Alexander Forbes Financial Services Ltd said it is exiting Uganda, part of a parent company strategic review to focus on core businesses in its primary market and reset pan-African operations.
The reset of operations outside South Africa, its primary market, will see the financial services group exit “sub-scale markets such as Uganda,” Alexander Forbes Group Holdings Ltd. said in a regulatory announcement on the Johannesburg Stock Exchange in March.
“The company is committed to an orderly exit from Uganda and will maintain levels of service and advice to clients,” said a group press release last week. “Details regarding the exit will be communicated as soon as there are material developments.”
Alexander Forbes, which provides insurance, retirement, and investment services, operates in six African countries outside South Africa. The vast majority of its income is from its South Africa operations, however: latest full-year financials, for the year that ended March 31 2018, show that 97% of operating profit was from South Africa.
The Ugandan unit, alongside the Nigerian operation, was one of the group’s worst performing subsidiaries. In both 2018 and 2017, Alexander Forbes reported an operating loss of ZAR3m (Shs934m in 2018 and Shs804.4m in 2017) for its operations in Uganda. The group has a 51% stake in Alexander Forbes Uganda.
Financials for the six months to September 2018 show that two countries, Namibia and Botswana, were responsible for “over 90% of the operating income” from outside South Africa, with “the remainder coming from smaller operations in Nigeria, Uganda and Zambia.” The results exclude Zimbabwe where Alexander Forbes only started operating last June.
Alexander Forbes is the Uganda’s largest private pensions fund and had assets of Shs28.3bn in 2017, according to the Uganda Retirement Benefits Regulatory Authority. It also provides several other financial services. The company had 12 employees in Uganda at the close of the 2018 financial year, according to its parent company.
The exit follows recent stalled efforts to liberalise Uganda’s retirement benefits sector and expand the coverage of pension schemes. First tabled in 2011, the Retirement Benefits Sector Liberalisation Bill was tabled again in November 2016. It was aimed at, among other objectives, breaking the National Social Security Fund’s monopoly over mandatory pension contributions, provide for fair competition among licensed retirement benefits schemes, and to convert the public service pension scheme into a contributory scheme.
Last year, however, the cabinet approved amendments to the National Social Security Act that in effect maintained NSSF as the sole national savings scheme.