Savings and investment industry’s transformation on track, but it can’t rest on its laurels - Asisa report

22 Aug 2022

Leon Campher, the outgoing chief executive of the savings and investment industry body Asisa, says while there has been a steady improvement in the transformation of life offices and asset managers, the report also shows that more remains to be done.

In a first for the savings and investment industry, the industry body, the Association for Savings and Investment South Africa (Asisa), released a transformation report this week, 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 the Asisa board, 12 (52%) are black. The board governance committees (executive, audit, remuneration and transformation) consist of 10 CEOs, of whom six (60%) are black.

The outgoing chief executive of Asisa, Leon Campher, says while there has been a steady improvement in the transformation of life offices and asset managers, the report also shows that more remains to be done.

The report was compiled by an independent research partnership from broad-based black economic empowerment (BBBEE) data sourced directly from Asisa member verification agencies. The data-weighting methodology was confirmed by independent actuaries to ensure accurate averages.

Collective scorecard results

In 2020, life offices and asset managers exceeded most of the targets for elements measured by the Amended Financial Sector Code (Amended FSC) scorecard. Targets were not met for the following elements: management control, employment equity and skills development. In the skills development category, the combined spend on black people was R1.7-billion in 2018, increasing 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 Amended FSC scorecard stipulates a spend of 0.4% of the previous year’s net profit after tax. However, the industry’s combined efforts amounted to 0.29% (R72-million) in 2018, 0.37% (R91-million) in 2019 and inched up to 0.38% (R81-million) in 2020.

Campher adds that two additional elements apply only to life offices: empowerment financing and access to financial services. While life offices consistently met their 15-point empowerment financing targets between 2018 and 2020, they have not yet collectively achieved full points for the access to financial services element.

Campher points out that the most significant progress was recorded for the ownership element of the BBBEE scorecard, which measures the extent to which black people own equity in a company.

“There has been a steady increase in black ownership of both life offices and asset managers since 2018, with life offices collectively having exceeded their 23-point target by 2.37 points in 2020 and asset managers their 25-point target by one point.”

Just this week, Old Mutual announced a broad-based empowerment share scheme that will bump up its BBBEE equity component by 4%.

Campher reports that substantial progress was also achieved for procurement.

“Both life offices and asset managers exceeded their procurement targets in 2020. The combined procurement spend with suppliers with valid BBBEE certificates in 2020 amounted to R52-billion, which is material. It is encouraging that R22-billion of this spend went to majority black-owned businesses.

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

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The importance of a collective scorecard

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

“While the Financial Sector Transformation Council (FSTC) tracks the transformation of South Africa’s financial sector as a whole, the FSTC reporting does not take into consideration features unique to the seven different reporting industries of which the savings and investment industry is one. It must be noted that all our big members participated in this research, as well as the majority of our smaller members,” he says.

Campher anticipates that the report will enable member companies, such as Sanlam and Old Mutual, to use the industry-weighted averages achieved for each element of the Amended FSC as a yardstick against which to measure their individual progress and take corrective action where necessary.

“For the first time, we are able to measure the transformation of our industry, while at the same time focusing our collaborative initiatives on addressing our industry’s most critical transformation shortcomings,” says Campher.

“While it is pleasing to see that we are well on our way, we must also acknowledge that we are not quite there yet.”

Asisa’s new chief executive, Busisa Jiya, says the life assurance and savings industry is acutely aware that it does not operate in a vacuum and that the sustainability of the savings and investment industry is affected by the wellbeing of the country and its people. The transformation journey of Asisa’s members will be measured annually, and data-gathering for the 2021 report is already under way. DM/BM

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Collective scorecard results

The importance of a collective scorecard