POST the Government Institutions Pension Fund (GIPF) scandal, the unlisted investment environment have been "jacked-up" and all players in the sector are better geared to see warning signs earlier, Sanlam has said.
Investments in unlisted entities are riskier than listed ones and "things do go wrong". But these incidences needn't taint the entire sector, Sanlam group chief executive officer Johan van Zyl said.
Many Namibians are sceptical about unlisted investments following the GIPF's Development Capital Portfolio (DCP), where about N$660 million were lost in dubious investments. In the aftermath of the DCP, however, regulators and the entire financial services sector have played a role in "upping" the unlisted investment sector, Van Zyl said in an interview with The Namibian.
"We are now better placed to catch these things earlier," he said.
Van Zyl and Tertius Stears, chief executive officer of Sanlam Namibia, spoke to The Namibian about Government's drive for more local investment in listed and unlisted entities, pressure to localise operations, calls for greater Namibian ownership and bigger financial inclusion - thorny issues often cited as as a threat to shareholders' profit.
Be aware of changes in the regulatory environment, embrace it early enough and see it as business opportunities rather than constrictions, both executives believe.
Regulation shouldn't hamper a company's growth, they said, adding that Sanlam's proactive stance on the issue has paid off. Sanlam Namibia has consistently delivered "excellent" results the past three years and is currently the top performer in Sanlam's emerging market cluster, which includes subsidiaries in most English-speaking African countries, as well as India.
"People complain now, but they've been complacent and refused to see it [regulatory changes] coming," Van Zyl said.
Regulation of the financial services sector is a worldwide phenomenon, but one Namibians weren't used to. "Now it is a relatively low hurdle people are complaining about," he said.
Government wants 5% of assets in the pension fund industry to be invested in unlisted entities locally - of Sanlam Namibia's more than N$16 billion in assets under management, about 10% is already invested in unlisted entities such as property, Stears said.
The same applies to legislation requiring 35% of pension fund assets to be invested in listed entities on the Namibian Stock Exchange (NSX), with limitations in investing in dual-listed companies. Stears dismissed industry concerns that Namibia doesn't present enough investment opportunities to meet the requirements, saying that Sanlam Namibia still believes that there is ample room for investment.
Sanlam Namibia is equally at ease with empowering Namibians. It is on track to meet the targets set in the voluntary Namibia Financial Sector Charter regarding black Namibians in management and director positions, and 46% of the company is in Namibian hands. Just because the majority of the shares still belong to the Sanlam in South Africa, doesn't mean that Sanlam Namibia is managed from Bellville in Cape Town, where the group's headquarters are, Van Zyl said.
Sanlam Namibia will embark on a major localisation of its information technology systems this year. "The company increasingly is not a branch of South Africa."
It will also focus on financial inclusion, believing that one of Sanlam Namibia's growth areas is penetration of the lower-end market.