Last year, South African specialist financial services group acquired Alexander Forbes African Actuarial Consultants (AAC) what the company hopes to grow into a regional powerhouse in actuarial consulting. NewsDay economic reporter Tatira Zwinoira (ND) sat down with Andrew Darfoor, Chief Executive Officer of Alexander Forbes Group Holdings Limited (ADVERTISEMENT) about their interest in Zimbabwe and the region. You will find excerpts from the interview below.
From Tatira Zwinoira
ND: Many readers may not understand much about actuarial services, so could you explain what it is?
ADVERTISEMENT: In short, we work with pension funds and their trustees to ensure that assets and liabilities are reported fairly.
So I would explain it this way that you save money, it goes into a pension, and every year you have to look at the assets and see if they grow in a way that offsets the liabilities to fund people’s pensions when they go in Pension.
What we do is provide valuations to ensure that assets are reported fairly and that growth assumptions are fed.
This means that people who put money into retirement can be assured that there will be enough money when it is time for them to take money when they retire. So this is the basic service that we provide.
ND: As Alexander Forbes, did you have this actuarial offer before you partnered with AAC?
ADVERTISEMENT: Yes. We are the largest actuary service provider in South Africa and we believe in Africa.
What we saw was an opportunity to work with a leader in the field in Zimbabwe and they had a vision of creating a regional leader not just in Zimbabwe but in other markets in southern Africa and that vision was in line with our vision match.
I also knew Tinashe Mashoko (General Manager of AAC).
We had previously worked together at Old Mutual so it was pretty easy for me to make this decision to develop a significant, strategic interest in the business that we are now the largest strategic investor in the business.
We will invest to support this growth in Zimbabwe and across Africa as well.
ND: When you look at pensions here in Zimbabwe averaging below $ 100 and when you look at numbers like that, do you still believe that through pensions you can provide services to the common man?
ADVERTISEMENT: So let’s have a second conversation about Alexander Forbes. We not only offer actuarial advice, but also retirement provision, asset management, car and home insurance, asset management, savings and much more.
We offer a wider range of services to businesses and individuals, so we believe we can evolve our model in Zimbabwe over time to better serve each person, both businesses and individuals. Our entry point, however, is the actuarial advisory business.
ND: Of course there are risks in this country and many of them. As I said, we have our elections in six weeks’ time. Are you still confident that if the choice goes one way or the other, you can continue to achieve the vision you had when you worked with AAC?
ADVERTISEMENT: Yes. We look at the cycle and that means we have a 5 to 15 year perspective.
We wonder, is this the market that will grow? Is this the market that has a young population that wants to invest and save? And we think the answer is yes.
We support the government’s early signs of attracting foreign investment, focusing on education and financial inclusion, these are all good signs so we are cautiously confident that the government will do what is right for the country.
So this is not a one-year decision, but a five to 15 year decision.
ND: You said you support companies and individuals. How are you going to do that?
ADVERTISEMENT: We will support businesses by providing them with a wider range of benefit solutions and individuals by providing access to broader financial services over time.
ND: But the problem is that many companies in Zimbabwe are struggling and many of them are facing foreign exchange problems and have to lay off some workers. How do you master these challenges?
ADVERTISEMENT: Well, ultimately for the company, what we are telling the company is that we can help them with actuarial assessments, create a savings plan for their employees if they choose, improve their employees’ financial awareness and literacy through our training .
And for individuals who want a broader range of advice, we have these solutions available.
But you are right. It’s a tough business environment, but guess what? It’s tough in South Africa and some of the challenges are here too and we can still support our customers.
ND: What financial strength do you bring to this partnership with AAC?
ADVERTISEMENT: We are looking for investments. We will support the team on recruiting, branding and marketing and have more extensive skills so this is an investment.
We’re going to invest in business to do better.
ND: A few months ago, Treasury Secretary Patrick Chinamasa said the country is over 90% cashless. Is that a problem or a positive for you?
ADVERTISEMENT: Well, I would react to this question in such a way that we want to invest here and expand the business. We are not making the investment for any other reason, so we need to take a long-term perspective.
ND: And this long-term perspective: what would you like to achieve by the end of the year?
ADVERTISEMENT: We don’t focus on the “end of the year”. Our 10 year vision is to help the team not only become the best actuarial consultancy in Zimbabwe, but also make them a pan-African leader in actuarial advice.
ND: Now, how do you say to a low-income worker, “See that actuarial services are good for you,” how would you convince this low-income person?
ADVERTISEMENT: I think the point is to separate who the actuarial services are for. It is mainly for corporate and pension funds.
Well, what I would say to the man on the street following your analogy is that you want to make sure your retirement fund is receiving proper advice to ensure that assets and liabilities are in sync.
You never want a situation where your liabilities are greater than your assets because that means when the time to retire there is nothing left. So I would say that we are providing the role of security to this asset base of this pension, so ultimately we want a world where people can work, withdraw and live peacefully, and that is the ultimate goal.
And I think there is more to be done not just in Zimbabwe but around the world.
ND: Have there been any companies interested in using your services since you control the AAC?
ADVERTISEMENT: Yes. One of the reasons I’m here is to meet a number of companies today for a wider discussion about how Alexander Forbes might help them.
ND: How many companies are you targeting? What number would you say okay that’s a good number?
ADVERTISEMENT: We have over 4,000 companies in South Africa, so of course we want to make sure we add value to the companies here and we will talk to them.
ND: Have you registered a company?
ADVERTISEMENT: AAC is the largest actuarial consultancy in Zimbabwe and already has the largest number of companies. Therefore, we are committed to current customers, future and potential customers.