Business News of 2013-12-11

Old Mutual targets investments in country’s economy

Ghana will be a major beneficiary of Old Mutual Emerging Market’s new investment plan for the next three to five years, targetting water, housing and roads sectors of the economy, the company said at a conference in Cape Town, South Africa, last week.

Old Mutual Emerging Markets is the arm of the Old Mutual Group -- the global financial services conglomerate with interests in banking, insurance and asset management -- concentrated on driving their business in emerging markets.

Speaking at the conference, which was part of the 2013 Emerging Markets Roadshow, Rojie Kisten, Head, Capital Raising, Infrastructure and Impact Funds of Old Mutual Investment, said: “The group is looking at helping to grow Ghana’s infrastructural development. We are not taking Ghana for granted in our investment plan; we see opportunities in Ghana, we see growth and we are working toward this.”

He added: “I am highly surprised that when I talk to government officials and regulators they want our relationship to be a partnership.”

Old Mutual recently acquired a majority stake in Provident Life Assurance Company in Ghana, and is hoping to close the agreement with the board and management by close of the year. While Kisten did not say how much they’ll be investing in Ghana, Old Mutual -- with funds under management of £262.2 billion at the end of 2012 -- is believed to have enough wherewithal to invest in strategic projects of the country’s economy.

Provident Life is the fifth-largest life insurance company in the country, and provides life insurance and investment products mainly via an agency force. The group’s acquisition of the company is targetted at expanding its African presence.

Old Mutual Group has a 2015 target for emerging markets of nine million customers, return on equity in the range of 20-25 percent, and profit from Old Mutual Africa equivalent to 15 percent of that of Old Mutual South Africa.

Last year, the group bought the life insurance unit of Nigeria’s Oceanic Bank, and plans to buy minority and majority stakes in businesses in both East and West Africa over the next three to five years.

“We believe that the prospects for growth in Africa are underpinned by sustainable, structural factors,” it said in a statement, adding that the continent’s economic output quadrupled to US$2trillion between 2000 and 2012.

Conference bemoans intra-Africa trade bottlenecks

Speaking under the topic “Sub-Saharan Africa: “Context and Potential”, Dennis Dykes, an economist, said intra-regional trade is still hampered by bureaucracy, corruption and lack of infrastructure.

“Infrastructure is still very underdeveloped and not geared to intraregional trade. Energy and transport infrastructure is a significant constraint. There are few development corridors within and between countries.

“Lack of skills impedes competitiveness, and the ability to conceive, plan and execute projects is a problem. Politics and policy remain deterrents in many African countries, and corruption levels are still high and patronage a problem.

“Considerable work needs to be done on regional integration and improved governance,” he added.