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Kenya’s largest pension fund administrator Zamara is planning to expand into Africa, north of the Limpopo, over the next five years, using the East African country and Zimbabwe as focal points. In Zimbabwe, Zamara will partner Atchison Actuarial Services (AAS), a subsidiary of Cormaton Consultants (Pvt Limited), a fund administration company. The two firms have worked together for 16 years.

The plans to expand come after a change in the ownership structure of Alexander Forbes East Africa which saw Kenyan investors and employees take up a majority 60 percent shareholding in the company. Alexander Forbes South Africa remains with a 40 percent stake.

Zamara started in 1994 operating as Hymans Robertson actuarial firm. In 2003, the firm became part of the Alexander Forbes Group.

In an interview, Zamara executive director James Olubayi said after the change in shareholding, the firm adopted Zamara as its corporate identity to support a wider service offering and a Pan African growth ambition.

Zamara controls a third of the Kenyan pension fund market worth about K1 trillion shillings (US$9,74 billion) making it the biggest in terms of size, the pension funds it controls and the number of actuaries employed. Its product portfolio includes financial services like insurance consulting, investment consulting, retirement benefits consulting, death and disability benefits and healthcare benefits among many others. The company also has products like political risk and terrorism insurance and crop and livestock insurance to guard against business interruption.

Mr Olubayi is also the chief and signing actuary of AAS where he holds a 10 percent stake. Under the plans, AAS will grow the southern African market, north of the Limpopo, Zamara will focus on east Africa and together the two will enter into West Africa.

“Plans are underway to expand into Africa. We are in the process of setting up operations in Rwanda and Nigeria. We are just finalising a few issues with Alexander Forbes but really our aim is to conquer the continent leveraging on our experience and successes in both Kenya and Zimbabwe. We believe in partnerships rather than competing head on.”

He noted that the scope for growth in the fund administration sector was huge as penetration ratios in the continent outside South Africa were still low.

“We need to capitalise on the growing demand of insurance, brokerage and similar services on the continent.”

However, challenges remain. Mr Olubayi said the sector tended to be “myopic”, too individualistic in its approaches. And this is an African problem.”

He emphasised that pension funds as long term investors should take the leading role in big projects such as low cost housing where they would be able to get meaningful returns over time.

Cormaton Consultants managing director Richard Muirimi in support and using Zimbabwe as an example, said the challenge was that the country has 1 290 registered funds in a small economy, which are in turn expensive to run.

“What we need to do is pool these funds and use them to go into big projects. This has successfully been done in Tanzania where there is one scheme for parastatals. There is no reason why a simple company can, for example, plant 400 hectares of Macadamias when funds can be put in an umbrella to plant 10 000h. This is why NSSA is able to do some of the big projects as it has a pooled fund with a long term horizon,” said Mr Muirimi.

Mr Olubayi said in Kenya, Zamara had a $260 million umbrella fund, which holds multi-employer retirement funds.

“This is a simple cost effective retirement arrangement that enables employers to participate in the fund and provide employees with benefits without the hassle of having to run a retirement benefits scheme.”

Mr Olubayi said the Zimbabwean market holds “a lot of promise” in spite of the harsh economic cycles it has been through.

“The minimum pension that the National Social Security Authority (NSSA) gives to pensioners is quite decent; even when compared to the private sector. So this market (for me) is poised for growth judging from what the economy has been through and from its large base of human capital.”

But for the fund administrators, the biggest potential markets on the African continent were Nigeria and Ghana.

“They are, however, not easy to get in. Rwanda is the softest considering its easy registration but Ghana and Nigeria have the biggest potential. We are, however, looking at the whole of Africa. We hope to be in a lot of countries in the next five years.”