Old Mutual is not contemplating exiting Zimbabwe, backing the fundamentals of that business despite macroeconomic headwinds in the country neighbouring the group’s home market, SA.
In its half year report for six months ended June 30 2024, the financial services group said due to hyperinflation in Zimbabwe and barriers to accessing capital by way of dividends, it continued to exclude results from its Zimbabwean business from adjusted headline earnings.
Old Mutual group CEO Iain Williamson said the company, which recently exited Nigeria and Tanzania as part of a portfolio review, said it was still confident about the prospects of its Zimbabwe business.
“The business in Zimbabwe is actually a good business. But the macroenvironment we operate in with hyperinflation is a problem. What we have effectively done is that we have given the Zimbabwean team a mandate to run the business in the following parameters: look after our customers and brand and [do] not eat up capital,” Williamson told Business Day.
“We have also told them to continue delivering good value to customers. Value in the context of what is happening in Zimbabwe is difficult. I think the management team in Zimbabwe have done a phenomenal job,” he said.
“But we can’t get money out of Zimbabwe. We have recently managed to get some money out from a dividend view. It’s also difficult to put value on the business in rand terms or any sensible currency because of what has been going on from the devaluation perspective. So, it’s not about the quality of the business, but the macroeconomic environment we are operating in.”
One of Old Mutual success stories in Zimbabwe was the launch of its fintech proposition in the country, O’mari.
Old Mutual launched O’mari — which offers mobile money services, insurtech, investech, digital lending, e-commence, payments and digital products and services for the retail mass market in Zimbabwe — at the end of May 2023.
The launch ratcheted up the fintech competition in that country which is dominated by Econet’s EcoCash, and Innbucks.
Fintech has become a big money spinner in Africa, with telecommunications companies benefiting handsomely. Africa’s largest mobile operator, MTN, said in September that payment giant Mastercard would take a minority stake in its burgeoning R100bn fintech business.
The operation brought it about R10bn in core earnings, or earnings before interest, taxes, depreciation and amortisation (ebitda) in the six months to end-June 2023.
Vodacom is also scaling up its fintech business.
Williamson said O’Mari has been a roaring success. “That business has a million customers already and it has only been going for a year. That has been a fantastic innovation. So there is some good stuff happening in the Zimbabwe business,” he said.
“We have actually ring-fenced that business by taking it out of our headline numbers from a results perspective. We always report it as a below the line result but this does not reflect an underlying concern about the business.”
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