Non-bank financial services firm, Sanlam Kenya has shrugged off fears pre-election jitters may impact negatively on its business three months to the General Election.
In a statement to its shareholders, published in the Nairobi Securities Exchange (NSE) listed company’s Annual report and financial statement 2016, Sanlam Kenya Group Chairman, Dr. John Simba, has expressed optimism ahead of the polls.
Further speaking at the firm’s Annual General Meeting (AGM) today, Dr. Simba said the firm’s positive optimism is underpinned by strategic efforts to expand Sanlam Kenya’s new distribution channels and the introduction of new products to accelerate growth.
“2017 is an election year in Kenya and, as in all elections, business performance is expected to remain muted. The effects of the drought are also expected to be felt throughout the country, impacting on growth and exerting inflationary pressures on the economy,” said Dr. Simba.
“Sanlam, however, remains optimistic of improved performance on the back of our continuous innovation, exploring new distribution channels, bringing to market new products and serving our customers with diligence.”
Speaking at the AGM, Sanlam Kenya Group CEO Mr. Mugo Kibati, assured the firm’s shareholders’ that the new corporate strategy adopted last year has begun to bear fruit.
The strategy, he explained is focusing on clear integration of the Group’s business divisions to unlock value.
“At Sanlam Kenya, we have successfully integrated the various business lines including the general and life units and we are beginning to realise value,” Kibati said, adding that, “the General business has turned around and we are looking forward to better results this year. At the moment, we are restructuring the life business with enhanced human capital and market focused products.”
The economy ordinarily takes a dip every five years as businesses hold back investments awaiting the outcome of the elections.
Several agencies including the World Bank have projected the sub-six per cent growth though. Last week, the World Bank forecast Kenya’s GDP growth would decelerate to 5.5 per cent, a 0.5 percentage point mark down from the 2016 forecast over poll jitters and drought.
Economic challenges this year have included the slowdown in credit growth for the private sector and the rise in global oil prices.
In February, the Central Bank of Kenya downgraded economic growth forecast to 5.7 per cent in 2017 from 5.9 per cent last year, citing uncertainties in the global economy. The economy grew at 5.8 per cent in 2016.
“The decline in the GDP growth rate was reflected in slower growth in gross premiums in the insurance industry of 7.3 per cent from 12.8 per cent in 2015,” said Mr. Simba.
The economy expanded by 5.7 per cent in the third quarter of 2016, a slight dip from the 6 per cent recorded in the third quarter of 2015 on the back of stunted growth in agriculture, manufacturing, real estate and construction sectors.
A severe drought experienced in major agricultural areas of Kenya since the beginning of this year has caused substantial shocks in local food supplies as consumers struggle with rising prices and shortages of popular food items.
Inflation has hit a 57-month high due to rising food prices that have pushed the rate outside the government’s preferred ceiling.
Sanlam Kenya, previously known as Pan Africa Holdings, is majority-owned by financial services group Sanlam which has a 68 per cent stake.
The firm has an estimated market share of 8 percent in the Kenyan life insurance industry, serving over 99,401 policyholders under individual life and more than 236,507 under group life.