Africa is a continent rich with expansion opportunities that are often accompanied by poor returns. Expansion on the continent does, however, remain at the core of the strategies of some major South African companies, possibly because they have an established presence there and need to try to make it work; or possibly because they believe in Africa’s well-documented growth potential, despite the significant hurdles.
Looking at the experience of companies such as MTN and Shoprite, this strategy is not without its risks, but it remains core to Sanlam’s strategy, which was reiterated when it reported results for the year to end-December 2020 in mid-March.
Reflecting the full effect of the pandemic and lockdown, its net result from financial services declined by 13%, but would have been up 17% excluding the impact of Covid-19. Net operational earnings decreased by 23%, although headline earnings increased 24%.
Earnings were affected by the extent of business continuity claims at short-term insurance subsidiary Santam, offset by lower motor claims, as well as increased mortality claims, doubtful debt provisions, and the provision of relief to clients and intermediaries.
Remarkably, new business volumes were up by 25% to R311bn with a strong growth at Sanlam Investment Group and Sanlam Emerging Markets, which operates predominantly in Africa and has investments in India and Malaysia too.
Sanlam has a significant presence in Africa, largely through the acquisition, in tranches in 2016 and 2018, of Moroccan-based financial services group Saham. Notwithstanding the experience of other companies, Sanlam’s management continues to believe in its strategy to become an African champion, build a fortress in SA and to strengthen and expand its position elsewhere, enabled by data and digital transformation, development of its culture, innovation and partnerships.
Continue reading your story on the app
Continue reading your story in the magazine
Simon's stock tips
Founder and director of investment website JustOneLap.com, Simon Brown, is finweek’s resident expert on the stock markets. In this column he provides insight into recent market developments.
The morass that is coal supply to Eskom
The Seriti contract with the power generator shows up other issues in the supply chain to keep SA’s lights on.
Swanky, safe, and more affordable
The Volvo XC40 T3 with its turbocharged three-cylinder engine brings a less pricey entry point to the XC40 range.
Do central banks still care about inflation?
Structural consumer price increases may be abating. We’ll soon see whether monetary authorities will adapt their mandates.
Are you on the right track with shares?
It is a good time to look at your portfolio to determine whether there are still good prospects, advises Schalk Louw.
The Outlook For Inflation
What is driving higher local consumer prices?
What is a store of value?
Gold, cryptocurrencies and cash have all been argumented for as protection against inflation and market crashes. Simon Brown busts this myth.
Does Convenience Cause Risk?
Thanks to technology, it has become far easier to make payments, but how safe are contactless payments and what are South Africans’ options?
Stocks Protecting The Planet And Digital Lifestyles
Is it possible to invest in companies that aim to secure humans’ existence on an ever-dwindling planet and those that protect our increasingly digital lifestyles? Finweek looks at these issues and analyses four offshore companies that fit these themes.
Flush-Outs Among Cryptos Are Healthy
Valuing cryptocurrencies and determining their correlation with traditional asset classes are becoming easier.