We take a long term view on Zim: Alexander Forbes

Last year, South African specialised financial services group, Alexander Forbes acquired African Actuarial Consultants (AAC) in what the company hopes will help it grow into a regional powerhouse in actuarial consultancy. NewsDay business reporter Tatira Zwinoira (ND) sat down with Alexander Forbes Group Holdings Limited chief executive officer Andrew Darfoor (AD) on their interest in Zimbabwe and the region. Below are excerpts of the interview.

By Tatira Zwinoira

ND: A lot of readers may not understand much about actuarial services, so could you explain what it is?

AD: In a nutshell, we work with pension funds and their trustees to ensure that the assets and liabilities are fairly stated.

So the way I would explain it is that you save money, it goes into a pension and every year you must look at the assets as well as looking at those assets whether they growing in a manner to offset the liabilities to fund peoples’ pensions when they retire.

What we do is to provide valuations to ensure that the assets are fairly stated and the growth assumptions are fed.

That means that people who put money into the pension can be rest assured that when it’s time for them to take money out when they retire, there will be enough money there, so that is the fundamental service we provide.

ND: Now as Alexander Forbes, before your partnership with AAC, did you have that actuarial offering?

AD: Yes. We are the largest actuarial service provider in South Africa and we believe in Africa.

What we saw was an opportunity to partner with a leader in that area in Zimbabwe and they had a vision to create a regional leader, not just in Zimbabwe, but across other markets in southern Africa and that vision was aligned with our vision.

I also knew Tinashe Mashoko (chief executive of AAC).

We had worked together previously in Old Mutual, so it was fairly easy for me to make that decision for us to take a significant, strategic interest in the business so we are now the major strategic investor in the business.

We are going to invest to support that growth in Zimbabwe and also across the broader scope of Africa.

ND: When you look at how pensions here in Zimbabwe are below $100 on average for people and when you look at those kinds of figures, do you still think that you can offer services to the ordinary man through pensions?

AD: So let us for a second talk about Alexander Forbes. We do not just provide actuarial consulting we provide retirement, asset management, car and home insurance, wealth management, savings and the lot.

We provide a broader range of services to the corporate and individual, so we believe over time we can evolve our model in Zimbabwe to better support every person both corporate and individual. But, our entry point is through the actuarial consultancy business.

ND: Of course, there are risks in this country and a lot of them. As I said earlier on, we are getting into our elections in six weeks’ time. Are you still confident if the election goes either way you will still be able to realise the vision you had when you partnered AAC?

AD: Yeah. We look through the cycle and what that means is we are taking a five-to-15-year view.

We are asking ourselves is this the market which is going to grow? Is this the market which has a young population that wants to invest, save? And we think the answer is yes.

We are supportive of the initial signs by the administration to want to attract foreign investment, focus on education and financial inclusion, these are all good signs, so we are confident in a cautious way that the administration will do what is right for the country.

So, this is not a one-year decision this is a five-to-15-year decision.

ND: You said that you to support corporates and individuals. How will you be doing that?

AD: We will support corporates by providing them a broader range of employee benefit solutions and individuals by providing access to broader financial services over time.

ND: But the problem is a lot corporates are struggling in Zimbabwe and a lot of them are facing foreign currency issues and some have to lay off workers. How do you navigate around those challenges?

AD: Well, that is ultimately for the corporate, what we say to the corporate is that we can help them with actuarial evaluations, create a savings scheme for their workers if that is something they want to do, improve financial awareness and literacy of their workforce through our training.

And for the individual, should they want a broader range of advice we do have those solutions available.

But, you are right. It is a tough economic environment, but you know what? It is tough in South Africa and some of the challenges here are there as well and we are still able to support our clients.

ND: What kind of financial muscle are you bringing into this partnership with AAC?

AD: We are looking to invest. We are going to support the team in terms of recruitment, branding and marketing, having broader capability so this is an investment.
We are going to invest in the business to make it better.

ND: A few months ago Finance minister Patrick Chinamasa said that the country was over 90% cashless. Is this a problem or positive for you?

AD: Well, the way I would react to that question is that we are making an investment here and we want to grow the business. We are not making the investment for any other reason, so we have to take a long term view.

ND: And that long term view, what would you want to accomplish by the end of the year?

AD: We do not focus on the “end of the year”. Our 10-year vision is that we help the team not just become the best actuarial consultant business in Zimbabwe, but it becomes a pan African leader in actuarial consultancy.

ND: For the low income earner, how do you now say to them “look actuarial services is good for you” how would you convince that person the one who is earning a low income?

AD: I think it is about separating who the actuarial services are for. It is largely for the corporate and pension funds.

Now what I would say to the man on the street as per your analogy is that you want to ensure that your pension fund is getting the right advice to makes sure that the assets and liabilities are in sync.

You never want a situation where your liabilities are more than your assets, because that means when it comes time to retire, there is nothing there. So, what I would say is that we are providing the role of security to that assets base of that pension, so ultimately we want a world where people can work, retire to live peacefully and that is the ultimate objective.

And I think there is more work to be done not just in Zimbabwe, but in pretty much all over the world.

ND: Has there been some corporates showing interest in getting your services now that you control the AAC?

AD: Yes. Part of the reason I am here is to meet a number of corporates today to have a broader discussion about how Alexander Forbes could help them.

ND: How many corporates are you targeting? What number would you say okay this is a good number?

AD: In South Africa, we have over 4 000 corporates, so obviously we want to make sure that we can add value to the corporates here, so we are going to start talking to them.

ND: Do you have any corporates signed on?

AD: AAC is the largest actuarial consultancy in Zimbabwe and has the largest number of corporates already, so what we are doing is engaging in current clients, future and prospects.

1 Comment

  1. THEY WILL NOT KNOW ANYTHING ABOUT INVESTMENTS

Leave a Reply

Your email address will not be published. Required fields are marked *