16
Our Economic
Impacts
This section explores Zain’s economic impacts across its footprint. From a financial standpoint, it considers Zain’s economic performance, its impact on supply chain management, indirect jobs generated, and the impact generated by the company’s fintech activities.
Major Milestones
Further developed and scaled the self-assessment questionnaire process to all markets, reaching 341 suppliers in 2022, reflecting an increase from 40 suppliers last year.
Contributing to employment opportunities through Zain’s distribution channels. In 2022, the company generated 122,493 jobs across Zain’s value chain.
Continued to develop the financial sector across Zain’s markets, allowing the company to grow its fintech customers by 64%, reaching a total of 995,000 customers.
Financial Performance
In 2022, Zain achieved a solid financial performance, showcasing a 14% year-on-year (Y-o-Y) growth representing consolidated revenue of USD 5.6 billion.
Financial Performance: Direct Economic Value Generated and Distributed
| 2022 | 2021 | |||
|---|---|---|---|---|
|
|
KD m |
US$ m |
KD m |
US$ m |
|
Revenues |
1,728 |
5,644 |
1,520 |
5,044 |
|
Cost of Sales |
(566) |
(1,847) |
(461) |
(1,530) |
|
Operating Costs |
(490) |
(1,599) |
(428) |
(1,421) |
|
Net Profit |
224 |
640 |
186 |
616 |
|
Retained Earnings |
393 |
1,285 |
340 |
1,125 |
|
Dividends Paid |
(142) |
(463) |
(186) |
(615) |
|
Dividends paid to non-controlling interests |
(2) |
(7) |
(4) |
(15) |
|
Staff Costs |
(147) |
(479) |
(127) |
(423) |
|
Finance Costs Paid |
(53) |
(174) |
(45) |
(150) |
|
(Repayment of)/ proceeds from bank borrowings (net) |
38 |
125 |
114 |
378 |
|
Income Tax Payments |
(11) |
(37) |
(19) |
(62) |
|
Kuwait Foundation for the Advancement of Sciences Paid |
(7) |
(22) |
(4) |
(14) |
|
National Labor Support Tax and Zakat Paid |
(3) |
(10) |
(6) |
(20) |
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
Zain’s value chain spans across multiple key enterprises that support the company by providing services that address the needs of its customers. To ensure that the company operates responsibly, Zain aims to ensure that its environmental, social, and governance (ESG) indicators are embedded throughout.
Network and Equipment Providers:
Explores areas of circularity, capacity building, emission reduction and efficiency.
Hardware and Software Manufacturers:
Product Research and Development:
Identify and follow development of ESG trends, conduct analysis and research on market composition, collaborate with stakeholders in the ESG space.
Distribution Channels:
Number of jobs generated through channels and alignment to Zain’s environmental and social standards.
Cloud Solutions Providers
System Integrators
Through its distribution channels this year, Zain provided 122,493 jobs that helped boost economic activity across its markets.
Zain’s Economic Impact through its Value Chain - The Supply Chain 2022
| Bahrain | Iraq | Jordan | Kuwait | Saudi Arabia | Sudan | |
|---|---|---|---|---|---|---|
|
Outlets |
2,500 |
73,000 |
2,837 |
1,766 |
23,711 |
41,070 |
|
Distributors |
2 |
3 |
5 |
8 |
5 |
48 |
|
Franchise Shops |
|
77 |
25 |
97 |
220 |
69 |
|
Flagship and Zain-owned stores |
16 |
28 |
31 |
7 |
31 |
3 |
Zain’s Economic Impact through its Value Chain - Our Supply Chain 2021
| Bahrain | Iraq | Jordan | Kuwait | Saudi Arabia | Sudan | |
|---|---|---|---|---|---|---|
|
Outlets |
2,700 |
71,000 |
2,920 |
1,766 |
23,274 |
31,000 |
|
Distributors |
2 |
3 |
5 |
8 |
4 |
48 |
|
Franchise Shops |
|
80 |
27 |
102 |
212 |
72 |
|
Flagship and Zain-owned stores |
15 |
29 |
28 |
5 |
30 |
3 |
| Jobs provided in 2022 | |
|---|---|
|
Bahrain |
180 |
|
Iraq |
1,432 |
|
Jordan |
5,749 |
|
Kuwait |
6,914 |
|
Saudi Arabia |
3,100 |
|
Sudan |
105,118 |
Responsible Supply Chain
Zain’s approach to responsible supply chain management encompasses its footprint to address ESG impacts. The company recognizes there is a strategic need to develop its supply chain to ensure alignment to Zain’s values and sustainability agenda KPIs. The development of Zain’s supply chain faces challenges due to different business practices coupled with financially driven factors. To address this, the company has been working with its suppliers to upskill them and set business boundaries. As part of the supplier assessment and selection criteria, sustainability-related factors of its supply chain range from sourcing of materials, health and safety, human and labor rights, and anti-corruption amongst others.
Throughout Zain’s journey, the company continues to take into consideration the complexity of addressing the risks that arise from its supply chain. Zain’s objective is to continue to evolve and better engage with its suppliers as this approach will allow the company to better identify the risks and manage disruptions. In 2022, the focus was to scale set processes piloted with Zain Group’s suppliers the previous year. Prior to scaling such processes across markets, the supply chain management team hosted engagement sessions with the most material suppliers to establish a more collaborative relationship. Through this engagement process, Zain was able to identify suppliers’ concerns and sustainability-related areas that require further development. As a result, the knowledge gap and awareness between local and foreign suppliers was evidenced. The observations led to pivoting the self-assessment questionnaire for our local suppliers to ensure they can engage with Zain in a productive manner. Zain also continued to develop a capacity-building training plan to allow suppliers to provide their feedback and identify topics for further knowledge development. The enhanced approach allows the company to better align its suppliers with Zain’s environmental and social criteria, as well as spread greater awareness amongst local suppliers.
Zain’s supply chain management process aims to capture and identify and mitigate possible risks:
Adhere to Zain’s supplier code of conduct, and human rights policy statements
Complete Zain’s training video available on the website and complete feedback form
Complete Zain’s self -assessment questionnaire
Complete physical audit for high risk suppliers
Supplier Code of Conduct, and Human Rights Policy Statements are available in Arabic and English on the Zain Group website page.
Zain launched the first training video available on the Zain Group website covering topics included in the Supplier Code of Conduct. The company then sent across a feedback survey to all suppliers to confirm they had viewed it and to gain insights on what topics they would want additional exposure to. Zain provided a drop-down menu for suppliers, highlighting the most material sustainability-related topics in the industry and the related context. Suppliers were requested to select topics to learn more about anti-corruption, fair labor, forced and child labor, human rights, compliance, climate change and others. 134 suppliers completed the training during the year.
In 2022, Zain scaled its self-assessment questionnaire across all markets after conducting a stakeholder engagement process with its suppliers in each country operation. After compiling the feedback, Zain reiterated the use of the questionnaire as a useful engagement tool to ensure alignment to its strategic objectives and to address any concerns from suppliers. The topics covered in the questionnaire included:
Progression of Supplier Self-Assessment Questionnaire
*2021, the number of responses reflects those from Bahrain and Group suppliers only.
*2022, the number of responses reflects those from Group and suppliers across all operations.
During 2022, Zain also scaled its physical audit process across its footprint. Each market had to conduct two audits, with the corporate sustainability and procurement departments working together, with observations then raised with suppliers. Zain provides a notice period to suppliers to address the observations raised. The notice period is determined by the material aspects of the observation and remedial action is implemented as stipulated in the framework agreement and supplier code of conduct.
Any negative related impacts from Zain’s supply chain is raised through either the self assessment questionnaire of the company’s physical audit process. This year, there were no major concerns raised based on the company’s social and environmental criteria.
| Operation | Number of Supplier Target | Number of Supplier Completion | Percentage achieved |
|---|---|---|---|
|
Group |
72 |
45 |
63% |
|
Bahrain |
72 |
72 |
100% |
|
Iraq |
72 |
73 |
101% |
|
Jordan |
72 |
81 |
113% |
|
Kuwait |
72 |
30 |
42% |
|
Saudi Arabia |
72 |
26 |
36% |
|
Sudan |
72 |
11 |
15% |
|
South Sudan |
72 |
3* |
0% |
|
Total |
576 |
341 |
59% |
* The response rate in South Sudan is hindered due to the lack of awareness. In 2022, Zain South Sudan procurement and sustainability team focused on training and developing its suppliers on fulfilling the self-assessment questionnaire.
** From the suppliers who completed the Self-Assessment Questionnaire 302 suppliers are considered active suppliers. This showcases the company’s commitment to reach all types suppliers across Zain’s value chain.
| Operation | Target of Number of Supplier | Completed |
|---|---|---|
|
Bahrain |
2 |
Yes |
|
Iraq |
2 |
Yes |
|
Jordan |
2 |
Yes |
|
Kuwait |
5 |
4 |
|
Saudi Arabia |
2 |
Yes |
|
Sudan |
2 |
Yes |
|
South Sudan |
2 |
No |
Procurement Spending
In 2022, the spending on local suppliers increased year-on-year (YoY) by 8%. This indicates Zain’s contribution to improving the local economy and employment rates.
2022 Procurement Spending Per Operation
| Operation | % Spending on Local Suppliers | % Spending on Foreign Suppliers |
|---|---|---|
|
Bahrain |
20% |
80% |
|
Iraq |
25% |
75% |
|
Jordan |
53% |
47% |
|
Kuwait |
49% |
51% |
|
Saudi Arabia |
88% |
12% |
|
Sudan |
44% |
56% |
|
South Sudan |
10% |
60% |
|
Total |
62% |
38% |
The graph below illustrates Zain Group’s procurement spending for local vs. foreign suppliers for 2022 as compared to 2021.
Procurement Spending: Year-on-Year
Average % Spending on Local Suppliers
Financial Inclusion
In 2022, Zain continued to develop the digital financial sector in areas such as digital lending, online payments, and micro-loans. To further accelerate systemic change, the company’s is further developing it’s fintech ecosystem through the subsidiaries across the footprint. The strategic direction allows Zain to provide a wide range of services allowing for inclusive growth and access.