Bramerlife Chief Executive Officer, Regina Sikalesele-Vaka
The newest life insurer in the country, Bramerlife, will soon shed any vestiges of its association with its former parent company, when it rebrands.
Under new ownership of the Botswana Public Officer’s Pension Fund, Bramerlife Chief Executive Officer, Regina Sikalesele-Vaka says the company is now owned by Batswana and brings an added advantage of responding to local clients quickly without having to seek permission from foreign based parent companies.
Bramer Life Botswana was launched in June 2014 after the Mauritian based British American Investment Corporation (BAIC) invested P40 million for an 80 per cent stake in the company with citizen investors holding the remaining 20 per cent.
Nine months after the glitzy launch, the insurance firm was rocked by a ‘ponzi scheme’ scandal that hit its sister company, Bramer Banking Corporation Limited in Mauritius, tarnishing Bramer Life Botswana in the process. The scandal was said to entail a large-scale scam in the shape of a ponzi scheme estimated at over P6.4 billion.â€¨
Following the revelations, NBFIRA (Non Bank financial Institutions Regulatory Authority) appointed Nigel Dixon-Warren of KPMG as a statutory manager in April for Bramer Life Botswana.
Sikalesele-Vaka, is upbeat about making Bramerlife the best financial services company in five years time. “We had our scandal but we are a new company now and we have new shareholders in BPOPF; the company is now owned by Batswana,” she said. “With some marketing and rebranding, we will shake off the scandal.”
Botswana Opportunity Partnership (BOP), a joint venture between Botswana Public Officers Pension Fund (BPOPF) and Capital Management Botswana (CMB), now owns 40 percent of Bramer Life Botswana under the new ownership structure.
According to Sikalesele-Vaka, the local insurance sector, which has become very competitive in the last five years, is plagued by, among other issues, fraud, especially perpetrated by brokers, who have even gone to the extent of claiming death benefits for clients who are still alive.
However, she said that the recently passed Insurance Industry Act is more prescriptive in the way that of client-insurer relations, as well as being more punitive in cases of breaches of the law.
She said there is competition in the industry, with many underwriters entering the insurance space and putting pressure with pricing.
On the issue of client perceptions, she said that insurance, particularly life is not a tangible good and the client often feels that they are paying for nothing, whereas they appreciate the peace of mind mostly when an incident happens that the insurance pays out a claim.
With vehicle insurance, people will usually take out a policy because the banks require it, said Sikalesele-Vaka, comparing long and short term life insurance. Another challenge that the industry has to deal with is the exclusion of the ordinary person from insurance cover.
The traditional way of doing insurance, with brokers, underwriters and clients on the other end, has been greatly reshaped by the arrival of the bancassurance business model, a distribution channel for both insurance and banking products, offered at one selling point. While this is greatly convenient for the consumer and profitable for the banks and partner insurers, it has had the effect of pushing out the broker from the scene.
“The two industries (banking and insurance) are from two extremes; often the customer does not even know why they are taking out an insurance policy when they are taking a loan but it is a business evolution and only the consumer can tackle that over time, maybe in the next five years,”she said.
THE SERIAL CORPORATE
Sikalesele-Vaka loves a good challenge. “I love turning small things big,” she told BusinessPost. A lawyer by training, Sikalesele-Vaka left the chambers to become a business leader when she joined the Motor Vehicle Accident Fund (MVA) in 1998, growing its asset base up to about P750 million and turning it into an exemplar of good governance for even similar organisations in the southern African region.
She then moved to Botswana Life and spearheaded its re-engineering, from 2010 to 2014, also becoming the head of the Group. In 2014, she was at the helm of the committee that organised the African Youth Games, with “very little time and a shoestring budget”.
Quizzed on her views regarding powerful women and their contribution to the development of other women, in the context of sentiments expressed by leader of opposition in parliament, Duma Boko, last week, that women generally grow powerful and make it difficult for other women to become successful, she said that it was actually quite true looking at the situation on the ground.
For her part, Sikalesele -Vaka, said she believes she has always made it a point to empower women, citing various examples of women who she has mentored and encouraged to climb the corporate ladder.
Sikalesele -Vaka relishes the thought of going into lecturing at university level, to impart the knowledge and experiences that she has garnered over the years to future corporate leaders. Would she go into politics? Every career has its people, she says, adding that she does not have the temperament for house to house campaigns, wheeling and dealing and being the people’s person, being the introvert that she is.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”