 | 1,627 | 5,311 |
Cost of Sales | (461) | (1,530) | (448) | (1,462) |
Operating Costs | (428) | (1,421) | (506) | (1,651) |
Net Profit | 186 | 616 | 185 | 605 |
Retained Earnings | 340 | 1,125 | 359 | 1,183 |
Dividends Paid | (186) | (615) | (133) | (432) |
Dividends paid to non-controlling interests | (4) | (15) | (6) | (20) |
Staff Costs | (127) | (423) | (129) | (419) |
Finance Costs Paid | (45) | (150) | (77) | (252) |
Proceeds from/ (Repayment of) bank borrowings (net) | 114 | 378 | (193) | (636) |
Income Tax Payments | (19) | (62) | (42) | (138) |
Kuwait Foundation for Advancement of Sciences Paid | (4) | (14) | (0.7) | (2.2) |
National Labor Support Tax and Zakat Paid | (6) | (20) | (17) | (55) |
The Annual General Meeting of shareholders for the year ended 31 December 2020 held on 17 March 2021 approved distribution of cash dividends amounting to 33 fils per share for the year 2020.
Zain’s Economic Impact
through the Value Chain
The company’s value chain consists of various key players that support by providing innovative, inclusive and highly-rated products and services to Zain customers. Zain’s value chain comprises:
Network and Equipment Providers
Hardware and Software Manufacturers
Cloud Solutions Providers
Product Research and Development
Distribution Channels
System Integrators
Ongoing lockdowns and disruptions due to COVID-19, highlighted Zain’s economic and social impact across its supply chain. The company plays a crucial role in generating employment opportunities that help boost economic activity across its markets.
Jobs provided in 2021 | |
|---|---|
Bahrain | 116 |
Iraq | 1,120 |
Jordan | 5,921 |
Kuwait | 6,914 |
Saudi Arabia | 4,045 |
Sudan | 62,000 |
Zain’s Economic Impact through its Value Chain – Our Supply Chain 2021
Bahrain | Iraq | Jordan | Kuwait | Saudi Arabia | Sudan | |
|---|---|---|---|---|---|---|
Outlets | 2,700 | 60,000 | 2,920 | 1,766 | 23,274 | 31,000 |
Distributors | 2 | 3 | 5 | 8 | 4 | 48 |
Franchise Shops | 0 | 80 | 27 | 102 | 212 | 72 |
Flagship and Zain-owned stores | 15 | 29 | 28 | 5 | 30 | 3 |
Zain’s Economic Impact through its Value Chain – Our Supply Chain 2020
Bahrain | Iraq | Jordan | Kuwait | Saudi Arabia | Sudan | |
|---|---|---|---|---|---|---|
Outlets | 2,340 | 60,000 | 3,107 | 4,800 | 20,900 | 30,000 |
Distributors | 2 | 4 | 6 | 6 | 4 | 48 |
Franchise Shops | 0 | 82 | 28 | 120 | 218 | 81 |
Flagship and Zain-owned stores | 15 | 29 | 28 | 5 | 29 | 3 |
Responsible Supply Chain
Supply chain management is continuously evolving to allow suppliers to operate more effectively and efficiently. The pandemic highlighted the need to ensure that supply chain management is agile and resilient. Zain continued to evolve the way it manages its suppliers to address the impact of COVID-19 while also emphasizing the importance of adherence to Zain’s social and environmental criteria.
Logistical challenges existed in 2021, impacting availability of products and services across most sectors. As part of building resilience within the organization and addressing supply chain disruptions, Zain took a proactive approach by pre-empting possible delays in the delivery of goods. Operations were directed to provide detailed plans well in advance to avoid possible disruptions.
Adhering to Zain’s 2020-2025 corporate sustainability strategy, under the social business pillar, Zain set the targets below to help guide the company in the establishment of a responsible and ethical supply chain.
Target to be achieved by 2025 | Status |
|---|---|
Embedding waste management policies into supplier contracts, including aspects of the circular economy model | Complete |
Address 70% of Group suppliers and 50% of local suppliers to complete Zain’s supplier self-assessment questionnaire | Ongoing |
Training 70% of Group suppliers and 50% of local suppliers on Zain’s social and environmental standards | Ongoing |
To develop and progress our supply chain management process, Zain took further measures to identify gaps under its social criteria. This highlighted the need to emphasize human rights aspects for our suppliers. The company included an additional requirement for suppliers registering with Zain to sign and adhere to its newly established human rights policy statement.
Complete Zain’s Supplier Self-assessment Questionnaire
40
Group and local suppliers completed the questionnaire
Signatory to Zain’s Supplier Code of Conduct
100%
of suppliers are signatories to Zain’s supplier code of conductSignatory to Zain’s Human Rights Policy Statement
100%
of newly registered suppliers are signatory to Zain’s human rights policy statement
Align to International Best Practices Through Zain’s ESMP Guidelines
100%
of suppliers are aligned to internatinal best practices through Zain’s ESMP guidelines
Conduct Two Audit Visits Per Year on Selected Suppliers on Social and Environmental Criteria
No physical audits were conducted this year due to travel restrictions
Continuing on its self-assessment process for its suppliers, Zain selected additional suppliers that needed to complete the questionnaire based on their materiality to the business.
During 2021, Zain decided to take a phased approach and focused on Bahrain and Zain Group suppliers. This method allowed the company to gain further insights to better manage the self-assessment process and ensure accuracy and validity in supplier submissions. As the company only focused on Bahrain and Zain Group’s suppliers, it resulted in a lower response rate.
Progression of Supplier Self-Assessment Questionnaire
*In 2021, the number of responses reflects those from Bahrain and Group suppliers only.
Procurement Spending
To ensure we operate efficiently, Zain continued to consolidate and streamline the process of engagement with its suppliers. By consolidating it at the Group level, Zain is able to ensure it is consistent in its approach. Due to 5G network expansions across our markets, the spending on foreign suppliers increased by 35% this year.
2021 Procurement Spending Per Operation
Operation | % Spending on Local Suppliers | % Spending on Foreign Suppliers |
|---|---|---|
Bahrain
| 19% | 81% |
Iraq
| 11% | 89% |
Jordan | 40% | 60% |
Kuwait | 39% | 61% |
KSA | 76% | 24% |
Sudan
| 60% | 40% |
South Sudan | 0% | 100% |
Total
| 54% | 46% |
The graph below illustrates Zain Group’s procurement spending for local vs. foreign suppliers for 2021 as compared to 2020.
Procurement Spending: Year-on-Year
Financial Inclusion
Ongoing lockdowns reinforced the need for inclusive digital financial services. Specifically, with respect to low-medium income households, mobile money can provide the means to help them uplift their livelihoods and quality of life. The potential for mobile money continues to be of great interest, as 1.7 billion people globally do not possess a bank account. However, two-thirds of the global population owns a mobile phone. Looking to maximize this opportunity, Zain’s fintech journey began in 2015, with the aim to provide a unified approach to financial services across operating markets.
ZainCash Iraq
The leading mobile wallet in Iraq, ZainCash counted over 92,000 active customers in 2021. The mobile money entity offers the ability to conduct payments through a mobile wallet, supporting payment for goods, money transfer and salary disbursements. The application is not only exclusive for Zain but includes other mobile operators that operate in Iraq. It provides customers with loyalty programs, printing e-goods and mobile top-up via network agents, in addition to cashback and refer-a-friend programs. Currently, there are 8,100 ZainCash agents operating in Iraq.
ZainCash Jordan
In Jordan, ZainCash continued to provide an array of services that include on-boarding customers digitally, facilitating utility payments, salary disbursement, linking MasterCard to the wallet, e-vouchers from a wide range of stores, digital donations, and loyalty programs. Through these services, ZainCash was able to attract 199,181 customers in 2021. ZainCash was also able to integrate Tamwelcom, a leading micro-lending institution, within the wallet where customers have access to micro-loans.
Tamam in Saudi Arabia
Established in 2019, Tamam is a fintech entity offering micro-lending services under the supervision of the Saudi Central Bank. Throughout the year, 7,302 unique users benefitted from Tamam by receiving a loan. Additionally, Tamam was able to enhance its IT-related services by installing interactive voice response (IVR) for automated scalable call verification and inbound call support. Following the Cybersecurity Maturity Model Certification (CMMC) Framework, Tamam achieved a Level 3 out of 5. Level 3 requires an organization to establish, maintain, and resource a plan demonstrating the management of its activities.
m-Gurush in South Sudan
m-Gurush provides a fast, safe, and easy way to send and receive money across South Sudan. The service offers a wide network of agents who help facilitate customer registration, deposit and withdrawal of funds. m-Gurush is offered by Zain in partnership with Trinity Technologies Limited (TTL) through a license granted by the Central Bank of South Sudan and the National Communication Authority.
- Zain supports m-Gurush with sales, distribution, marketing and SMS broadcasts, customer care, and social media advertising.
- Trinity Technology Limited provides the mobile money platform and developed distribution networks.
There are a total of 617,000 registered customers on the platform as at end of 2021.
