FIDELITY Life Assurance CEO Simon Chapereka (SC) talks to the Zimbabwe Independent business reporter Taurai Mangudhla (TM) on the likely impact of the impending elections on his company and gives an update on specific strategic projects.
Below are excerpts:
TM: The country is now in an election period and all the attention is on what is happening on the political field. What is the likely impact of these elections on your business?
SC: In terms of the issue of elections, everything hinges on uncertainty and once the uncertainty has been removed, we believe, a number of issues affecting industry will be addressed. For example, the issue of liquidity and issues of business goals.
Actually, it is a good thing for us if the elections are held, the sooner they are held the better.
TM: From your past experience, what has been the trend for your business in terms of performance around elections?
SC: Obviously, if you take 2008, for instance, because of the violence, I think a number of our partners withdrew to protect themselves, but this time it has been relatively peaceful and we have not yet recorded such issues. We have not had anyone saying they can’t work with us. So, if this environment continues to exist, it’s a huge plus for Zimbabwe.
TM: Turning to specific projects, what is the likely impact of delays at your Southview Park high-density residential stands project on group performance?
SC: It will not affect our performance because we have not built into Southview in our budgets for this year. What has happened, of course, is these are pre-sales and we will realise the sale into our books when we have delivered and we are delivering basically a finished product which we will then bring into account.
TM: What reasons have been given for the hold-up and are you not concerned about this delay?
SC: I think we are not unduly concerned with the time it has taken because it is reasonable given that we are talking about ground development of around 6 000 housing units. That’s a massive investment. So the city fathers have got to ensure that they have looked at it from every angle because the houses are expected to last for the next 100 years.
TM: What has been the payment pattern especially with the delays?
SC: When people go to Southview Park, they see the land and they know they are talking to a developer of repute, you only need to go to Manresa and see what we can do. Individuals have not changed, but housing funds and co-operatives have indicated that they will participate once we start developing the area, that’s why we are expecting a huge uptake once we have started.
TM: Still on the Southview Park project, how many stands have you sold so far?
SC: We have sold about 582 on installments of over five to 10 years and that’s over US$1 million.
TM: During your annual general meeting, you spoke about partnering a South Sudanese company. Would you care to shed some light on the nature of the investment?
SC: We are talking about a 50-50 joint venture to exploit the opportunities in that market.
TM: What is the name of the company?
SC: The company is called National Insurance Company of South Sudan.
TM: In terms of your seed capital, how much are you looking at for the project?
SC: The investment which we want to put in there is in terms of IT, and the human resources; so we are talking about US$1 million for computers and vehicles.
TM: How soon do you expect returns from the investment in South Sudan?
SC: If everything goes according to plan we should expect returns by next year. Now we are establishing the system, sourcing the business and ensuring everything is in place.
TM: Still on new investments, you have previously spoken about establishing a micro bank and how the group expects it to be a game-changer.
SC: Yes, from a point of view that our major competitors are the banks, they have access to large deposits because they are deposit-taking whereas ours is basically limited to the funds we are collecting from our premiums — our own lending — so, you then find we can’t meet the demand. I think we are only meeting 20% of our demand. So, basically, it will help us do so, but you can understand that the Microfinace Bill, which is before parliament, hasn’t gone to senate. Once it has gone, it will have an impact on the terms for new licensing.
TM: Do you have the resources to start the micro-finance business, given the capital requirement stands at US$5 million?
SC: Yes, we do, and if you go to our balance sheet you will see that we have got more than US$4,5 million. We will use internal resources.
TM: Does it mean you are abandoning previous considerations to move into established banks?
SC: Look, while that was considered, we will have a problem if we deal with already established businesses because they had their own overheads and if we get in we get stuck and in terms of re-aligning, we would clear the debts overnight whereas if we are fresh, we start from a clean sheet.
TM: You have spoken about a group rationalisation plan, what targets are you looking at in terms of impact on performance?
SC: The rationalisation will actually result in a savings of up to 20% on expenses incurred; so, we actually have a reduction of business expenses as opposed to fee increase which obviously will have an impact on the bottom line.
TM: Is your staff going to be affected by the strategic decision?
SC: The staff has been re-assigned in terms of the expanding business and re-alignment.