Recent questions posed to Johannes !Gawaxab elicited interesting food for thought across a broad spectrum of financial matters…
Q: Considering the financial sector’s performance in 2012, and the strides made in 2013, how critical a role does the Insurance Sector have in Namibian Society?
A:The insurance sector in Namibia certainly plays a critical role in Namibian society.
Q: As a driver of sustainable growth, size matters:
A:The non-banking financial sector holds about twice the assets of the banks interms of size alone. As at June 2012, the total AUM in the non-banking financial sector amounted to about N$130 billion of which about N$70 billion are in retirement funds, N$30 billion in life and short term insurance, and around N$30 billion in Unit Trusts. Comparably over the same period (end 2012), the total assets of the four local banks amounted to N$67 billion only. Compare this again to the GDP of Namibia which was about N$110 billion during the same period. Non-banking assets thus accounted for 118% of GDP, while total bank assets only accounted for 63% of nominal GDP in 2012.
Q: As a driver of social, financial and infrastructural growth, community investment, financial literacy and skills development matter:
A:The sector is central in the development of the Namibian economy.It forms an integral part of Namibia’s social fabric, meeting the social and financial needs of communities, and advancing the public good by contributing to the welfare and wellbeing of Namibians. Furthermore, the sector fulfils a valuable risk transfer function.It has been a powerful force in mobilising savings and using these to provide capital to the economy for its growth and development. As Old Mutual alone, we have about 20% of all the governments bonds in issue which amounts to around N$10 billion. Apart from playing a role in staff development, transfer of skills and access to financial services to the broader masses of Namibians, the evolution of theNSXr has been closely linked to the life insurance industry.
Q: As a driver of financial stability, market capitalisation matters:
A:The insurance sector is also playing a significant role in the deepening and broadening of capital markets in Namibia. As at last Friday (8/11), the total market capitalisation of the NSX was N$1,4 trillion, of which the local stocks accounted for about N$18 billion. The NSX in Namibia, the JSE in SA and Mauritius are the only exchanges in SADC which are cash positive and need no money/guarantees from their governments.
Q: Looking more closely at the value the Insurance Sector contributes to Namibia, questions on treating customers fairly, pricing and benefits, and fit for purpose products and services, have become topical in the light of global financial woes. What do you consider crucial with regards to ensuring relevance and return for customers in Namibia today?
A:At Old Mutual, we are constantly challenging ourselves regarding our value contribution to society, costs to customers, and real customer needs. We ask ourselves, ‘do we hear the cries of the people around us?’
While the insurance business is relatively new to the majority of Namibians, these questions are not new to the industry. I believe the world is healing from the global financial crisis and we need to work hard to regain the trust in the financial sector that has been shaken. We need to play a role in actively building confidence in the sector.
There is a huge unemployment challenge in the country, particularly amongst the youth, and inequality is not abating. It is estimated that about 35% of Namibians live in squatter camps and only 20% of Namibians are covered by retirement funds. We can’t say this is none of our business and keep quiet.
Q: In the Namibian context Old Mutual has embarked on a number of interventions to play its role in society. Our constant challenge is – have we done enough?
A:We provide services and solutions that meet the needs of our clients, we have introduced the Treating Customer Fairly (TCF) campaign, we have a Customer Affairs Committee (CCA) and a clear Customer Engagement Strategy. We are committed to operating in a responsible manner, making decisions that take account of the value we offer to our clients and of the impact we have on the society. We invest our capital in a responsible manner, and we guide our customers to make appropriate financial decisions with expert advice.We ensure credible service through supporting and developing our employees through financial education, and we support local communities and worthy projects through the OM Foundation, funded via 1%NPAT annually.
We also contribute to society more broadly through our property portfolio which is around N$600 million and the MIDINA Fund we have created has invested close to N$900 million since inception in private schools, private health care, low-cost housing, municipal infrastructure, tourism and telecommunications.
What is indeed crucial to us, is the building of long-term relationships with our customers, and that this should be premised on proper investment in understanding their needs and dreams and that the meeting of these should be delivered relevantly within a sound understanding of both the macro-, and micro-economic environment.
We have committed to being a certain friend in uncertain times for over 168 years, and at all times we are geared to delivering to our promise of financial partnership.
Q: As the year draws to a close, what is it that you would like for fellow-Namibians to be considering with regard to their financial well-being - over what we all know to be costly holiday season and the inevitable new financial commitments the New Year will bring?
A:It is my hope that in planning for your own and your family’s well-being, that every customer would take a long-term view of what this requires from today, specifically in terms of disciplined saving, prudent investment and necessary life and asset cover. Dipping in and out of insurance and investment products reduces your returns when you need it most. Expensive holiday seasons come every year, but you only get the one chance to give a solid education to your children, the one chance to ensure your family is provided for at all times, and the one chance to make the earliest possible start to a better future. PF
To continue the conversation with Old Mutual, email email@example.com call us on +26461 299 3999, or log on to www.oldmutual.com.na