Select Page

We have to do things differently, and do them fast

We have to do things differently, and do them fast

By Jan Coetzee
MD Headway Consulting.

The world is on the verge of a major revolution; while developed countries are keeping pace with major technological advancement, developing countries, mostly in Africa, are still making efforts to industrialise their economies, trying to map their way out of the extractive sector.

Nonetheless, not all is lost, given the fluid nature of technology; there are opportunities for developing countries to catch up. The good news is that there is realisation in developing countries of the vital role technology can place in alleviating some of the teething development challenges weighing down their prospects for growth. Stakeholders and the Namibian Government are keenly aware of the crucial role the ICT sector can play in speeding up development in Namibia.

In his book, The Fourth Industrial Revolution, Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, acknowledges that the world is at the beginning of a revolution that is fundamentally changing the way we live, work and relate to one another.

Ubiquitous, mobile supercomputing, intelligent robots, Self-driving cars, Neuro-technological brain enhancements, Genetic editing, are all evidence of dramatic change around us and it’s happening at exponential speed, Klaus acknowledges.

It goes without saying that economically superior countries are those who have embraced and enhanced technology in almost all areas of economic activities.

Namibia’s Vision 2030 could have been conceived before major technological advancements, it’s however, increasingly clear now that its realisation can be accelerated and enabled by the use of technology, but only if Namibia, at policy level, can jump onto the band wagon and move in the direction technology is driving the world.

The industrial revolution, liberated mankind from animal power, made mass production possible and brought digital capabilities to billions of people. This Fourth Industrial Revolution is, however, fundamentally different.

The advancement in technologies now offers opportunities for low and medium income countries to make use of ICT; these technologies have been experiencing progressive diffusion at various paces in different countries and for different tools. In the case of mobile phones it has been surprisingly fast and socially widespread.

Currently Namibia is experiencing increased interests in locally developed and based ICT applications that are catching the interest of the Government. What is left is seeing how the Government through the line Ministry can help such start-ups in the ICT gain access to finance for further development and interest generation in the ICT sector in the country.

Namibia is focused on creating a knowledge-based society where technology, innovation, entrepreneurship at every socio-economic level becomes the norm. Vision 2030 and the Harambee Prosperity Plan are both working towards this goal. This means that we have to do things differently and we have to do them fast, 2019 is upon us.

Being able to see and act upon potential opportunities and possibilities for change through innovation is the only path to success. This means that the business environment needs to change. It can only survive if Namibia can successfully compete and even flourish in the face of the range of emerging adverse and fluctuating business and economic conditions. We need to become service orientated, this does not just mean offering good quality services, but adding value to the economy by selling services.

Whether we offer ICT-services, hosted services or even solutions like call centres for large international corporations. We have English and German speakers, Internet is relatively fast and stable and the labour force plentiful. The opportunity is there.

We can fully embrace new technology, embrace cloud services and avoid mistakes that the early adopters made. We can engage and implement best practices and adapt them for our own needs and circumstances. We will engage and implement the best possibly solutions, hardware and people to continue to improve our ICT rankings in the coming years as well as gaining a competitive edge in the region since we are willing to use technology and innovation to our advantage.

There is need to develop home-grown talent through internships with relevant companies and by stimulating tertiary institutions to continue focusing on ICT-skills development for the knowledge-based economy. If we look at other emerging nations that have made giant economic strides, it’s because they have embraced the service-industries in all their forms.

Namibia has a chance to build networks, acquire and develop tailor-made technology that suits our particular set of challenges and issues, using the latest technology available. Consider the West Africa Cable System (WACS) or our 4G networks that has connected our large but sparsely populated country. This is not a pipe-dream and certainly not impossible.

It almost sounds too good to be true and often seems a long way off. We can establish an environment where everything is set up to stimulate an innovative economy and be a catalyst for an innovative economic sector. This environment is facilitated by high-speed Internet that is always on, stable and available nationwide. As well giving organisations access to the right advice and making sure that knowledge and experience is developed, harnessed, shared and retained within the borders of Namibia This is how we fulfil Vision 2030.


 

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.