Fidelity halts regional expansion

By Prince Mushawevato

Fidelity Life Assurance has temporally halted its expansion programme into the region as it seeks to consolidate current operations to ensure sustainable growth, a company official has revealed. 

The life assurance company presently has operations in Malawi where it operates Vanguard Life Assurance. Early this year, it ventured into South Sudan, which became an independent state in July 2011, through a 50-50 partnership agreement that it signed with short-term insurance firm New Sudan Insurance Company.

Fidelity managing director Mr Simon Chapereka said the life assurance company will instead work towards expanding and consolidating its market share in the two countries it is currently operating.

Investments in the next two years, he said, are going to be concentrated in Zimbabwe, South Sudan and Malawi. Fidelity’s portfolio on the local market is spread into property development, micro-finance, asset management and actuarial consultancy.

Mr Chapereka indicated that the Malawi project was beginning to register steady growth following stabilisation of the economic situation in the country.

“Operations in South Sudan began in August and are now in full swing. As we monitor developments, we will constantly be looking for new investment opportunities within the same country.

“Our focus is to make sure that all our investment interests succeed; this is the reason why we continue to give due attention to Vanguard Life Assurance (Malawi) so as to ensure that the company realises its full potential,” he said.

The temporary halt of expansion and redirecting of funds to existing services and products, he said, would ensure sustainable growth of the company.

“The idea is not just to go around the region and continent opening operations. Those that already exist need to be strengthened through capital investments before we can start looking elsewhere,” he said.

FLA has in the last three months deployed financial and technical resources in South Sudan in a bid to boost business following the approval of its deal by the Reserve Bank of Zimbabwe and the Insurance and Pension Commission.

Oil-rich South Sudan is currently considered a niche for new investments in such areas as banking, insurance, tourism, exploration, information technology and the manufacturing sector.

“It is every company’s optimism that any investment bears fruit. South Sudan has vast investment opportunities that we can capitalise on. Searching for new opportunities is going to be easy since we will be literally monitoring the day-to-day operations of the market,” added Mr Chapereka.

The 50-50 partnership saw FLA and New Sudan Insurance Company jointly investing more than US$600 000 for operations. Mr Chapereka said returns for investment could only be ascertained after 12 months.

He noted: “Since this is a new operation, we cannot at the moment quantify the amount of business and revenue we are going to generate from the investment. But in due course, after taking note of trends, we will be able to do so. It should be noted though that we expect to get reasonable returns and we both (FLA and New Sudan Insurance Company) believe this will happen.”

Fidelity’s major investment in the South Sudan deal is in information technology infrastructure, human resources and motor vehicles, among other technical requirements. South Sudan sits on the third-largest oil reserve in Africa and analysts predict that the national economy will be largely driven by oil revenues in the near term.

But South Sudan is still to invest in its own oil export infrastructure. It resumed oil exports in June this year, 18 months after dispute over pipeline fees with the Sudanese government. Sunday Mail