Wednesday , May 25 2022

Map your strategy: Build a Pan-African insurance company


Lessons from African leaders

Mutsa Chironga, Georges Desvauk and Acha Leke

Nadia Fettah, executive director of Saham Finance, Morocco, oversaw the expansion of a small local company into a leading African insurance company operating in 23 countries across the continent. Between 2005 and 2015, it increased sales almost ten times to over one billion dollars. In 2016, Saham shifted his expansion strategy to Africa to the next level: she teamed up with Sanlam, a long-standing South African insurance company, which has made Africa the main focus of growth. This partnership became a merger in 2018, when Sanlam fully bought Saham in a $ 1.1 billion transaction, buying the remaining stake in a company he had not already had.

Nadia Fettah: Our goal was simple: to become the best insurance company in Africa. Our first step was to become the main player in Morocco, which we managed to do in three or four years. But our ambition was great and our market was small, so we were looking for the next countries in which we could expand. We considered North Africa and Europe, but when we began to travel to sub-Saharan Africa, we realized that we could have a big influence there. Most countries had very low insurance penetration, so there was a great potential for providing services to clients who had very little access to insurance.

This led us to quickly expand in different regions of Africa. In 2010, we made an acquisition that gave us a direct presence in ten countries in the West African francophony – which made life easier for our Moroccan managers, all of whom speak French. But we also wanted to go to other major markets in Africa that were unchanged. We went to Angola and bought a company that became the first private insurer there back in 2005. We invested in Nigeria, Kenya, Rwanda, Madagascar and Mauritius. In spite of linguistic and cultural differences, we have built successful businesses in all these markets, creating slim, highly empowered local leadership teams supported by common, technologically-guided back-office systems.

Of course, this rapid expansion has come up with challenges, as illustrated by an example of our entry into Angola. We bought a fast-growing local insurance company in 2015, but just as the deal ended, the price of oil collapsed, putting the oil-dependent Angolan economy in the key. Suddenly, everything went wrong, and we faced the crisis.

However, we looked at the long-term, and our local management team quickly came to a strategy for saving business. This strategy was aimed at increasing sales to business users, including thousands of smaller businesses, instead of returning back. In a year, our Angolan business returned to profitability and built a real beach for us. As we grew, our competitors stopped their investments. This will give us a strong competitive advantage, as the economy of Angola is recovering.

Today we have a big business portfolio in smaller countries, so we can not manage it in the headquarters. Instead, we give our managers a lot of freedom and ensure that the people we put on these roles are real entrepreneurs. We issue guidelines on topics such as asset management, and we provide our countries with back-office support operations. In addition, we allow our local operations to decide what to do and how to do it. Consider the example of Burkina Faso, one of the smallest and poorest countries in Africa. The local local manager of Saham has only good ideas, such as targeting inefficient business users. As a result, Burkina Faso has become one of our fastest growing markets.

Talent is an essential component of our success. I personally spend one-third of my time on talent management and development. One of the key components of our talent strategy is to make geographical mobility a requirement for career advancement at higher levels – a key step in building pan-African business with shared values ​​and practices. We have established a rule that, in any African country, the Deputy Director-General of his local operation may never be the next Director-General of the country. It pushes people towards more mobility: you can grow in your own country, but if you want to have number one place, you have to travel. In order to gain new talent, we employ the best people from the Moroccan University, who have many students from sub-Saharan Africa. We are also making great efforts in training, although it is difficult to find training providers in African markets that meet our standards. As a result, we have internally built our own training solutions.

About the author / authors

The reflections by Nadia Fettah, James Mwangi, Alic Dangot, Fred Svaniker and Grace Machel come from interviews conducted in the wider research effort of the new book, Business revolution in Africa: how to succeed in the next major global growth market (Harvard Business Press, 2018) Mutsa Chironga, Executive Director of Nedbank and Diplomate from McKinsey's Office in Johannesburg; Georges Desvauk, senior partner in Hong Kong; i Acha Leke, president of McKinsey's offices in Africa, headquartered in Johannesburg. The authors want to thank Jalil Bensoudi and Omid Kasiri for their contributions to the book and this article.

Source link