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Botswana-Zimbabwe meeting advances regional integration

Botswana-Zimbabwe meeting advances regional integration

By Phyllis Johnson

Southern African News Features – Botswana and Zimbabwe have taken a giant step in advancing regional cooperation and integration at a meeting in late February little noticed by other countries in southern Africa.

When the leaders of the two countries met in Harare, they discussed issues that will have far-reaching benefits for accelerating development in neighbouring countries and the Southern African Development Community (SADC) as a whole.

They agreed to strengthen trade and investment between the two neighbouring countries that share a common border and some common languages, and called for the lifting of sanctions imposed against Zimbabwe by the United States and the European Union.

The agreements signed at this first Bi-National Commission (BNC) between Botswana and Zimbabwe cover geology, mining and metallurgy; energy; science and technology; and diplomatic consultations.

Before this BNC, operational diplomatic relations between the two SADC Member States were rooted in agreements signed in 1982. They also signed a long-awaited extradition treaty. Other discussions included trade, transport routes, conservation and wildlife management.

Zimbabwe and Botswana have different strengths that combine well in these areas, but had cool relations under previous administrations, headed by former Presidents Robert Mugabe and Ian Khama, respectively.

President Emmerson Mnangagwa of Zimbabwe and President Mokgweetsi Masisi of Botswana are both former vice-presidents who have been in the top office for about one year.

Both presidents inherited development challenges that can be addressed more easily in collaboration with the other and in the context of regional integration.

The two countries are at the hub of the SADC region of 16 member states, and both are landlocked, relying on other neighbours for access to transport routes and seaports.

This meeting that is critical to regional development will be noticed in South Africa where President Cyril Ramaphosa is preparing for a similar bilateral meeting in Harare on 12 March.

In a major breakthrough, Zimbabwe and Botswana have agreed that Zimbabwe diamonds will go to Botswana for processing, cleaning, polishing and marketing, rather than sending raw diamonds to Europe, to Antwerp in Belgium and other places.

The Diamond Trading Company in Gaborone, Botswana has facilities that are second to none in the world, and it is regarded as a leading global hub for sorting and valuation. This cooperation will start immediately with exchange of experts and officials to assess and develop the process.

Both countries are members of the Southern African Power Pool (SAPP) and they agreed to expand cooperation in the energy sector through various means, including electricity, coal, fuel and other aspects.

Both countries have massive deposits of coal and this extraction requires heavy transport and port facilities. Therefore, President Masisi spoke of the need to resuscitate Zimbabwe’s southern railway line that that goes through Chicualcuala to Maputo in Mozambique, and there are plans for the link to extend to a new coal port to be built further south of Maputo.

A tripartite agreement signed by the three governments two years ago committed to share the cost of the US$600 million Port Techobanine Heavy Haul Rail Project to develop a deepwater coal port south of Maputo for delivery of coal from northern Botswana and Zimbabwe, a distance of about 1800 kilometres.

The railway goes to Bulawayo in Zimbabwe and can feed into the rail network from there to Francistown in Botswana, which can be further developed later to the port of Walvis Bay, thus fulfilling the dream of a railway line that runs from coast to coast.

Transport routes were a key regional issues discussed by the two Presidents who, in addition to the southern route, talked about their collaboration with Zambia in building the new Kazungula bridge across the Zambezi river to carry traffic to northern ports via the North-South Corridor.

President Mnangagwa brought Zimbabwe into the joint Kazungula Bridge initiative that replaces a ferry across the Zambezi River to Zambia, at the point where the three countries meet.

The two neighbours also signed agreements on Diplomatic Consultations, and on the Rules and Procedures that will guide their engagement at top level, and they agreed to meet annually.

Botswana extended a one billion pula line of credit to be taken up by the private sector, who cannot access capital from hostile western funders, due to sanctions imposed on Zimbabwe.

They agreed to convene a joint business forum on the sidelines of future BNC meetings.

A Zimbabwe-Botswana Business Forum will first be held during the Zimbabwe International Trade Fair which takes place at the end of April in Bulawayo, which is located just 100 kilometres from the border with Botswana.

There was also agreement to strengthen the Zimbabwe economy which still suffers from sanctions imposed by the US and Europe, and the leaders called for the unconditional removal of sanctions against Zimbabwe.

“I wish to add our voice in calling for the unconditional removal of sanctions on Zimbabwe,” Masisi said. “We recently made the same call as SADC leaders and we all stand by that announcement.”

“There is no doubt that the sanctions on Zimbabwe are a major stumbling block with serious deleterious effect on the country’s efforts towards full economic recovery.”

In this regard, President Masisi also brought a contribution of much-needed drugs and supplies for the health sector in Zimbabwe.

A statement issued by the SADC Chairperson, President Hage Geingob, following a consultative meeting of SADC Heads of State and Government in early February, said the Zimbabwe government’s efforts to transform the economy were “negatively affected by the illegal sanctions that were imposed on the country since the early 2000s.”

SADC leaders expressed solidarity with the government and people of Zimbabwe and called “upon the international community to unconditionally lift all sanctions imposed on the country.”

There was significant discussion on conservation issues, with agreement to collaborate on protection of their rare rhinocerous populations, and to share expertise and information in that regard.

The two countries also share the largest elephant population on the continent, well-protected and growing too large for the habitat.

Zimbabwe requested Botswana to consider joining the joint visa agreement for the cross-border conservation area of Kavango-Zambezi (KAZA) where the boundaries of five countries converge in the world’s largest Transfrontier Conservation Area (TFCA) – Angola, Botswana, Namibia, Zambia and Zimbabwe. sardc.net


 

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.