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Britam Holdings Posts Record Profit, Boosts Market Position

By Q4 2024, Britam aims to finalize its strategic entry into the DRC market through the acquisition of a local insurer. This initiative is part of the company’s larger goal to establish a strong presence in 12 African countries by 2030.

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Britam Holdings Plc's record profit and strategic expansion into the DRC highlight its resilience and adaptability within the ever-evolving African financial landscape.

:Britam Holdings Plc has achieved record profits and strategically expanded into the DRC, showcasing resilience and adaptability in Africa’s financial landscape. With diverse revenue streams and a clear growth vision, Britam aims to enhance stakeholder value and strengthen its position as a leading pan-African financial services provider.

By Charles Wachira

Integrated financial services firm, Britam Holdings Plc announced in late March 2024 a remarkable KSh 4.82 billion ( US$ 37,302,587) profit before tax for the year ended December 31, 2023. This represents a significant 65% increase from the KSh 2.92 billion ( US$ 22,598,247) recorded in the previous financial year ended December 31, 2022.

Financial Performance

The robust financial performance is attributed to substantial growth in top-line revenue from both insurance and investment activities, which effectively cushioned the business against fair value losses incurred from fixed income securities. Britam’s insurance revenue surged to KSh 36.4 billion, marking a notable 41% increase from KSh 25.8 billion in 2022. The general insurance business throughout the region and the Kenyan insurance sector, which together accounted for 29% of the total insurance revenue, both saw notable expansion that drove this growth.

SWOT Analysis

Strengths:

  • Strong Financial Performance: Britam’s KSh 4.82 billion profit before tax for 2023 demonstrates a solid financial foundation and effective revenue generation strategies.
  • Diversified Revenue Streams: Growth in both insurance and investment activities reduces reliance on any single income source, providing stability against market volatility.
  • Regional Expansion: Successful expansion into the DRC and other East African markets strengthens Britam’s presence and market share in the region.

Weaknesses:

  • Exposure to Market Volatility: Despite growth, Britam still faces risks associated with fair value losses in fixed income securities.
  • Operational Risks in New Markets: Entering new markets like the DRC poses operational challenges and regulatory risks that could impact profitability.

Opportunities:

  • Untapped Markets: The DRC presents significant growth potential with low insurance penetration rates, offering Britam a chance to capture a large market share.
  • Digital Transformation: Continued investment in digital solutions can enhance customer experience, improve operational efficiency, and drive further growth.
  • Strategic Acquisitions: Acquiring established local insurers in new markets can accelerate market entry and expansion.

Threats:

  • Regulatory Changes: New regulations in various markets could impact operational processes and profitability.
  • Economic Instability: Economic fluctuations in target markets could affect consumer spending on insurance products.
  • Competitive Pressure: Increased competition from other financial services providers in the region could impact market share and profitability.

Strategic Initiatives and Future Outlook

By Q4 2024, Britam plans to have completed its strategic entry into the DRC market by acquiring a local insurer. This move aligns with the company’s broader plan to establish a significant presence in 12 African countries by 2030. The acquisition, valued at approximately USD 50 million, is expected to boost Britam’s gross earned premiums by 15% annually over the next five years, with the DRC operations contributing an estimated KSh 5 billion by 2028.

Britam’s proactive expansion strategy, coupled with its commitment to innovation and customer-centric solutions, positions it well for sustainable growth. The company plans to invest over USD 200 million in acquisitions and organic growth initiatives across the continent over the next six years.

Conclusion

Britam Holdings Plc’s record profit and strategic expansion into the DRC underscore its resilience and adaptability in the dynamic African financial landscape. With strong financial performance, diversified revenue streams, and a clear vision for future growth, Britam is well-positioned to enhance value creation for its stakeholders and strengthen its presence in Africa’s emerging markets.

Keywords:Profit Growth:Market Expansion:Insurance Revenue:Strategic Acquisitions

Financial Performance

Charles Wachira, Managing Editor of businessworld, has disproportionately worked as a foreign correspondent in Nairobi, Kenya. Formerly an East Africa correspondent with bloomberg, covering the business beat he has since been published by a legion of other authoritative global news platforms including Global Finance Magazine, Toward Freedom, Earth Island Journal, and Dialogue. earth and so on. He is also a co-author of, Success to Significance, a biography of pre-eminent global industrialist and renowned philanthropist Dr. Manu Chandaraia. He’s an alumnus of the University of Nairobi and Nairobi School.

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Business & Money

Ethiopia Attracts $53.5 Million in Q1 Investments, Creates 8,700 Jobs

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: Ethiopia attracts $53.5M in Q1 investments, creating 8,700 jobs. Growth driven
by reforms, with a focus on service and manufacturing sectors.

The Addis Ababa Investment Commission (AAIC) announced a promising start to the
2023/24 fiscal year, with 612 investors registering a combined capital of Birr 2.93 billion
($53.5 million) in the first quarter.

This reflects a 13% growth compared to the same period last year, signalling sustained
investor confidence despite economic challenges.

Speaking at a press briefing on November 30, AAIC’s Director of Communication,
Meseret Woldemariam, credited the growth to policy reforms and enhanced investor
facilitation.

“Our efforts to streamline investment processes and resolve bottlenecks are yielding
results. We remain committed to ensuring investors thrive in Addis Ababa,” she said.

SECTORIAL CONTRIBUTIONS

The majority of the newly licensed investors are in the service and manufacturing
sectors. The service sector includes hotels, tourism, and IT ventures, while the manufacturing
investments span electrical products, steel, wood, and textiles.

These investments have generated 8,707 jobs, comprising 770 permanent and 490
temporary positions created by newly licensed entities.

The AAIC has also initiated field monitoring visits to ensure operational readiness. “Our
team works closely with new investors to address challenges promptly, enabling faster
project rollout,” Meseret added.

CHALLENGES AND REFORMS

Investors continue to face hurdles such as foreign currency shortages and workspace
availability. However, the commission highlighted progress due to macroeconomic reforms,
particularly improving foreign currency access.

“We are actively collaborating with the Mayor’s office to address workspace issues
through professional support in rental solutions and operational guidance,” Meseret
explained.

Recent reforms in the National Bank of Ethiopia’s foreign exchange policy have also
been pivotal. In October, the central bank announced a 30% increase in forex allocation to priority sectors, a move welcomed by stakeholders.

EXPANSION PLANS AND PROJECTIONS

The AAIC aims to capitalise on the momentum, targeting Birr 15 billion ($274 million) in
investments by the end of the fiscal year. A new digital investment portal, launched in November, promises to reduce registration times by 40% and improve transparency.

“We are confident these initiatives will not only attract more investors but also deepen
the trust of existing ones,” Meseret concluded.

INVESTOR SENTIMENT

Prominent business leader Ahmed Yusuf, who recently launched a $3 million IT hub in
Addis Ababa, praised the commission’s efforts.

“The improvements in investor services and forex allocation are encouraging. We hope
to see more streamlined processes for licensing and operations,” he remarked.

As Ethiopia seeks to position itself as a regional investment hub, sustained efforts in
addressing investor concerns and enhancing infrastructure will be critical.

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Ethiopia Eyes December Debt Restructuring After IMF Review

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: Ethiopia’s December IMF review may unlock long-awaited debt restructuring,
crucial for economic reforms and stalled projects like the Koysha Hydroelectric
Dam.

Ethiopia’s much-anticipated debt restructuring prospects could gain clarity this
December, as the country awaits the second review under its four-year International
Monetary Fund (IMF) program.

The Extended Credit Facility (ECF), launched in August 2023, remains central to
Ethiopia’s economic reform and debt relief efforts.

Progress Toward Debt Treatment

Last week, Ethiopian authorities reached a staff-level agreement with the IMF tied to the
second review. A comprehensive report on this review is set for release in December, a month many stakeholders, including the National Bank of Ethiopia (NBE), view as pivotal for
advancing debt treatment plans.

“Debt restructuring stands at the centre of our reform agenda. With the report’s release,
we expect rescheduling talks to gain momentum,” said Habtamu Workneh, Director of
External Economic Analysis & International Relations at the NBE.

He added that discussions are focusing primarily on extending maturity dates for Ethiopia’s debts.

IMF Support and Engagements with Creditors

The IMF has provided Ethiopia with USD 2.5 billion under its current fiscal program,
offering critical support to the country’s macroeconomic stabilisation efforts.
In parallel, Ethiopian authorities have engaged with Eurobond holders and the Official
Creditors Committee (OCC).

A debt restructuring proposal was submitted to Eurobond holders in July 2024, following
key discussions in December 2023 and May 2024.

Additionally, a global investor update held on October 1, 2024, highlighted the nation’s
ongoing economic challenges and progress in creditor negotiations.

Shifting Debt Landscape

The government has reported improvements in its debt profile. Planning and Development Minister Fitsum Assefa (PhD) announced that Ethiopia had ceased relying on commercial loans and direct borrowing from the central bank.

She noted a significant drop in the external debt-to-GDP ratio to 13.7 per cent, though
the IMF’s Debt Sustainability Analysis, published in July 2024, pegged the ratio at 18
per cent as of June 2023.

External debt accounts for 45 per cent of Ethiopia’s total public and publicly guaranteed
debt, the report stated.

Financing Challenges Persist

Despite these reforms, Ethiopia’s financing challenges remain acute.
The government is seeking nearly USD 1 billion to complete the Koysha Hydroelectric
Dam project, which has stalled at two-thirds completion due to funding shortfalls.

The project is a critical component of Ethiopia’s development strategy, but its delays
underscore the broader fiscal pressures the country faces.

Expert Views on Economic Outlook

While Ethiopian officials are optimistic about the December review as a turning point,
analysts caution that real progress hinges on creditor consensus and the government’s
ability to implement reforms.

Critics have also raised concerns about inflated GDP growth figures, which they argue
may distort Ethiopia’s true debt sustainability.

Looking Ahead

The IMF review, coupled with Ethiopia’s active engagement with creditors, could mark a
a significant step forward in its quest for debt relief.

December will likely be a defining month for the country’s economic future, with broader
implications for its ability to attract investment and complete critical infrastructure
projects.

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Business & Money

KCB Group Surpasses Equity with US$ 342.31 Million Nine-Month Profit

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: KCB Group reports Sh44.5B ( US$ 342.31) nine-month profit, outpacing
Equity Bank. Learn about its 49% growth, challenges, and stock performance this
year.

KCB Group Plc has outperformed Equity Bank to cement its position as Kenya’s leading
lender, posting a net profit of Sh44.5 billion for the nine months ending September

This represents a 49% year-on-year growth, surpassing Equity Bank’s Sh37.5
billion profit during the same period.

Profit Growth Driven by Core Business Performance

The remarkable profit growth was fueled by higher earnings from both interest and non-
interest income streams. KCB’s diverse revenue base has been pivotal in maintaining
its dominance in the competitive banking sector.

Non-Performing Loans a Key Concern

Despite the impressive profit growth, KCB’s non-performing loan (NPL) ratio rose to
18.5%, compared to 16.5% last year. This increase highlights persistent challenges in
managing credit risk, with Chief Financial Officer Lawrence Kimathi acknowledging it as
a “pain point” for the bank.

KCB Stock Outshines Peers on NSE

KCB’s strong financial performance has translated into exceptional stock market results.
The bank’s stock has risen 78.8% year-to-date, making it the best-performing banking
stock on the Nairobi Securities Exchange (NSE).

Plans to Sell National Bank of Kenya

Earlier this year, KCB announced plans to sell its struggling subsidiary, National Bank of
Kenya (NBK), to Nigeria’s Access Bank. While Nigerian regulators have approved the
deal, it is still awaiting clearance from Kenya’s Central Bank. The sale aims to
streamline KCB’s operations and address losses at NBK.

CEO Paul Russo Optimistic About Year-End Performance

“The journey has not been without its hurdles, but our ability to walk alongside our
customers has driven our success,” said KCB CEO Paul Russo. He expressed

confidence in closing the year on a high note, leveraging improving economic conditions
across the region.

Key Figures at a Glance

● Net Profit: Sh44.5 billion (+49%)
● Non-Performing Loan Ratio: 18.5% (up from 16.5%)
● Stock Performance: +78.8% year-to-date

KCB’s strong performance underscores its resilience in navigating challenges and its
commitment to sustaining growth in Kenya’s banking sector.

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