BIHL sails past COVID-19 to 24% profit jump
The country’s largest diversified financial services group, Botswana Insurance Holdings Limited (BIHL) posted pretax profits of P666.2 million last year, over 24% higher than the previous reporting period, BusinessWeek has established.
BIHL’s performance, set against the difficult operating environment caused by COVID-19 in 2020, underlines how the local financial sector was not only able to withstand the pandemic, but in some cases and sectors, actually registered higher growth during the period. BIHL’s subsidiaries include the country’s largest life insurer, Botswana Life and the biggest asset management company, BIFM.
According to results published this week, BIHL’s net premium income grew by 11% to P2.9 billion, while the group was able to keep a lid on claims and benefits, which only rose by 2.4 percent to P1.7 billion. On the other hand, investment income fell 68% to P370 million due largely to a net loss on financial assets held at fair value. BIHL’s share of profit from associates shot up 81% to P257.3 million aided by improved performances in the group’s businesses as well as the turnaround of a previous impairment which did not recur. BIHL’s associates include Letshego, Funeral Services Group and Nico Holdings in Malawi.
Commenting on the results, BIHL CEO, Catherine Lesetedi said the life insurance business had remained steady showing resilience despite the challenging economic environment brought about by the COVID-19 pandemic.
“Despite the increasing COVID-19 risk, which continues to put pressure on our traditional faceto-face business model, we continue to serve clients better and conveniently by focusing on executing our digitalisation strategy,” she said.
According to Lesetedi, the strategy will assist in maintaining the group’s position as a market leader while focusing on looking for opportunities to expand the offerings of the group.
“As a result of the COVID-19 impact, the business accelerated its digitisation projects,” she said.
“These will enable us to continue to write new business, enhance the customer experience by giving our customers online capability to access our platforms as well as several options to pay their premiums.” Lesetedi said the focus on collaboration had yielded results in the past and management would continue to drive internal synergies as well as mutually beneficial partnerships with key clients.
JOHANNESBURG: The South African economy contracted by seven percent in 2020, statistician-general, Risenga Maluleke has revealed. Maluleke on Tuesday briefed media on the results of the gross domestic product (GDP) for the fourth quarter of 2020. The decrease was despite the economy growing by 1.5 percent in the last three months of the year, giving an annualised growth rate of 6.3 percent. However, Maluleke said the positive growth recorded in the third and fourth quarters was not enough to offset the devastating impact of COVID-19 in the second quarter, when lockdown restrictions were at their most stringent. “Economic activity for the entire year decreased by seven percent in 2020 compared with 2019. If we explore the historical data, this is the biggest annual fall in economic activity the country has seen since at least 1946.” The second biggest fall was recorded in 1992 when the economy contracted by 2.1 percent. At that time, the country was struggling through a twoyear recession, mainly the result of a global economic downturn. During the 2008/09 global financial crisis, the economy shrank by 1.5 percent in 2009. In the last three months of 2020, the manufacturing industry increased at a rate of 21.1% during this period, contributing 2.4 percentage points to GDP growth.
The annual real GDP growth rate of -7% in 2020 was primarily led by decreases in manufacturing, which contributed -1.4 percentage points, based on growth of -11.6%; trade, catering and accommodation, which contributed -1.3 percentage points, based on growth of -9.1%, and transport, storage and communication, which contributed -1.3 percentage points, based on growth of -14.8%. The agriculture, forestry and fishing industry increased by 13.1% in 2020, and general government increased by 0.7 percent in 2020. Expenditure on GDP in 2020 decreased by 7.1% in 2020, following an increase of 0.1% in 2019. Household final consumption expenditure (HFCE) decreased by 5.4 percent and contributed -3.4 percentage points. Maluleke said the main negative contributors to growth of -5.4 percent in HFCE were expenditure on transport (-10.6% and contributing -1.5 percentage points); clothing and footwear (-21.0% and contributing -1.2 percentage points), restaurants and hotels (-41.8% and contributing -1.1 percentage points), and alcoholic beverages, tobacco and narcotics (-16.9% and contributing -0.8 of a percentage point). Stats SA said the gross fixed capital formation decreased by 17.5%, contributing -3.4 percentage points to total growth, and changes in inventories contributed -2,6 percentage points to total growth. Net exports contributed 2.1 percentage points to growth in expenditure on GDP.
“Nine of the 10 manufacturing divisions reported positive growth rates in the fourth quarter. The four divisions with the largest contributions to the increase were food and beverages; motor vehicles, parts and accessories and other transport equipment; basic iron and steel, non-ferrous metal products, metal products and machinery; and wood and wood products, paper, publishing and printing,” said Stats SA.