Sanlam House on Kenyatta Avenue in Nairobi. FILE PHOTO | NMG
Sanlam Group, a South African financial services group, last
week announced it had completed the $1 billion acquisition of SAHAM
Finances, an insurance group headquartered in North Africa, as part of
its plan to become a pan-African insurer.
The group’s
pursuit of a pan-African position ties with studies showing that
consumers prefer multinational brands to local ones because of perceived
higher quality.
“The acquisition of the remaining 53
per cent of SAHAM Finances, which increases our shareholding to 100 per
cent in the Group, is the next logical step for Sanlam and enables us to
have an even more meaningful presence across sub-Saharan and North
Africa, in line with our strategy,” said Mr Ian Kirk, Sanlam Group CEO
in a statement.
The deal will give Sanlam access to
SAHAM’s African business in 26 countries in North, West and East Africa,
as well as the Middle East, through its 65 subsidiaries and 700
branches. SAHAM Finances predominantly writes personal lines general
insurance, which exceeds 80 per cent of its portfolio.
“Given our presence in the market, the deal positions Sanlam as
the financial services provider of choice for international business,
financial advisers, banks, other distribution entities as well as a
preferred network of partners for global insurers with no African
presence,” said Kirk.
It was in similar fashion that
Sanlam Group re-entered the Kenyan general insurance market in March
2015 after acquiring a majority shareholding in Gateway Insurance
Company Limited. The deal entitled Sanlam to a 51 per cent stake in the
firm, positioning it to tap into sectors such as the oil market.
According
to a case study published in the Harvard Business Review on the
strategies transnational companies employ to compete in a market,
consumers tend to perceive international brands as of good quality, more
than they do local brands.
“Consumers watch the fierce
battles that international companies wage over quality and are
impressed by the victors. A focus group participant in Russia told us
that the more people buy a brand the better the quality is, while
another consumer in Spain said that he likes international brands
because they typically offer more quality and better assurances than
other products,” reported the Harvard Business Review.
However,
this is not an indication that transnational insurance companies such
as Sanlam Group can completely dominate the market on the basis of their
international status.
Local brands can still win
consumers on the basis of enhanced brand awareness, which may overshadow
the appeal and status of global brands.
Research by
Curtin University in Australia on how a successful international brand
may compete with a local brand, based on consumers’ perceived commercial
value and quality, found that local brands enjoy more brand awareness
that leads to brand loyalty.
“A strong local brand
enjoys certain advantages in terms of brand loyalty and overall brand
commercial value especially amongst the low status-seeking consumers....
Our findings also confirm that globalisation might not always be an
appropriate strategy given the presence of strong local iconic brands,”
reported Curtin University.
- African Laughter
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