Old Mutual driving aggressive push into emerging markets

The growth potential of African economies expected to remain at more than 5 percent in the long term, the growing stability in the emerging markets buoyed by increasing corporate governance, policy stability and a positive demographic trends are factors wetting the appetite of Old Mutual’s new investments in the emerging markets.

The 168-year-old investment and financial services Group is optimistic of a stronger position in Africa, with new investments in emerging markets of East and West Africa where it plans to spend about $500 million, equal to 5 billion Rands in the next few years.

Having concluded acquisitions in life and general business insurance in Nigeria from Oceanic Life; insurance from Provident Life in Ghana; asset management and banking in Kenya; and an already strong presence in Zimbabwe, Namibia and Malawi for retail, affluent, corporate, unit trust and asset management services, Old Mutual is targeting an integrated financial services market that would outgrow its returns on investment from South Africa.

Julian Roberts, group chief executive officer said “We provide a broad range of financial services in emerging and developing economies. We are focused on markets where we have a strong position and believe we have the right expertise.” Roberts noted that the group’s interest in countries where “we see sustained growth, underpinned by structural factors such as demographic and macro-economic trends and where we have a competitive advantage.”

Dennis Dykes, Nedbank economist said Africa has considerable potential and circumstances are now favouring a step change – better, more market-based policies, improved access to credit, a renewed drive towards regional integration and more favourable global circumstances.

As Johannes Gawaxab, CEO Old Mutual Africa puts it, “Our vision for Africa in 2020 is to be the number one or two long term savings and insurance business in established and core growth markets, with strong franchise in other West Africa, East Africa and SADC countries.

“We are best positioned to take advantage of the opportunity in the rest of Africa,” targeting customer base growth from 7 million in 2012 to 9 million in 2015, while return on investment will grow from 23.9 percent to 20-25 percent.”

Ralph Mupita, chief executive officer, Old Mutual emerging markets excited about the growth opportunity in Africa, noted that Africa’s time is now, and its priority is to become an African champion through a coordinated banking and insurance strategy.

Mupita said this is underpined by the rise of the African consumer, where an estimated 856 million consumers in sub-Sahara Africa will grow to 1.3 billion by 2020, while consumer expenditure will hit $1 billion over the same period. “By 2014, more than 600 million people will own a mobile phone giving Africa one of the world’s highest mobile usage rates.”

Mupita’s key objective for the business is ‘Putting customers first”. His focus is to improve understanding of the needs of Old Mutual’s customers, using the insights gathered from customer engagement to ensure Old Mutual is meeting product and service needs.

“Our strategy is to drive strategic growth, through leveraging the strength of our people and through accelerating collaboration between our businesses. Our focus is to expand in South Africa, Africa and other selected emerging markets; and to improve and grow Old Mutual Wealth and US Asset Management.”

Old Mutual is an international long-term savings, protection, banking and investment group founded in 1845, and today provided life assurance, asset management, general insurance and banking services to more than 14 million customers in Africa, Asia, the Americas and Europe.

With funds under management standing at 289.3 billion pounds as at 30th June 2013, Old Mutul Group is growing with earnings per share up 22 percent, with return on equity standing at 13.7 percent, and net cash flow as at the same period standing at 9.1 billion pounds. The Company has in its employ, 54,368 as at 31 December 2012.

 By: Modestus  Anaesoronye