Juba - Old Mutual will continue to back its businesses in
war-torn South Sudan even after profit plunged last year because the economy
shrank and customers scaled back operations.
“Though we’re not expanding as fast as we would like to,
we continue to maintain and increase our presence” in the country, Patrick
Waweru, head of business development and marketing of Old Mutual’s UAP
Insurance South Sudan, said in an interview last week.
London-listed Old Mutual, which runs insurance and
property management businesses in South Sudan, has just finished constructing
the oil-producing nation’s tallest building, a 15-floor tower in the capital,
Juba, at a cost of more than $20 million. It’s also spending $6 million on
high-end apartments in the city as it seeks to complete work started shortly
after the country gained independence in 2011 and before a civil war two years
later that has dimmed its prospects.
The country’s economy will probably contract 10.5 percent
this year, after shrinking as much as 6.9 percent in 2016, according to
International Monetary Fund estimates. The insurer’s gross premiums in the
country declined to $16.8 million in 2016, from $21 million a year earlier,
while earnings slumped to $4 million from $11 million in 2015, according to
Waweru. Old Mutual has a 60 percent share of the South Sudanese insurance
market.
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The company’s directors have supported the business and
remain positive about the outlook for South Sudan, he said. Old Mutual last
month reported net income of 570 million pounds ($708 million) for 2016 and
gross earned premiums of 3.87 billion pounds.
‘Closed completely’
A civil war that erupted in December 2013 has claimed
tens of thousands of lives and forced more than 3.5 million to flee their
homes, many to neighbouring countries. Authorities declared a famine in two
northern counties of South Sudan in February, the first such official
announcement made anywhere in the world since a food shortage in Somalia in
2011.
Most of the company’s customers come from
non-governmental organizations, which have cut funding or jobs, Waweru said.
“Some have actually closed completely,” he said. It also
offers cover to industries ranging from aviation to oil, for everything
from group medical and life insurance to policies that payout in the event of
kidnappings. Banks and the government are among the company’s other customers.
“The political instability and the dollar crunch has
really affected us and our clients’ numbers,” Waweru said. “We have seen
reduced activity.”
Old Mutual controls the South Sudanese business through
its 61 percent stake in Nairobi-based UAP Insurance Kenya, which started
operating in the country in July 2006.
BLOOMBERG