- It responded positively to the misery of the scourge
FSG Limited, Botswana’s leading funeral services company, reported more than 60 percent profit growth in the past year ended 31 December 2021, its shareholder Botswana Insurance Holdings Limited (BIHL) has revealed.
BIHL, the most diversified insurance company in Botswana, owns 37.62 percent in FSG. According to the insurer, profit after tax for FSG grew from P23 million to P38 million, reporting the fastest profit growth amongst BIHL’s subsidiaries and associates.
BIHL CEO Catherine Lesetedi explained that FSG carried a lot of work in terms of undertaking, providing a service at a time of death. General undertaking is the principal revenue generator for the company. With the increase in mortality, and with the footprint and the expertise that the FSG group has, it was able to benefit in the past two years. FSG market share is around 75 percent.
Lesetedi was quick to emphasise that prior to COVID era “there were a combination of other factors” that contributed to improved performance. FSG is present in four markets – Botswana, South Africa, Zimbabwe and Zambia. The markets are regulated differently, Lesetedi observed, hence the needs are somewhat different even in terms cultural beliefs. In other words, she means that the time taken to bury individuals is different.
In the past three years, Lesetedi said FSG took a decision to shut down most of its loss making operations as a way of stopping the leakages to make the business profitable. “There was focus in Zambia to turn the business profitable,” the CEO said, adding that there were some months where the group was not getting remittances, especially from government employees.
In South Africa (SA), FSG remained in the North West part, a highly competitive environment. According to Lesetedi, the focus in SA has been tombstones that are again exported to Botswana. “When one looks at results for 2021, it is those markets turning profitable (Zambia and SA),” she observed stressing “the stopping of leakages and then the COVID deaths”. Against the background of rising mortality, she puts this into perspective: “One could say it was easy for them to benefit, but you only benefit if you are still able absorb the services asked of you,” she said.
Logistically, Lesetedi declared that the business was well positioned and managed to be able to provide the much-needed services at a time the turnaround for funerals averaged three days due to excess mortalities. In addition, she reckons that there was a lot of pressure on team; they needed to manage the variable costs, such as petrol, which were also rising. Therefore, “the fact that they benefited from that speaks to the ability to manage a fluid landscape and be able to provide a good service,” the CEO emphasised. “FSG benefitted from normal public that did not have policies with them mainly on account of services they offer and ability to do that professionally.” The CEO said Zimbabwe has been difficult because it is a start-up, hence it takes time to get to a position of scale and to compete pound for pound with existing providers there.
In terms of the relationship with Botswana Life, Lesetedi clarified that FSG did get an administration fee which also happens in Zambia where the insurer is Sanlam. FSG has two product lines, the first being that they sell or distribute funeral assurance products on behalf of Botswana Life, carrying out administrations on these policies. Lesetedi previously disclosed that more than two years ago, FSG improved benefits for FSG assurance, and “we’ve seen clients move to the improved products on the funeral side and therefore there’s been a steady revenue increase on that line”.