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Parents by Choice must be the theme for NDP5

There is a stiff philosophical debate over poverty and fertility. One school maintains that a growing population is the main driver of economic growth while the other says poverty is a drain on resources that could have been used for faster growth. While the first emphasises the pervasive entrepreneurial spirit of humanity, the second focuses on the allocation of resources that already exist.
I suspect reality finds a place somewhere between these two opposing views, and that ultimately a phenomenon as complex as fertility and poverty, will encompass many facets all ranging across the same spectrum. I also believe that not any single aspect can be viewed in isolation, and that despite the best academic attempts, poverty will always have to consider fertility, and fertility will always have a causal relationship to poverty.
In a developed society one would like to think that fertility is as much part of a managed society as are voting, finding a job, paying taxes, or paying for a good education. But this is not always the case, and there are several studies that focus specifically on the effect of fertility in even the most advanced countries. Even rich societies have poor people or marginalised communities, and the link between poverty and fertility can be found the moment the research moves to the lower income section of any population.
In Africa it is much simpler. People generally have large families. Or phrased differently, many children in an extended household, used to be the norm. The further a family finds itself from the main centres of economic activity, the bigger the propensity for large families. As individuals in a society climb the rungs from least developed to developed, the smaller the families become. But this is not a one-generation process, and sadly, we find ourselves surrounded by communities of whom the vast majority will remain poor. The breadwinners in these families do not earn enough to sustain their large families and to pay for the education that inevitably supports the process of development.
Fundamentally, the choice of how many children a husband and a wife want, is a personal affair. But fertility does not only refer to those children born in a conventional household. I think locally we have many more children not belonging to any particular family or home, than those fortunate enough to grow up in one home, with one set of parents. So fertility in Africa has another dimension and this determines the future for the majority of all children.
I am all for planned parenthood. My approach relies on the willingness of the parents to take care of and raise their own children. But to be able to do this, they must have the means. Unfortunately, the poorer a family, the bigger the number of children. Add to this the hundreds of thousands of children that do not belong to any particular family where the mother is exposed to all sorts of evils to survive. All these children are the result of unplanned parenthood, or rather, accidental parenthood.
The other sad reality is that many of the young fathers do not have the slightest inclination to look after their offspring. Once the lover gets pregnant, she is discarded for another. Then the poor young women must either return to her parents home, if there is one, or send her baby back to the rural area from where she came, to be raised by her mother. The results is the many villages where I find old people, mostly women, hordes of infants and toddlers, some children of school going age, but no teenagers, no young people, and not a single young individual that will set the next generation on a solid footing. The gap is glaringly obvious and is not restricted to any particular region. Wherever I visit villages, I find a repeat of this pattern. I think these people are basically lost for the current generation as well as the next.
Then there is the case of many young families where there is a father and a mother occupying a steady home on a permanent or semi-permanent basis. But by the time this young couple reaches the age of thirty, the number of dependents may already exceed six, if not more. These people are also lost for development, and can at best hope to scrounge together some way of making a living to be able to send at least some of the children to school. This I also encounter only too often but this pattern is more prevalent in the shanty areas surrounding the larger towns and cities.
So, whichever part of the philosophical spectrum you find yourself on, realise that this debate is entirely useless for a poor couple with simply too many children to take care of. The only way we shall see a meaningful reduction in the number of unwanted children, is if it becomes government policy. And then the problem must be prevented, not tried to be patched after the event.

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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