Barclays Life in six questions
BARCLAYS LIFE MANAGING DIRECTOR: Motshabi Mokone
What is Barclays Life?
Barclays Life Botswana (Pty) Ltd is a subsidiary (100%) of Barclays Africa Group Limited, and provides life insurance to Batswana through various channels. Our business started operating in Botswana in March 2011, operating at the time as Absa Life Botswana. In August 2013, Absa Life Botswana officially rebranded to Barclays Life Botswana.
Barclays Life Botswana provides Life Insurance, Funeral Insurance, Group Life Assurance (death) and Disability Benefits, Credit Life benefits to both retail and corporate clients. We also provide structured life insurance products that are designed to meet the specific needs of clients who require unique insurance products. Over the last 3 years, our business has successfully grown from being the smallest insurer in Botswana at inception, to being ranked the third largest life insurer.
At times there is a bit of misunderstanding about Barclays Bank and Barclays Life. Help us understand this.
Barclays has two operating entities in Botswana. Barclays Bank, and Barclays Life. Barclays Life provides long term insurance services in Botswana while Barclays Bank provides banking services. This proposition sees us as Barclays supporting our customers over a wider scope of needs.
It’s been more than a year since the introduction of Barclays Life in this market. How has the journey been?
It’s been both challenging and exciting at the same time. From an industry perspective, competition has intensified over the years, with an increased number of life insurance players. This has resulted in more innovative, relevant and affordable life insurance products for Batswana. Overall growth in the life insurance market has been sluggish over the years, from double digit growth a few years ago, down to just above 1% in the last year. Amongst other things, increased pressure on consumer spending has contributed to the decline in growth of the industry. However, for Barclays Life, the challenges created an exciting environment and opportunities for us to reflect on the lives of Batswana, given the economic pressures, and ensure that we provide solutions and financial security for Batswana.
There is very stiff competition in your industry. How are you handling it?
We are relatively new in Botswana, having opened our doors in March 2011 as Absa Life Botswana. We subsequently rebranded to Barclays Life Botswana in August 2013, following Absa Group’s acquisition of Barclays’ African businesses. We have grown notably since inception, despite fragile economic recovery, and are now the third largest life insurer in Botswana, out of a total of 9, with approximately 6% market share. Barclays is a very strong brand both locally and internationally, and Barclays Life, as the ‘Insurance’ arm of the Barclays Group seeks to grow within the Botswana market as the insurer of choice. Being part of a well-established group has the benefit of extensive experience and technical expertise, which our clients get easy access to.
Which are Barclays Life’s main products?
Barclays Life provides credit life cover, which is insurance cover that will settle an insured’s outstanding loans in the unfortunate event of their death or disability. We also provide group life and group funeral, which is insurance cover for a group of people, normally done through an employer, association etc. Through this type of cover, we are able to offer unique insurance cover specifically suited for a defined group. Through group life cover, we are able to form long-lasting partnerships, as our insurance cover is designed as long-term, sustainable solutions for the particular group. We also offer individual life cover and individual funeral cover. Our flagship products in the individual space include Kgomotso Funeral Cover, and Lefika Life Cover, both of which have attracted a lot of interest in Botswana, as they are affordable, relevant for Batswana and easy to get with exceptional turn-around times on claims.
How easy is it to differentiate insurance products in the market, and how are you doing it?
We differentiate our products and ourselves in a number of different and relevant ways. Firstly, through the design of our benefits, we ensure that our products are appropriate and specifically suited to our clients’ needs. Secondly, we incorporate the effect of increased pressures on consumer spending, and ensure that our products are affordable through our competitive premium rates. In addition, our clients play a critical role in securing competitive differentiation. This can only be achieved by engaging them and responding to what they need. Lastly, although relatively young in Botswana, we have an extensive distribution network, through the 43 Barclays Bank Botswana branches & mobile agents. This makes our products and service highly accessible to Batswana nationwide, and contributes to our superior service and turnaround times.
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Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.