Liberty Plans Nigerian Expansion Amid Job Cuts in South Africa

  • Possible naira devaluation won't deter Liberty's plans
  • Growth on the continent outstipping South African returns

Liberty Holdings Ltd., the insurer controlled by Standard Bank Group Ltd., said it wants to expand further in Nigeria as profit from its operations across the continent rises, outstripping sluggish growth in South Africa, where it has reduced its headcount.

“West Africa is where we have to grow and conclude things,” Thabo Dloti, chief executive officer of the Johannesburg-based group, said by phone on Friday. Even though Nigeria’s naira may be devalued this year “foreign-exchange issues aren’t going to delay us -- being operational in Nigeria sooner is far more beneficial for us than waiting for the exchange rate to be right,” Dloti said.

Liberty already owns Total Health Trust Ltd.in Nigeria, having bought the shares it didn’t already own for 142 million rand ($9 million) in August last year, and has said it wants to buy a Nigerian insurer and asset manager. It may also buy or start a short-term insurer in Botswana to add to its existing operations in the southern African country. It announced an acquisition of 51 percent in Uganda’s Madhvani Group’s short-term insurer in January, completing its East African expansion for now.

Outside of South Africa, new life business grew 39 percent to 304 million rand while the value of new business surged 67 percent to 45 million rand in the year ended in December, Liberty said in a statement on Friday. Total net income, including the South African operations, rose 2.3 percent to 4.01 billion rand and earnings per share excluding one-time items advanced to 14.61 rand, beating the median estimate of 14.32 rand by eight analysts surveyed by Bloomberg. 

The company will pay a final dividend of 4.37 rand a share, it said. The stock climbed the most in more than a week, adding 4.3 percent to 119.19 rand by 9:25 a.m. in Johannesburg.

Liberty, founded in South Africa by Donald Gordon almost 60 years ago, has a presence in 16 African countries, having followed Standard Bank into many of the markets. At home in South Africa, where growth has slumped to levels not seen since 2009 amid rising inflation and interest rates and high unemployment, Liberty has restructured its business, cutting back on head office staff and outsourcing so-called non-core functions, Dloti said. 

“We need to tighten how we operate so there’s lots of internal focus,” he said. “Despite the tougher environment, there’s far stronger growth available in the rest of Africa.”

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