13 January 2014
Angola, Mozambique, Zimbabwe and other countries in East Africa have been identified as possible expansion prospects in 2014, Heinie Werth, the chief executive of Sanlam Emerging Markets (SEM), said on Thursday last week.
SEM, a division of South Africa’s second largest insurance company the Sanlam group, already has a presence in 12 emerging market countries on three continents and says it will seek to expand in those markets this year.
“The biggest potential contributions to our business, purely due to scale, will be from India during 2014 and Nigeria over time,” Werth said in a statement, “but we are also very comfortable with the forecast contributions from the smaller economies that make up our Africa portfolio.”
With regards to expansion prospects for SEM in 2014, he said there were many opportunities in emerging markets, including the addition of a life insurer in Malaysia and increasing the SEM footprint by investing in Angola, Mozambique, Zimbabwe and other countries in East Africa.
SEM, which contributes roughly 20% to the Sanlam group’s gross profit, has business interests in 10 African countries (predominantly in the Anglophone countries), Malaysia and India and is well positioned to comment on growth prospects in these emerging markets.
One of the key factors supporting growth in Africa and South East Asia is that insurance penetration in both the short term and life categories is low.
Africa’s insurance penetration is approximately 1.6% compared to India (3.4%) and a global average of around 7%. South Africa, meanwhile, boasts among the highest insurance penetrations anywhere in the world, at 14%.
“Financial services businesses in these markets will therefore benefit from both the above-average economic growth potential and a catch-up in insurance penetration over time,” he said. “Add to this the desire of governments and international investors to develop the burgeoning middle class in Africa and India and you have a winning growth formula.”
Mobile phone penetration and the return of international banking brands to Africa are also growth drivers specific to the continent. A recent report by GSMA reveals there are 253-million unique mobile phone subscribers in Sub-Saharan Africa.
“This is great news for diversified financial services companies with investments in Africa,” Werth said. “Mobile phones make it easier for insurance businesses to communicate with their clients, while mobile banking solutions make it possible to collect premiums,” he said.
“Our growth in Africa and other emerging markets will come from achieving a balance between our existing businesses and new opportunities. We have found that the secret for success in the emerging market arena is to be flexible and patient and to approach each country with due consideration for its unique culture and consumer needs.”
SAinfo reporter and Sanlam