Diversification is Vital to BIHL Growth – Lesetedi

CEO confident group is on the right track


Diversifying Botswana Insurance Holdings Limited’s (BIHL) field of operations is vital to the financial service group’s continued growth, Catherine Lesetedi, the Chief Executive Officer of (CEO) BIHL, said recently.

With group operating profit standing at P376 million from the 12 months ending December 2019, BIHL is headed in the right path. However, the group must continue to work on its diversification strategy and look for businesses that fit within its growth ambitions if it should achieve its vision of becoming the leading financial services provider in southern Africa in the near future.

“We developed and launched a five-year strategy that goes to 2023, so 2019 was the year of privatising and it was the year where we had to clarify for ourselves as the management what does strategy really mean for us,” Lesetedi said noting that the group will have to tap into the strength of its numbers.

“When we looked back, we realised that we are not using this strength. So one of the values that we came with is the one of collaboration by (which) we realised that we have to ensure that the group’s subsidiaries and associates work together.”

The group increased its stake in Letshego from 26.17 % to 28.1 % last year.
Meanwhile, Botswana Life contributed 45percent (P169.2 million) of the group’s operating profit, strengthening the CEO’s faith in BIHL’s diversification outlook. “The reason why I am saying this is because if one goes 10 years back, he or she will find out that Botswana Life contributed 80 percent of the group total earnings,” she said. “So this is important for our diversification story as it shows that other businesses are growing, (which) does not mean that Botswana Life’s significance is reduced.”

The group‘s asset management business under its market outfit, Botswana Insurance Fund Management Holdings’ (BIFM) operating profit decreased by 14 percent compared to 2018. “The main driver of the 2019 performance was the continued pressure on investment management fees, hence lower margins,” she said. “The margin squeeze calls for more stringent cost management and containment strategies. The Zambia business, on the other hand, remained resilient despite the challenging economic conditions, particularly in the second half of the year, and posted an overall 5 percent year-on-year growth in operating profit.”

Total Assets under Management for the year were P27.3billion, a 5 percent growth from the 2018 AUM. “Included in this number is Zambia’s P4.2 billion and the remaining P23.1 billion represents assets directly managed by BIFM,” the financial reports said. “During the year, management rolled out a new five-year strategy which saw some new funds being introduced to the market.

“This strategy is already bearing fruit, with fresh mandates received for some of the new funds. Management is cognisant of the highly competitive environment and will continue to focus on managing expenses and delivering value to clients,” BIHL noted.