Bifm escapes equity markets downturn

WANETSHA MOSINYI
Staff Writer | Friday February 22, 2008 00:00

Bifm CEO Victor Senye said despite facing market volatility, inflationary pressures and limited investment products, the company's overall returns and clients were positive for the year in both real and nominal terms. Assets under management grew more than 20 percent to P15.1 billion for the year ended 31 December 2007.

Speaking at the presentation of BIHL's results for 2007, Senye said it was notable that Bifm had retained the majority of its clients and signed on new ones in spite of competitive forces. A consortium in which Bifm is a shareholder was awarded public private partnership (PPP) contracts and the contract for the construction of office space for the new SADC headquarters, while construction of the Office of the Ombudsman and the Land Tribunal has commenced.

During the year in review, there was a successful completion of minority stake sale of 27.5 percent in Bifm to a local consortium and Sanlam Investment Management of South Africa. 'This shows Bifm's commitment to utilising Botswana funds to contribute to the country's development.'

Senye said for Bifm to solidify its growth, it has to diversify its business and source of income. 'I am pleased to inform you that our Zambian operation keeps on improving year on year.'

Bifm is the majority shareholder of Aflife Zambia, with the remaining 30 percent owned by Zambian citizens.

Senye stressed that despite Bifm's diversification drive, asset management is still their core business.

The life insurance business also survived market volatility. Botswana Life Insurance Limited (BLIL) had a recurring premium income increased by 20 percent to P447.9 million. BLIL CEO Regina Sikalesele-Vaka said business had implemented a more client-centric model with increased emphasis on client-serve delivery through an extensive branch network. 

During the year, four new satellite offices were opened in Gantsi, Kasane, Tsabong and Letlhakane. The company is also actively pursuing other distribution channels to complement existing ones so as to increase future sales. 'We will have to do more because Botswana is a small market,' Sikalesele-Vaka said. 'It has to be top priority to retain our customers, and we will do so by utilising our branch network .' She said the company's operating expenses were well managed, resulting in unit costs being maintained at acceptable levels.

The value of new business improved due to an increase in business volumes, improvement in lapse rates and good operating expense management. The value of new business in the year under review stood at P55 million.

Corporate business succeeded in retaining large corporate clients as well as acquiring new group life schemes. However, this was affected by a decline in single premium annuity new business. Overall single premium increased by 12 percent to 343.4 million. BLIL continues to pursue strategic partners for Bancasurrance opportunities with local banks and sees growth potential in this line of business. Sikaleseke-Vaka said the life insurance company faces challenges this year, notably the legislative changes and new entrants into the life insurance market.

'There is going to be stiffer competition and new goods coming onto the market,' she said, 'and we will be competing for the same disposable income from customers. However, this can all be a challenge or opportunities, depending on how you look at it.'

Going forward, the company will build synergies with shareholder Sanlam in areas like product development, staff training and IT capabilities. BLIL and Bifm are wholly-owned subsidiaries of BIHL. The BSE-listed company is 54 percent owned by Sanlam.  The Botswana public holds the remaining 46 percent.