The transformation of the savings and inte…

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In a first for the savings and investment industry, the industry body, the Association for Savings and Investments in South Africa (Asisa), this week released a report on the transformation , showing the transformation progress made by its members over the three years from 2018 to the end of 2020.

Of the 21 chief executive officers (CEOs) representing member companies on Asisa’s board, 12 (52%) are black. The board’s governance committees (executive, audit, compensation and transformation) are made up of 10 CEOs, six of whom (60%) are black.

Asisa’s outgoing chief executive, Leon Campher, says that while there has been steady improvement in the transformation of life offices and asset managers, the report also shows that there is still much to be done. TO DO.

The report was compiled by an independent research partnership from large-scale Black Economic Empowerment (BBBEE) data sourced directly from Asisa member verification agencies. The data weighting methodology has been confirmed by independent actuaries to ensure accurate averages.

Collective scorecard results

In 2020, life offices and asset managers exceeded most targets for items measured by the Amended Financial Sector Code (Amended FSC) scorecard. The targets were not met for the following elements: management control, employment equity and skills development. In the skills development category, the combined expenditure for Blacks was R1.7 billion in 2018, rising to R2.05 billion in 2020. Of this amount, R1.2 billion was spent on black women, the report says.

In the consumer education category, the modified FSC scorecard stipulates an expenditure of 0.4% of the net profit after tax of the previous year. However, the combined industry efforts amounted to 0.29% (R72 million) in 2018, 0.37% (R91 million) in 2019 and 0.38% (R81 million) ) in 2020.

Campher adds that two additional elements only apply to life offices: empowerment funding and access to financial services. Although life insurance offices have consistently achieved their 15-point empowerment funding targets between 2018 and 2020, they have yet to collectively achieve full marks for the access to financial services element.

Campher points out that the most significant progress has been in the ownership element of the BBBEE scorecard, which measures how much equity black people hold in a company.

“There has been a steady increase in black ownership of Life Offices and Asset Managers since 2018, with Life Offices collectively exceeding their target of 23 points by 2.37 points in 2020 and Asset Managers their target 25 points one point.”

Just this week, Old Mutual announced a massive empowerment equity program that will increase its BBBEE equity component by 4%.

Campher reports that substantial progress has also been made on procurement.

“Life offices and asset managers exceeded their sourcing targets in 2020. Combined sourcing spend with providers with valid BBBEE certificates in 2020 was R52 billion, which is significant. It is encouraging that R22 billion of this spending went to majority black-owned businesses.

“Life offices and asset managers also exceeded their business and supplier development (ESD) targets, with total spend in 2020 amounting to R749 million.”


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The importance of a collective dashboard

Campher says it’s important that Asisa members have access to transformation progress reports specific to life offices and asset managers.

“While the Financial Sector Transformation Council (FSTC) tracks the transformation of the South African financial sector as a whole, the FSTC reports do not consider the unique characteristics of the seven different reporting industries including the savings and savings industry. investment is part of it. It should be noted that all of our larger members participated in this research, as well as the majority of our smaller members,” he says.

Campher anticipates that the report will allow member companies, such as Sanlam and Old Mutual, to use the industry-weighted averages obtained for each amended FSC element as a yardstick to measure their individual progress and take corrective action if necessary.

“For the first time, we are able to measure the transformation of our industry, while focusing our collaborative initiatives on addressing the most critical transformation gaps in our industry,” says Campher.

“While it’s nice to see we’re on the right track, we also have to recognize that we’re not there yet.”

Asisa’s new CEO, Busisa Jiya, says the life insurance and savings industry is well aware that it does not operate in a vacuum and that the sustainability of the savings and savings industry investment is affected by the welfare of the country and its people. The transformation journey of Asisa members will be measured annually, and data collection for the 2021 report is already underway. DM/BM

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