Deputy Secretary of Financial Policy at the Ministry of Finance and Economic Development Elaina Gonsalves said the lack of trust in the world of insurance conceives fraudulent activities which costs the insurance industry approximately US$ 80 billion according to latest global statistics.
Gonsalves raised this point this week when launching new players in the industry; Western Insurance Botswana and Western Life Insurance Botswana. The two are part of the Western National Insurance Group, a subsidiary of the renowned PSG Group in South Africa. Gonsalves said trust is the core of the insurance industry.
Gonsalves gave a scenario where: “Someone gives a premium to someone else, trusting that the person will deliver when the insured event occurs. Someone receives a premium from someone else trusting that the information received is correct and as a result, the premiums, terms and conditions will allow the cover to be given and the claim paid. This is why the process is susceptible to fraud-fraud by the customer or by someone in the insurer’s employ. Globally, fraud costs the insurance industry approximately US$ 80 billion in 2017.”
The deputy director said insurance entities use many different systems to facilitate the delivery of their promises. She said however to date the only system identified with the capacity to restore trust and transparency in the insurance industry is the Blockchain Technology. Gonsalves told Western Botswana that they should establish trust in their business and use the latest technology to improve their businesses. She said the rest of the insurance industry in this country should shape up or ship out.
“Friends, what am I saying? I am saying that we have to get with the programme or get out of business. As with other service industries, if insurers are not able to provide cutting edge service, then their very survival, let alone success, becomes very doubtful. This requires re-skilled and up-skilling of personnel and change in business models,” said Gonsalves.
According to Gonsalves, the new generation of policyholders expects seamless, individualized and transparent service. The successful insurer is one which can win back the trust of policyholders and potential clients according to Gonsalves. The deputy director said the business challenge is to be innovative and control costs, while responding and exceeding customer expectations.
Gonsalves hailed the pending Insurance Industry Act as a law which will instill professionalism in the insurance industry. She said the new legislation will help in combating money laundering and finance terrorism.
“The major changes are; provisions pertaining to identification and transparency of beneficial ownership; provisions concerning kinds, spread and location of assets owned by the company; prohibition of the receipts of premiums by insurance brokers and agents, except under certain circumstances; free choice of insurance cover for assets pledged under loans/leases; disclosure of commissions and fees; provision for insurance agents (corporate) to represent one life and one non-life insurer; and discontinuation of individuals as insurance agents and agents for brokers,” said Gonsalves.
Western Insurance Botswana and Western Life Insurance Botswana began trading in the shores of Botswana in June 2018 and was officially launched on Wednesday. Western Insurance Botswana and Western Life Insurance form part of the Western National Insurance group, which in turn stems from the renowned PSG Group in South Africa.
Western Insurance Botswana is under the captaincy of 12 year experienced CEO Victor Nnoi. Marinda Botes is at the helm of CEO of Western Life Insurance Botswana and has 18 years of experience in the industry. Before expanding its prescience to South Africa in 2007, the Western brand was established in 2004 in Namibia, then expanding into South Africa in 2007.
PSG Konsult, is the direct majority shareholder in the Western group. PSG Group is listed on the JSE with a market cap in excess of R52 billion. Together with the holding company of PSG Konsult, it holds strategic investments in the banking sector through shareholding in the renowned Capitec Bank and the education sector via Curro Schools in South Africa. The PSG Group expanded its footprint in Botswana over the last few years and, through subsidiary PSG Alpha who currently holds a controlling share in CA Sales. Curro Schools has also acquired it first school, Baobab School, in Botswana earlier this year.
Today, Western boasts an African footprint of 8 offices across the continent and has seen gross written premium exceed R1.2 billion in less than 10 years of trading. Expansion into Botswana forms part of the Group’s Southern African strategy, strategy which also includes business interests in Lesotho. Western Botswana is committed to rethinking insurance, and redefining its delivery for clients across Botswana.
In today’s digital age, banking is no longer just about visiting a branch during business hours. It’s about putting you, the customer, in the driver’s seat of your financial journey. But what exactly is self-service banking, and how do you stand to benefit from it as a customer?
Self-service banking is all about giving you the power to manage your finances on your terms. Whether you want to check your account balance at midnight, transfer money while on vacation, or deposit cash without waiting in line, self-service banking makes it possible. It’s like having a virtual branch at your fingertips, ready to assist you 24/7.
This shift towards self-service banking was catalyzed by various factors but it became easily accessible and accepted during the COVID-19 pandemic. People of all ages found themselves turning to digital channels out of necessity, and they discovered the freedom and flexibility it offers.
Anyone with a bank account and access to the internet or a smartphone can now bank anywhere and anytime. Whether you’re a tech-savvy millennial or someone who’s less comfortable with technology, you as the customer have the opportunity to manage your finances independently through online banking portal or downloading your bank’s mobile app. These platforms are designed to be user-friendly, with features like biometric authentication to ensure your transactions are secure.
Speaking of security, you might wonder how safe self-service banking really is. Banks invest heavily in encryption and other security measures to protect your information. In addition to that, features like real-time fraud detection and AI-powered risk management add an extra layer of protection.
Now, you might be thinking, “What’s the catch? Does self-service banking come with a cost?” The good news is that for the most part, it’s free. Banks offer these digital services as part of their commitment to customer satisfaction. However, some transactions, like wire transfers or expedited bill payments, may incur a small service fee.
At Bank Gaborone, our electronic channels offer a plethora of services around the clock to cater to your banking requirements. This includes our Mobile App, which doesn’t require data access for Orange and Mascom users. We also have e-Pula Internet Banking portal, available at https://www.bankgaborone.co.bw as well as Tobetsa Mobile Banking which is accessible via *187*247#. Our ATMs also offer the flexibility of allowing you to deposit, withdraw cash, and more.
With self-service banking, you have the reins of your financial affairs, accessible from the comfort of your home, workplace, or while you’re on the move. So why wait? Take control of your finances today with self-service banking.
Duduetsang Chappelle-Molloy is Head: Marketing and Corporate Communication Services
Botswana has recently recorded a significant trade deficit of over P6 billion. This trade deficit, which occurred in November 2023, follows another deficit of P4.7 billion recorded in October of the same year. These figures, released by Statistics Botswana, highlight a decline in export revenues as the main cause of the trade deficit.
In November 2023, Botswana’s total export revenues amounted to P2.9 billion, a decrease of 24.3 percent from the previous month. Diamonds, a major contributor to Botswana’s exports, experienced a significant decline of 44.1 percent during this period. This decline in diamond exports played a significant role in the overall decrease in export revenues. However, diamonds still remained the leading export commodity group, contributing 44.2 percent to export revenues. Copper and Machinery & Electrical Equipment followed, contributing 25.8 percent and 10.1 percent, respectively.
Asia emerged as the leading export market for Botswana, receiving exports worth P1.18 billion in November 2023. The United Arab Emirates, China, and Hong Kong were the top destinations within Asia, receiving 18.6 percent, 14.2 percent, and 3.8 percent of total exports, respectively. Diamonds and Copper were the major commodity groups exported to Asia.
The Southern African Customs Union (SACU) received Botswana’s exports worth P685.7 million, with South Africa being the main recipient within SACU. The European Union (EU) received exports worth P463.2 million, primarily through Belgium. Australia received exports worth P290 million, while the United States received exports valued at P69.6 million, mostly composed of diamonds.
On the import side, Botswana imported goods worth P9.5 billion in November 2023, representing an increase of 11.2 percent from the previous month. The increase in imports was mainly driven by a rise in Diamonds and Chemicals & Rubber Products imports. Diamonds contributed 23.3 percent to total imports, followed by Fuel and Food, Beverages & Tobacco at 19.4 percent and 15.0 percent, respectively.
The SACU region was the top supplier of imports to Botswana, accounting for 77.7 percent of total imports. South Africa contributed the largest share at 57.2 percent, followed by Namibia at 20.0 percent. Imports from Asia accounted for 9.8 percent of total imports, with Diamonds, Machinery & Electrical Equipment, and Chemicals & Rubber Products being the major commodity groups imported. The EU supplied Botswana with imports worth 3.2 percent of total imports, primarily in the form of Machinery & Electrical Equipment, Diamonds, and Chemicals & Rubber Products.
Botswana’s recent trade deficit of over P6 billion highlights a decline in export revenues, particularly in the diamond sector. While Asia remains the leading export market for Botswana, the country heavily relies on imports from the SACU region, particularly South Africa. Addressing the trade deficit will require diversification of export markets and sectors, as well as efforts to promote domestic industries and reduce reliance on imports.
The business sector in Botswana is optimistic about the year 2024, according to a recent survey conducted by the Bank of Botswana (BoB). The survey collected information from businesses in various sectors, including agriculture, mining, manufacturing, construction, and finance, among others. The results of the survey indicate that businesses expect trading conditions to improve in the first quarter of 2024 and remain favorable throughout the year.
The researchers found that firms anticipate improvements in investment, profitability, and goods and services exported in the fourth quarter of 2023 compared to the previous quarter. These expectations, combined with anticipated growth in all sectors except construction and real estate, contribute to the overall confidence in business conditions. Furthermore, businesses expect further improvements in the first quarter of 2024 and throughout the entire year.
Confidence among domestic market-oriented firms may decline slightly in the first quarter of 2024, but overall optimism is expected to improve throughout the year, consistent with the anticipated domestic economic recovery. Firms in sectors such as mining, retail, accommodation, transport, manufacturing, agriculture, and finance are driving this confidence. Export-oriented firms also show increased optimism in the first quarter of 2024 and for the entire year.
All sectors, except agriculture, which remains neutral, are optimistic about the first quarter of 2024 and the year ending in December 2024. This optimism is likely supported by government interventions to support economic activity, including the two-year Transitional National Development Plan (TNDP) and reforms aimed at improving the business environment. The anticipated improvement in profitability, goods and services exported, and business investment further contributes to the positive outlook.
Firms expect lending rates and borrowing volumes to increase in the 12-month period ending in December 2024. This increase in borrowing is consistent with the expected rise in investment, inventories, and goods and services exported. Firms anticipate that domestic economic performance will improve during this period. Domestic-oriented firms perceive access to credit from commercial banks in Botswana to be relaxed, while export-oriented firms prefer to borrow from South Africa.
During the fourth quarter of 2023, firms faced high cost pressures due to increased input costs, such as materials, utilities, and transport, resulting from supply constraints related to conflicts in Ukraine-Russia and Israel-Hamas. According to the survey report, the firms noted that cost pressures during the fourth quarter of 2023 were high, mainly attributable to increase in some input costs, such as materials, utilities, and transport arising from supply constraints related to the Ukraine-Russia and Israel-Hamas wars. βHowever, firmsβ expectations about domestic inflation decreased, compared to the previous survey, and have remained within the Bankβs 3 β 6 percent objective range, averaging 5.4 percent for 2023 and 5.4 percent for 2024. This suggests that inflation expectations are well anchored, which is good for maintenance of price stability,β reads the survey report in part.
However, firms’ expectations about domestic inflation decreased compared to the previous survey, and inflation expectations remained within the Bank’s objective range of 3-6 percent. This suggests that inflation expectations are well anchored, which is beneficial for maintaining price stability.
In terms of challenges, most firms in the retail, accommodation, transport, manufacturing, construction, and finance sectors considered the exchange rate of the Pula to be unfavorable to their business operations. This is mainly because these firms import raw materials from South Africa and would prefer a stronger Pula against the South African rand. Additionally, firms in the retail, accommodation, transport, and mining sectors cited other challenges, including supply constraints from conflicts in Russia-Ukraine and Israel-Hamas, as well as new citizen economic empowerment policies that some firms considered unfavorable to foreign direct investment.
On the positive side, firms highlighted factors such as adequate water and electricity supply, a favorable political climate, an effective regulatory framework, the availability of skilled labor, and domestic and international demand as supportive to doing business in Botswana during the fourth quarter of 2023.
Overall, the business sector in Botswana is optimistic about the year 2024. The anticipated improvements in trading conditions, supported by government interventions and reforms, are expected to drive growth and profitability in various sectors. While challenges exist, businesses remain confident in the potential for economic recovery and expansion.