Time to grab opportunities – Clem Booth, Allianz

"Africa is incredibly misunderstood,” according to Clem Booth, Member of the Board of Management of Allianz SE, Global Insurance Lines & Anglo Markets. “Think back 30 years ago and the number of countries with an open democracy could be counted on one hand. Today you can count on one hand those that have not made major progress.” He admitted there is large scale poverty but believed there are many more reasons to engage with business on the continent than to disengage. Among those reasons, he cited ‘a growing population, educated people, good regulatory environments and free access to markets’. Those outside Africa, he said, should also look at the many developments that have come from the continent and the way in which Africa often leads Europe in terms of development. “If you look at insurance, for example, some multi-peril personal lines policies were available in South Africa maybe 10 years ahead of Germany.”hideBooth recognised there is more to be done but is confident of success across the continent. Allianz, he said, has chosen to hub in South Africa, reflecting moves made by many clients and he believed it would remain a regional centre for many years to come. He acknowledged the country faced some tough challenges—notably unemployment and an unequal distribution of wealth—but did not predict any Arab Spring-type revolution. Used to questions about whether South Africans would remain sufficiently patient and wait for government-led change, Booth said: “South Africa has a democracy, there is a vocal discussion and a free market economy. It is a different scenario.” However, Booth recognised ‘investors are fickle’ and in thinking about the Marikana mining dispute last year, he was concerned such events should not be repeated. He also believed that the event was widely reported because it was in South Africa and he urged “people to be more open-minded and more constructive. Africa is not homogenous but is far more democratic than parts of Asia or eastern Europe, for example.” MANDELA FACTOR Europeans are concerned about what could happen after the death of former president Nelson Mandela but in contrast Booth believed it might well unite the country in remembering the good he had done and his legacy. He also questioned why people ask those questions. “Europeans do worry it will be chaos if Mandela dies but will it be chaos in the UK if David Cameron were to die? It is another example of the negative thought process when it comes to Africa.” Nationalisation of major industries is another concern looming large in the minds of many investors but Booth remained confident it was unlikely to happen on any large scale in South Africa. He has always engaged with government, including talks with the ANC when it was a party in exile. In the past there were hopes that South Africa could develop as a southern hemisphere hub for insurance, for example, although Booth felt Singapore has probably stepped up and achieved that goal. Acknowledging the problems brought by the financial crisis in Europe and which continue to dog many businesses, Booth still said that Europeans could be missing out on a major opportunity for growth if they do not consider investment into Africa—something, he said, the Chinese had recognised some years ago. “Chinese investment on the continent has been huge. Many Europeans and Americans have remained largely unaware of that and stand to miss out on the opportunities available,” he said. “Insurance requirements reflect the increasing population and wealth in Africa,” he said. So it was no surprise that Allianz sees Nigeria as a major target with its millions of potential customers but Booth stressed the firm would not compete head to head in the well advanced retail markets but instead would remain concentrated on catering for the needs of the corporates. Distribution remains critical, with any business potentially facing enormous challenges in accessing customers. But again Booth highlighted the innovation of African businesses. Within the insurance industry, he pointed to the many initiatives across Africa to give customers access to insurance products, such as the use of mobile telephones in east Africa, and also the use of satellites to help develop crop insurance for agricultural concerns across the continent as examples where innovation has paved the way for new and rapidly expanding markets. In terms of business more generally, for the future, he said, mining would continue to be critically important but he believed the growth in agriculture would produce many opportunities for both business and for insurers. “Africa really can be the food basket of the world. Africa has jumped the technology hurdle,” said Booth, adding: “It gives us some neat opportunities.” Keeping ahead of the game is vital, he said, in every aspect of business in Africa, from the outset of development plans through to completion. One of the continual questions is whether there is enough insurance capacity for the large infrastructure projects emerging across Africa. Booth said that being part of a global organisation ensures Allianz can provide sufficient capacity and experience, as required. Equally he is not fazed by the differing regulatory regimes across the continent. He admitted it can take time to work with the differing systems but stressed that it was no different to doing business in the US, where every state has a different regulator. “I am quite comfortable with the levels of regulation,” he said. “We cannot swim against the stream, we expect regulation, we make submissions, work with the regulators and then it is plain sailing.” The financial crisis has had an unintended consequence in the ‘tsunami’ of regulation across the world, Booth said, including plenty of new rules introduced by many African countries. A more regional approach would be welcome. As Booth said there have been talks in east Africa for the past couple of years and many businesses already adopt a regional approach in their operations, so stronger links in terms of regulation would be a natural step. The key, said Booth, is to understand the current position and be alive to possible changes. “For that, we partner with companies that have been here a long time and understand the operating environment. SOVEREIGN STATES “In the European Union we have lots of disagreements between, say, the UK and Germany. Africa is no different. It is home to a group of sovereign states who all want to exercise their rights. The trick is in finding the common denominator.” The financial crisis, as well as some of the natural catastrophes of recent times, have challenged the old norm for governments, businesses and the insurance sector. Booth admitted ‘the future is not what is was’ but he was confident the insurance industry had stood up well through the financial crisis and that insurance will remain ‘the best tool to transfer risk’. While predicting the future is not easy but Booth saw the next decade as crucial for the long-term shape of Africa. It was important, he stressed, that insurers were fully prepared to face up to future challenges. Taking Egypt as an example, he said, instead of running away because of the riots, insurers needed a stronger presence there, offering support to businesses as they try to work their way through the problems. The main message, he said, was to be ready to take advantage of the many opportunities doing business in Africa brings—and not to underestimate the level of sophistication in many African markets. African businesses already operate around the world, he said, and are extremely competitive on a global basis.

Time to grab opportunities – Clem Booth, Allianz

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