Botswana Insurance Holdings Limited (BIHL) is the country’s most diversified financial services provider with interest in the likes of Botswana Insurance Company and FSG. However, a key associate to the BIHL group is Letshego Holdings Limited, a truly African multinational lender. Letshego’s largest shareholder is the BIHL group. According to 2020 annual reports of both companies, BIHL holds around 28 percent in Letshego. BIHL increased this stake from 26.17 percent in late 2019. The annual report by Letshego shows that BIHL holds this non-public stake through Botswana Life, the country’s leading life insurer. Botswana Life, with a market share of about 69 percent, is owned by the BIHL Group.
BIHL itself is owned in majority by Sanlam. According to BIHL’s latest annual report, Sanlam owns a stake of about 58.43 percent in BIHL. Sanlam is more diversified than BIHL in geography. The Group has over the years evolved from a traditional insurer to a diversified financial services provider with both local (SA) and international footprints. The Sanlam Group has presence in 11 African countries, as well as in India, Malaysia and niche businesses in certain developed markets. The group operates in South Africa, Namibia, Botswana, Swaziland, Malawi, Zambia, Tanzania, Rwanda, Uganda, Kenya, Ghana, Nigeria, Mozambique, India, Malaysia and the United Kingdom. It also has business interests in the United States, Australia and the Philippines.
Sanlam has the largest pan-African footprint of insurance groups based in a number of countries and contribution to the overall consolidated Group. Further, Sanlam operates Sanlam Emerging Markets (SEM), which is responsible for Sanlam’s financial business services (life assurance, general insurance, banking, credit, health, bancassurance and asset management) in emerging markets outside South Africa. The cluster, which aims to ensure sustainable delivery and growth, operates in almost all African countries save for Mauritania, Lybia, Egypt, Sudan, Chad, the Central African Republic (CAR), Eritrea, Somalia, Ethiopia, South Sudan and the Democratic Republic of the Congo (DRC).
Sanlam is also diversified in terms product lines; this so much that there could be conflict of interest when it operates in the same environment as its associates or when its associates want to expand in territories where Sanlam is and vice versa. Sanlam’s financial services range from insurance and credit to banking and savings plans.
Take, for example, Letshego, which offers credit. Letshego is present across Southern, East and West Africa. The Group’s inclusive finance agenda is focused on anticipating and solving the needs of financially under-served customers. Letshego has not shown interest in the South African market, Africa’s second largest economy. Sanlam offers loans in SA. Letshego serves a variety of financial needs of three key customer segments: Micro and Small Entrepreneurs (MSEs), public and private sector low and middle income earners and individuals in the informal market.
Sanlam also has a credit product where they offer clients credit. While addressing conflict of interest questions from this publication in joint a statement, Sanlam, BIHL and Letshego explained that Sanlam remains a valued and strategic partner for the Letshego Group by virtue of being a significant shareholder of the BIHL Group in Botswana (of which Letshego is an associate). Back in 2017, Sanlam and Letshego worked on an insurance product. BIHL gets technical support mostly from Sanlam.
According to Tebogo Keepetsoe, BIHL’s spokesperson, the complementary product offering and synergy in regional representation is an asset for both financial services entities, enabling the platform businesses to unlock mutual commercial benefits. “This is achieved through establishing a broader ecosystem for the advantage of consumers across Africa,” she responded to this publication in a joint statement with Letshego and Sanlam.
Asked how the group handles conflict of interest, she answered that appropriate measures are in place for any conflict of interest that may arise, though this is unlikely. Keepetsoe pointed out that Sanlam offers loans in South Africa, a market in which Letshego does not operate. SA is Africa’s second largest economy after Nigeria in West Africa. However, Letshego has been more aggressive in expansion in the regions of West Africa and East Africa.
Keepetsoe says through its strategic relationships with banks in Botswana and Namibia, Sanlam offers full term loans while Letshego offers micro-loans. “The two target different markets. So, while somewhat competitive, we do not believe (there is) a material issue for either,” she said, adding that in line with both entities’ commitment to maintaining strict levels of governance and compliance, in markets where Sanlam and Letshego partner on products and pricing, all local regulatory and compliance requirements have been sought and secured, mitigating any potential conflict of interest and thus ensuring security and benefit for local consumers. “Sanlam and Letshego share a similar strategic vision and understanding that effective private sector collaborations deliver greater long term, sustainable economic benefits for more communities across Africa.” Keepetsoe emphasised.
BIHL and Sanlam also share similar aspirations, namely to remain a leading regional financial services providers. There is no doubt that the two power houses have been conflicted before. When BIHL acquired Nico Holdings, it negotiated with Sanlam and the company exited the market but continued to be a shareholder in the holding company. BIHL does not just enter into a territory where Sanlam operates. “We will look at opportunities where we don’t have to compete with Sanlam. Where we believe opportunities are worth pursuing, we will engage with them,” BIHL CEO, Catherine Lesetedi, explained back in 2017.