MMI mulls withdrawing from smaller African markets

LISTED financial services group MMI Holdings could exit from certain countries on the continent, it said on Friday, just days after Barclays announced plans to sell its African operations.

While the dust was settling after Barclays’ announcement, MMI, the country’s third-largest insurer by market value, hinted it was considering withdrawing from certain African countries.

“Given the current economic environment, we are reviewing our presence in certain smaller African markets and depending on the outcome of the review we might exit them,” spokeswoman Lerato Mametse said.

Mametse declined to name the countries in which MMI had launched a review.

MMI, which sells funeral, health and retirement insurance in several African countries that include Namibia, Botswana and Swaziland, reported a 9 percent drop in half-year earnings on Thursday.

Earlier last week, Barclays announced plans to partially sell down its 62.3 percent stake in Barclays Africa, which has 12 million customers in 12 African countries. Shortly after the announcement, Barclays Africa chief executive Maria Ramos said the move was not driven by sentiment about Africa and South Africa.

Blum Khan, the chief executive of MMI’s international division, said on Friday that the review was under way and would be concluded in the next few months.

Khan said despite the review, MMI would continue with its strategy, which emphasised geographic diversification.

“We remain committed to growing our business in Africa,” Khan said. “Capital will continue to be deployed into markets that have growth potential, including Africa, UK and India.”

Khan said there were many attractive markets within Africa “in which MMI will continue to invest capital and pursue growth opportunities. Beyond our continent we will be launching a health and wellness offering in India in a joint venture with the Aditya Birla Group. We are also looking to expand our asset management business in the UK.”

MMI Holdings was formed in 2010 when Metropolitan Holdings and Momentum Group merged their operations. The company’s business units include Metropolitan, Momentum, Guardrisk and Eris Properties.

It has businesses in South Africa, Botswana, Ghana, Kenya, Lesotho, Mauritius, Namibia, Nigeria, Swaziland and Zambia.

Bryan Leith, the chief operating officer of KPMG’s Global Africa Practice, said on Friday: “It is true to say that the world economy is suffering at the moment. In the circumstances, companies will look for the least risky environments. This is a global phenomenon and is not unique to Africa.”

NKC African Economists senior economist Hanns Spangenberg said there were trends prompting companies to exit certain African markets.

“Of key concern are weakened local currencies, which often places upward pressure on the inflation environment. In response, several central banks have commenced monetary policy tightening, making it more expensive to finance new business, while simultaneously constraining consumer demand by reducing their disposable income,” Spangenberg said.

MMI shares on the JSE on Friday closed 0.74 percent lower at R24 a share. – Additional reporting by Reuters