Select Page

UN Security Council reforms – Africa demands action

The African Union’s position on the global governance and political system is clear – “reform the United Nations Security Council”.
This common position was reiterated at the 26th African Union (AU) Summit held in Addis Ababa, Ethiopia, when the continent said the UN Security Council is out of date and out of touch with reality.
For example, the council, which is tasked with the primary duty of maintaining international peace and security, continues to be dominated by a few powerful nations at the expense of the majority.
Of the five permanent members with veto power, none is from Africa yet the continent provides the largest membership of the UN.
The UN is made up of 193 member states. Of these, 54 are in Africa, 53 in Asia-Pacific, 23 in Eastern Europe, 28 in Western Europe and 33 in Latin America and the Caribbean. The State of Palestine and the Holy See (Vatican) have observer status.
The five permanent members are the United States of America, Russia, the United Kingdom, France and China. They enjoy a veto right, meaning that the council can not implement any decision if one of the five permanent members objects.
In addition, the council is made up of 10 other non-permanent members elected for two-year terms by the UN General Assembly. These members do not have veto powers.
A country which is a member of the UN but not of the Security Council may participate or be invited, without a vote, to its discussions when the council considers that interests of the country are affected. Conditions of participation by such a member are set by the council.
Currently, the council is dominated by a few countries that were victorious in a war fought some 70 years ago, and thus determine every important decision on peace and security in the world.
Ironically, Africa is the recipient of most declarations on peace and security but continues to be marginalized in influencing such decisions.
Africa’s common position on the UN Security Council reforms is contained in the Ezulwini Consensus made in Swaziland in 2005 and adopted the same year at an Extraordinary Session of the Executive Council of the AU in Ethiopia.
Even though the Ezulwini Consensus is based on the idea of regional representation as opposed to the current UN system which focuses on representation of countries on the basis of their individual merit, the adoption of such a consensus by Africa is nevertheless a step in the right direction.
A permanent seat for Africa on the UN Security Council will allow the continent to at least have some voice in all decision-making organs of the UN, setting the stage for the reconstructing of global affairs.
The consensus calls for the need to expand the size of the council from 15 to 26 members, with fair representation of Africa.
“Africa’s goal is to be fully represented in all the decision-making organs of the UN, particularly in the Security Council, which is the principal decision-making organ of the UN in matters relating to international peace and security,” reads part of the Ezulwini Consensus.
“Full representation of Africa in the Security Council means not less than two permanent seats with all the prerogatives and privileges of permanent membership including the right of veto, and five non-permanent seats.”
In principle Africa is opposed to the veto provision, still the continent is of the view that so long as it exists and as a matter of common justice, veto power should be made available to all permanent members of the council.
On the issue of the selection of Africa’s permanent representatives in the council, the Consensus states that “the question of the criteria for the selection of African members of the Security Council should be a matter for the AU to determine, taking into consideration the representative nature and capacity of those chosen.”
On the five non-permanent seats, the Ezulwini Consensus states that these will rotate between African countries, one for each of the five regions namely North, East, West, Central and South.
While amendment to the UN Charter to effect reform of the Security Council requires a two-thirds majority out the 193 UN members, some of the five permanent members, particularly France, UK and the US have openly objected to this.
The African Union is convinced that the time is ripe for Africa to influence the proposed UN reforms, and reconstruct global affairs, which has for many years benefited a few selected countries at the expense of the majority.

About The Author

Sanlam 2018 Annual Results

7 March 2019

 

Sanlam’s 2018 annual results provides testimony to its resilience amid challenging operating conditions and negative investment markets

Sanlam today announced its operational results for the 12 months ended 31 December 2018. The Group made significant progress in strategic execution during 2018. This included the acquisition of the remaining 53% stake in SAHAM Finances, the largest transaction concluded in the Group’s 100-year history, and the approval by Sanlam shareholders of a package of Broad-based Black Economic Empowerment (B-BBEE) transactions that will position the Group well for accelerated growth in its South African home market.

Operational results for 2018 included 14% growth in the value of new life insurance business (VNB) on a consistent economic basis and more than R2 billion in positive experience variances, testimony to Sanlam’s resilience in difficult times.

The Group relies on its federal operating model and diversified profile in dealing with the challenging operating environment, negative investment markets and volatile currencies. Management continues to focus on growing existing operations and extracting value from recent corporate transactions to drive enhanced future growth.

The negative investment market returns and higher interest rates in a number of markets where the Group operates had a negative impact on growth in operating earnings and some other key performance indicators. This was aggravated by weak economic growth in South Africa and Namibia and internal currency devaluations in Angola, Nigeria and Zimbabwe.

Substantial growth in Santam’s operating earnings (net result from financial services) and satisfactory growth by Sanlam Emerging Markets (SEM) and Sanlam Corporate offset softer contributions from Sanlam Personal Finance (SPF) and Sanlam Investment Group (SIG).

Key features of the 2018 annual results include:

Net result from financial services increased by 4% compared to the same period in 2017;

Net value of new covered business up 8% to R2 billion (up 14% on a consistent economic basis);

Net fund inflows of R42 billion compared to R37 billion in 2017;

Adjusted Return on Group Equity Value per share of 19.4% exceeded the target of 13.0%; and

Dividend per share of 312 cents, up 8%.

Sanlam Group Chief Executive Officer, Mr Ian Kirk said: “We are satisfied with our performance in a challenging operating environment. We will continue to focus on managing operations prudently and diligently executing on our strategy to deliver sustainable value to all our stakeholders. The integration of SAHAM Finances is progressing well. In addition, Sanlam shareholders approved the package of B-BBEE transactions, including an equity raising, at the extraordinary general meeting held on 12 December 2018. Our plan to implement these transactions this year remains on track.”

Sanlam Personal Finance (SPF) net result from financial services declined by 5%, largely due to the impact of new growth initiatives and dampened market conditions. Excluding the new initiatives, SPF’s contribution was 1% down on 2017 due to the major impact that the weak equity market performance in South Africa had on fund-based fee income.

SPF’s new business sales increased by 4%, an overall satisfactory result under challenging conditions. Sanlam Sky’s new business increased by an exceptional 71%. Strong growth of 13% in the traditional individual life channel was augmented by the Capitec Bank credit life new business recognised in the first half of 2018, and strong demand for the new Capitec Bank funeral product. The Recurring premium and Strategic Business Development business units also achieved strong growth of 20%, supported by the acquisition of BrightRock in 2017. Glacier new business grew marginally by 1%. Primary sales onto the Linked Investment Service Provider (LISP) platform improved by 5%, an acceptable result given the pressure on investor confidence in the mass affluent market. This was however, offset by lower sales of wrap funds and traditional life products.

The strong growth in new business volumes at Sanlam Sky had a major positive effect on SPF’s VNB growth, which increased by 7% (14% on a comparable basis).

Sanlam Emerging Markets (SEM) grew its net result from financial services by 14%. Excluding the impact of corporate activity, earnings were marginally up on 2017 (up 8% excluding the increased new business strain).

New business volumes at SEM increased by 20%. Namibia performed well, increasing new business volumes by 22% despite weak economic conditions. Both life and investment new business grew strongly. Botswana underperformed with the main detractor from new business growth being the investment line of business, which declined by 24%. This line of business is historically more volatile in nature.

The new business growth in the Rest of Africa portfolio was 68% largely due to corporate activity relating to SAHAM Finances, with the East Africa portfolio underperforming.

The Indian insurance businesses continued to perform well, achieving double-digit growth in both life and general insurance in local currency. The Malaysian businesses are finding some traction after a period of underperformance, increasing their overall new business contribution by 3%. New business production is not yet meeting expectations, but the mix of business improved at both businesses.

SEM’s VNB declined by 3% (up 6% on a consistent economic basis and excluding corporate activity). The relatively low growth on a comparable basis is largely attributable to the new business underperformance in East Africa.

Sanlam Investment Group’s (SIG) overall net result from financial services declined by 6%, attributable to lower performance fees at the third party asset manager in South Africa, administration costs incurred for system upgrades in the wealth management business and lower earnings from equity-backed financing transactions at Sanlam Specialised Finance. The other businesses did well to grow earnings, despite the pressure on funds under management due to lower investment markets.

New business volumes declined by 13% mainly due to market volatility and low investor confidence in South Africa. Institutional new inflows remained weak for the full year, while retail inflows also slowed down significantly after a more positive start to the year. The international businesses, UK, attracted strong new inflows (up 57%).

Sanlam Corporate’s net result from financial services increased by 4%, with the muted growth caused by a continuation of high group risk claims experience. Mortality and disability claims experience weakened further in the second half of the year, which is likely to require more rerating of premiums in 2019. The administration units turned profitable in 2018, a major achievement. The healthcare businesses reported satisfactory double-digit growth in earnings, while the Absa Consultants and Actuaries business made a pleasing contribution of R39 million.

New business volumes in life insurance more than doubled, reflecting an exceptional performance. Single premiums grew by 109%, while recurring premiums increased by a particularly satisfactory 56%.

The good growth in recurring and single premium business, combined with modelling improvements, supported a 64% (71% on a comparable economic basis) increase in the cluster’s VNB contribution.

Following a year of major catastrophe events in 2017, Santam experienced a relatively benign claims environment in 2018. Combined with acceptable growth in net earned premiums, it contributed to a 37% increase in gross result from financial services (41% after tax and non-controlling interest). The conventional insurance book achieved an underwriting margin of 9% in 2018 (6% in 2017).

As at 31 December 2018, discretionary capital amounted to a negative R3.7 billion before allowance for the planned B-BBEE share issuance. A number of capital management actions during 2018 affected the balance of available discretionary capital, including the US$1 billion (R13 billion) SAHAM Finances transaction. Cash proceeds from the B-BBEE share issuance will restore the discretionary capital portfolio to between R1 billion and R1.5 billion depending on the final issue price within the R74 to R86 price range approved by shareholders.

Looking forward, the Group said economic growth in South Africa would likely remain weak in the short to medium term future, and would continue to impact efforts to accelerate organic growth. The outlook for economic growth in other regions where the Group operates is more promising. Recent acquisitions such as the SAHAM transaction should also support operational performance going forward.

“We remain focused on executing our strategy. We are confident that we have the calibre of management and staff to prudently navigate the anticipated challenges going forward,” Mr Kirk concluded.

Details of the results for the 12 months ended 31 December 2018 are available at www.sanlam.com.