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Robbing the poor to pay the rich

Robbing the poor to pay the rich

By Nico Smit
Treasurer General: Popular Democratic Movement (PDM)

In the light of the extreme secrecy surrounding the real facts about the hidden agenda behind the establishment and collapse of the SME Bank and the fact that it seems that the amount of money lost far exceeds the N$200 million which is public knowledge.

The PDM demands that the liquidators make a full disclosure, telling the public what the true extent of the losses is – according to our sources more than one billion Namibian dollars – and that they publish a full list of every investor who has been affected by the bank’s closure.

In the Year of Accountability, it is vital that the failure of SME Bank must be investigated fully and those responsible be held liable before the law. The PDM believes that the real perpetrators of this whole SME Bank scheme must be finally exposed and it must be made clear that it was the brain child of the minister of Trade and Industry at the time¸ namely our current president, His Excellency Hage Geingob and his tainted Zimbabwean collaborators.

There is overwhelming evidence that senior government officials are implicated in the serious conflict of interest which extended to the bank’s management. We, as the Namibian electorate, demand that the reasons for the bank’s failure be made public, that all ordinary Namibians who lost their savings are refunded, and that both the bank’s management and board be held criminally liable.

All the hidden agendas of high-ranking government officials must be exposed and the public must be warned to avoid any financial institution where there is a demonstrable involvement of politicians.

The damage done to a disproportionately large number of Namibians is irreparable. Many small businesses lost a substantial amount of money forcing many who needed financing most, the SME owners, to abandon their businesses. Referring all enquiries to the liquidators is of no use. It does not change the fact that money was robbed from poor people to benefit the rich elite who used their political connections to con unsuspecting people into depositing their funds in a financial institution which they thought was above board.

It strikes us as very suspicious that the Namibian SME Bank scheme has so many similarities to the VSB Bank scheme that recently caused such chaos among poor depositors in Limpopo in South Africa. Both these banks received large deposits from government institutions; both operated a kind of ponzi scheme that finally led to the wholesale looting of the bank’s assets by a chosen elite. And it seems clear that there was collusion between the elites of the two ruling parties in Namibia and South Africa who established these banking schemes, namely SWAPO and the ANC. Our information further indicates that a large part of the SME Bank’s funds went to the VSB Bank in Limpopo, South Africa.

As a political party who represents the people, the PDM wants to put it on record that SME funding is such a paramount issue that it must be brought into the public domain. The source of funding must be transparent, the management of funds must be transparent, and the beneficiaries must be transparent.

To ensure that this crime is never repeated, the PDM offers a series of interventions as rehabilitation. The PDM proposes that a national SME fund is established as a Public Private Partnership between all financial institutions, willing investors, and the Ministry of Finance. This fund must serve as the source for all SME funding and simultaneously serve as a sign of social responsibility.

In addition, the PDM proposes that such fund must be administered by the Development Bank of Namibia in a separate division with a Head of Department taking full responsibility for his or her own actions as well as the staff’s conduct. This department must be accountable to the Development Bank’s leadership directly and indirectly to its Board. Its functions must encompass all aspects of SME-funding and fund administration at a level much more advanced than the bank’s current SME business centre, which was only a crisis response to the SME Bank’s failure.

The PDM advises the Ministry of Finance to remove SME funding oversight from the domain of the Banking Institutions Act and to place its administration solely under the control of the Development Bank of Namibia Act as amended.

The PDM explicitly warns the government not to repeat its failed tactic of founding just another institution, burdened by an over-paid incompetent management and a completely uninformed Board.

The SME fund department in the Development Bank of Namibia must conform to all international standards of governance, transparency, accountability, and most important, sustainability. For this reason, SME funding must be removed from the sphere of commercial banking, and protected against government interference, political expedience and connected persons who are only too eager to enrich themselves regardless of the sacrifices ordinary, and in most cases, poor Namibians must make.

In a further step to improve the chances of success for SMEs, the PDM proposes that several enablers are put in place with unrestricted access and benefit to SME owners. The party advocate for cheap broadband services, cheap electricity for SME manufacturing enterprises, cheap legal services, and access to funding well below market rates applicable to other commercial enterprises. All these things will be possible with the establishment of the proposed National SME Fund.

It is deplorable that the institution that was supposed to achieve these small but important gains for SME owners was revealed as controlled by personal interests, corruption and outright criminality. The SME Bank’s management operated the institution like a cash loan business, exploiting innocent people, and eventually defrauding them. According to the response the PDM received from its constituencies, the damage has affected tens of thousands of poor Namibians.

Essentially, the SME Bank has robbed Namibians of their futures and their future incomes. Closely involved individuals have benefited at the cost of those who can least afford it. The PDM wants full disclosure of every individual who was involved during the planning and commissioning phase, of all shareholders, of all board members, and of all senior managers.

Every Namibian who wants to generate his or her own income, take care of their families, and strive to start a small business, must be empowered to do so. The PDM has gone beyond political rhetoric, offering concrete interventions as listed above, and demanding adequate checks and balances to protect the interests of SME owners.

In the Year of Accountability, we demand that every person who undermined the SME sector must be brought to book. Corruption must be rooted out, not only on paper and by lip-service, but all its elements must be eradicated visibly, to be seen, observed and witnessed by those who were harmed by the SME Bank’s failure.

Putting a lid on the unwinding of the SME Bank, only confirms what thousands of Namibians suspect: Harambee is not for the people, it is for the rich elite who will continue to drive their own hidden agendas, and squash ordinary Namibians to achieve their goals.


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