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SADC achievements in 2017 and strategies post-2020

SADC achievements in 2017 and strategies post-2020

Southern African News Features – The Southern African Development Community (SADC) grew to include 16 Member States in 2017, and the steps towards integration and development advanced significantly as the region recorded achievements and began to develop strategies for the post-2020 agenda.

The 37th SADC Summit held on 19-20 August in Pretoria, South Africa, formally admitted the Union of Comoros as the 16th Member State of SADC.

Summit adopted the theme of “Partnering with the private sector in developing industry and regional value chains” and urged Member States to operationalize the theme through implementation of projects in the focus areas of agro-processing, mineral beneficiation, energy, and pharmaceuticals.

Summit directed that a regional Natural Gas Committee be constituted to promote the inclusion of gas in the energy mix for industrial development, and urged Member States to “speed the process of operationalizing the SADC Regional Development Fund” to support the industrialization agenda.

This followed preparatory meetings held earlier in the year to commence a process to review and develop long-term strategies.

A SADC Strategic Ministerial Retreat was held in March to determine what needs to be done to create the “SADC We Want” and to develop scenarios on a trajectory for the region.

Among the measures agreed was a mechanism for tracking progress on the implementation of the regional integration agenda and compliance with protocols and other legal instruments.

The ministerial retreat agreed that Member States should strengthen National Committees so they can be more effective in coordinating the implementation of regional policies at national level.

Another important decision was to pursue alternative options for funding the SADC regional integration programme to avoid over-reliance on international partners.

It was noted that the region has potential to raise more than US$1.2 billion annually from alternative funding options such as an export and import tax; a tourism levy; a financial transaction tax; a lottery system; philanthropy; and income from the hosting of regional events.

SADC has commenced a process of formulating a new cooperation and integration strategy to succeed the Revised Regional Indicative Strategic Development Plan (RISDP) that was approved in 2015 and runs to 2020.

A consultative conference on a post-2020 strategy was held in mid-year to seek expert analysis on the implementation of the Revised RISDP and the plan guiding SADC cooperation in the political sector, the Revised Strategic Indicative Plan for the Organ on Politics, Defence and Security Cooperation (SIPO).

The experts noted the need to maximise synergies in the implementation of the two pillars of SADC activities – the developmental integration as covered by the RISDP, and political and security cooperation as defined under SIPO.

The consultative process is expected to lead to the development of a framework for a post-2020 regional strategy based on SADC common values and principles, in the context of the African Union’s Agenda 2063, and incorporating the UN Sustainable Development Goals.

With regard to economic development, SADC adopted a costed action plan for its Industrialization Strategy and Roadmap during an extraordinary summit held in March in the Kingdom of Swaziland.

The action plan seeks to establish a coherent and synergistic implementation scheme containing strategic options and general policies towards the progressive attainment of time-bound targets set out in the strategy and roadmap.

The SADC Industrialisation Strategy and Roadmap was developed as an inclusive long-term modernisation and economic transformation scheme that should enable substantial and sustained economic development to raise living standards and achieve SADC’s vision for a united, prosperous and integrated region.

Energy access is an essential ingredient to implementation of the industrialisation strategy and in 2017, the SADC region, for the first time in a decade, experienced surplus capacity in electricity generation as a result of regional cooperation in energy planning.

According to the Southern African Power Pool (SAPP), the surplus generation capacity was about 2,616 megawatts (MW) as of September. The acting manager of the SAPP Coordination Centre, Alison Chikova, said the trend is likely to continue as “SAPP will commission an average of 5,000MW per year in the next six years.”

In July, SADC hosted s High-Level Ministerial Workshop and an Investors’ Conference on Regional Energy Projects. The meeting reviewed a list of priority energy projects, assessed the preparation of these projects, and discussed measures for capacity building to strengthen skills within the region to package bankable projects.

During this year, Southern Africa also witnessed the launch of the regional development bank by the BRICS countries (Brazil, Russia, India, China and South Africa) to service the African continent. The Africa Regional Centre of the New Development Bank based in Johannesburg is expected to unlock the socio-economic potential of the region and continent.

With regard to strengthening the role of women in economic development in the region, Botswana became the 14th Member State to sign the Revised SADC Protocol on Gender and Development, which provides for the empowerment of women, elimination of discrimination, and the promotion of equality and equity through gender-responsive legislation, policies, programmes and projects.

The Protocol was revised in 2016 to align its objectives to various global targets and emerging issues, such as AU Agenda 2063 and UN Sustainable Development Goals. The protocol was already aligned to the Beijing Declaration and Platform for Action.

Political stability is an essential factor in SADC’s plans for regional integration and development; and a significant achievement in 2017 was the smooth transfer of power in three SADC Member States (Angola, Kingdom of Lesotho and Zimbabwe), thus illustrating the ability and effectiveness of the region to address its own challenges without outside interference.

SADC intervention to the political situation in Lesotho resulted in national elections that were successfully held on 3 June, bringing hope for a country that has faced challenges since its birth in 1966, and most recently since 2012.

Following the inauguration of the new Prime Minister, Dr Thomas Thabane, in June, the 37th SADC Summit in August approved the extension of the Oversight Committee to “continue acting as an early warning mechanism, and to monitor and assist the Kingdom of Lesotho to implement SADC decisions.”

In Zimbabwe, SADC supported the country in finding an amicable solution to a political impasse that followed weeks of tension in which the founding President of Zimbabwe, Robert Mugabe, came under pressure from his political party, parliament, the defence forces and the population to resign.

Mugabe, 93, who had ruled Zimbabwe for 37 years since independence in 1980, resigned on 21 November, as provided in the Constitution, and was replaced by his former deputy and now President of the Republic of Zimbabwe, Emmerson Mnangagwa, whose inauguration was attended by several presidents and former presidents from SADC Member States.

In Angola, the second executive president, José Eduardo dos Santos, who had served the country since 1979, handed over the party leadership and later the instruments of government to President João Lourenço after their party, the MPLA, won 61 percent of the votes and 150 seats in parliament.

On food security, SADC noted an improvement for the overall 2017/2018 season and urged Member States to improve storage facilities to minimise post-harvest losses. The 37th SADC Summit also approved the Protocol for the Protection of New Varieties of Plans in the SADC Region.

In terms of disaster risk reduction and management, SADC has agreed to explore risk insurance options, including the facilities available through the African Development Bank for disasters such as drought and floods caused by climate change.

The SADC Disaster Preparedness and Response Strategy 2016-2030 requires that SADC Member States put in place a simple and accessible early warning system in the three official languages by the end of 2017.

Another milestone for 2017 was the restructuring of the SADC Secretariat to align with current operational priorities. (SADC Today).


 

 

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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.