The dust has finally settled after an overhaul in the leadership of Britam, a regional financial services provider. The company’s managing director, Tom Gitogo, discusses his growth projections, including why the company is primed for a return to paying dividends.
Where does Britam stand now in contrast to your appointment in August 2022?
The business has moved on beyond steady now, we are definitely on a growth path. Our profit before tax has grown by 65 percent in an extraordinary year characterised by higher interest rates which affect our debt service costs and some of our expenses. We have invested significantly in listening to our customers and redesigned our products to respond to the feedback.
We have also leveraged what has worked here across regional markets. For example, we have started a life business in Uganda and two micro-insurance businesses in partnership with Airtel in Rwanda and Malawi.
From a management point of view, can you say that the Britam shakeup is now complete?
We have now steadied our staff turnover and there hasn’t been any significant change in our Exco staff over the last year. If anything, we have beefed up our staff complement with skills I thought we needed. There is also a high level of optimism among staff. I do hold regular town halls with all of our staff, including those in the region. I have had town halls with our financial advisers who are a significant pillar of the success of Britam and I dare say they carry a significant part of the brand.
For investors, I’m sure they would now want to see the company paying a dividend as profitability becomes routine. How soon will this happen?
My projection is that from 2025 we should be able to have addressed the technical issue of retained earnings. Because of the significant loss from 2020, the Group is still clearing the accumulated losses so we can pay dividends. From a cash flow and earnings perspective, we have been steadily growing. All the indicators are pointing in the right direction.
Are there plans to further roll out some of your services here in Kenya to the region?
Being able to leverage our success and DNA here in Kenya in the regions but, of course, adjusting for local nuances has helped because it’s easier for Britam to set up a life business in any of our markets than perhaps our competitors. For example, it’s only taken a couple of months to fully set up a life business in Uganda.
We are looking at Tanzania and Malawi as potential areas to expand to in terms of the life business. We have started a pension business in South Sudan and have a sound asset management business in Uganda. Mozambique has an interesting landscape with the oil, gas and agricultural sectors.
Your property segment is now profitable, but what’s your outlook for the business?
We are now confident we have a clearer view of what we want to do with our property portfolio. We have put on sale some of our idle land banks because we are convinced that commercial rental space and properties might be the way to go with an eye on real estate investment trusts (REITs) so we can introduce liquidity into an otherwise illiquid sector.
You have highlighted micro-insurance as your key area of focus for future growth. Is this the way to increase the worrying low share of the industry as a share of GDP?
We are largely an informal sector as an economy, which renders itself ripe for microinsurance. Micro-insurance is not poverty insurance, it just means insurance that is agile, flexible and bite-sized to emulate or simulate the income streams of the target market. Demographics indicate that the youth are the majority but they are not known for their purchase of insurance, so you must make it relevant and convenient for them.
You have to look at how you distribute insurance to them and how they access it. By its very nature, that limits the quantum of insurance premiums and also the frequency. The youth will want to pay for insurance only when they need it or as and when they need it. They would want to be in control of when they turn it (insurance) on and off. To us, that’s all in the realms of micro-insurance because you can’t do that with the bigger policies.
You are now essentially in the second half of your strategy, by the time you hit the proverbial final whistle, what more should we expect from Britam before we see the next focus areas?
We have a rolling strategy as Britam but obviously, it’s quite common to have a timeframe of activities. We are looking at how the future will look over the medium term to inform our next strategy. A strategy, however, doesn’t have to change significantly if it’s delivering. We believe we have struck gold with the strategy and we may enhance it or drop things that have become second nature to us like cost efficiency. We are not looking only at 2025 but beyond that.