Banking / Insurance
Ecobank Transnational Incorporated responds to Wrongful Allegations in some Media Publications
We want to use this medium to allay the fears of any of our shareholders, creditors, and other stakeholders resulting from the unfounded allegation contained in the said publications
LAGOS, Nigeria, December 19, 2018 The attention of the ETI Group has been drawn to recent publications in some online media alleging overstatement of ETI’s balance sheet and income statements emanating from incorrect exchange rates in translating the financial statements of our affiliate entities, especially Nigeria.
We want to use this medium to allay the fears of any of our shareholders, creditors, and other stakeholders resulting from the unfounded allegation contained in the said publications.
Ecobank complies with IAS 21 requirements
The deterioration of the Naira in 2016 led to the creation of different windows for various segments of the economy leading to foreign currencies being traded in these markets/windows at different rates and thus leading to a multiple exchange rate system in Nigeria.
The existence of multiple FX markets with different exchange rates as well as the accessibility to such markets necessitates the review of the appropriate exchange rates that entities should use in accounting for and reporting its foreign currency transactions as well as foreign investments into Nigeria under International Financial Reporting Standards (IFRSs). IAS 21 ‘The effects of changes in foreign exchange rates’, requires that a foreign currency transaction should be recorded at initial recognition in the functional currency using the spot exchange rate at the date of transaction (IAS 21, paragraph 21). IAS 21 paragraph 8 defines the spot exchange rate as the exchange rate for immediate delivery. Where a country has multiple exchange rates, an official quoted rate should be used as the spot rate.
Nigeria currently has multiple exchange rates and judgment is required to determine which exchange rate qualifies as a spot rate that can be used for translation under IAS 21. In determining whether a rate is a spot rate, an entity is required to consider whether the currency is available at an official quoted rate and whether the quoted rate is available for immediate delivery. The CBN official rate, Nigeria Inter-bank Foreign Exchange Fixing (NIFEX) rates and the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rates are all quoted and can be used to convert or translate foreign currency transactions. Thus, the CBN official, NIFEX or NAFEX rates all technically comply with the requirements of IAS 21.
As a policy within Ecobank Group, we use the official rate in the respective jurisdictions in which we operate to translate the results and balances of our affiliates into the Group’s reporting currency, the US Dollar. As a result, and in exercising the judgment allowed for within IAS 21, the Group currently uses the CBN official rate which is one of the 3 quoted rates and the official exchange rate according to the CBN. The use of this rate complies with IAS 21 and has been publicly disclosed to the market in all our press releases along with the impact of using the other available rates. This is done so that users of our financial statements can easily quantify and adjust for the use of the other exchange rates if necessary. Most of our peers in Nigeria used the CBN rate in 2017, before switching to NIFEX towards the end of the year. In 2018, they have gradually settled at a blend of both NIFEX and NAFEX.
The use of the CBN rate is in accordance with the group’s policy which is to apply the official rates. This policy and its application are compliant with IFRS and specifically IAS 21. To enable comparison and to ensure that the user of the group’s financial statements is not prejudiced in any way, we have adequately disclosed in our various press releases and investor presentations the fact that we have used the CBN official rate in addition to disclosing the expected impact on our results of using alternative available rates.
At its November board meeting, the Board of ETI approved the adoption of the NAFEX rate as the rate to be used for the translation of our operations in Nigeria. The change has been necessitated and approved in response to developments in the industry especially with the ETI’s peers moving away from the use of the CBN official rate.
Ecobank complies with IFRS 9 requirements
Ecobank Group adopted IFRS 9 as issued by the IASB in July 2014 with a date of transition of 1 January 2018, which resulted in changes in accounting policies and adjustments to the amounts previously recognised in the financial statements. Similarly to our peers in Nigeria, as well as other African and global banks, and, as permitted by the transitional provisions of IFRS 9, the Group has elected not to restate comparative figures. Adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognised in the opening retained earnings and other reserves of the current period. Overall, the adoption of the standard resulted in the group recording higher impairment allowance than that recognised under IAS 39. This had a negative impact on the group equity by $299m.
The main drivers for the significant increase in IFRS 9 impairment figures when compared to IAS 39 impairment figures are:
• Replacement of the emergency period under IAS 39 with 12 months ECL on all exposures under IFRS 9.
• IFRS 9 introduces the stage 2 bucket where higher impairment (Lifetime losses) is recognised for facilities with significant increase in credit risk. Under IAS 39, same assets were classified as performing with minimal impairment recognised.
• Off balance sheet exposure & undrawn balances: Under IAS 39, impairment was not required to be recognised on these items, however, IFRS 9 requires that impairment provision on these items is calculated.
• Other financial instruments: Historically very little or no impairment has been held on non-customer loans/ instruments such as placements with other banks, government treasury bills and bonds, corporate bonds, items in the course of clearing and other debtors. These are now clearly within the scope of IFRS 9 and impairment has been computed on these.
IFRS 9 2014 does not require restatement of comparative period financial statements except in limited circumstances related to hedge accounting (not applicable to Ecobank Group) or when an entity chooses to restate (the Group has not, nor have most of its peers). The standard requires that where comparative periods are not restated, the difference between the previous carrying amounts and the new carrying amounts be recorded in opening retained earnings or other components of equity, as appropriate. This is the approach that has been followed by the Group and as a result the transition impact of $299m has been recognised in equity.
In conclusion, we can confirm to all stakeholders that there were no misstatements in our financial statements as alleged in our financial statement for the year ended 31 December 2017 nor in our three quarterly reports released during the 2018 year. We also note that this unfounded allegation was made by a former employee of the Group who is currently in court claiming payment of 13 years’ salary for an alleged unlawful termination of his employment contract. (APO)
SOURCE Ecobank
aYo Chief Operations Officer, Miles Bloemstein and Revio’s co-founder and Chief Operating Officer, Nicole Dunn
African insurtech aYo Holdings, jointly owned by telecommunications giant MTN and insurer Sanlam Allianz, is pioneering omnichannel insurance premium collections and claims payouts, through a partnership with payment orchestrator, Revio. This development will make it easier for aYo’s millions of customers to pay for life and hospital cash insurance by choosing their preferred method from a range of locally relevant payment options, in addition to MTN mobile money and airtime currently offered by aYo in its seven markets across the continent.
The additional payments capabilities, facilitated via Revio in its respective markets, will allow aYo to offer greater choice to existing and new clients, boosting both sales and retention.
Miles Bloemstein, aYo’s Chief Operations Officer, who is championing the omnichannel payment strategy was inspired by the growth in alternative payment methods and adoption across the continent. While Africa’s digital payment transactions are growing 16% year-on-year – and are projected to reach $146 billion in 2023 – the continent’s payment landscape is notoriously complex and fragmented, with few universal and interoperable payment methods available.
“Localisation of payments and collections is key to business success in Africa. Our team has spent significant time in our different markets to understand local payment preferences and cultures, and the feedback is clear – payment methods matter. If customers do not see the payment methods they trust and prefer, they will not buy the product.,” said Bloemstein. Whilst MTN payment options remain the core of its strategy, aYo believes omni-payments, in addition to omni-channel delivery, is key to success in its digital insurance ecosystem.
Revio’s co-founder and Chief Operating Officer, Nicole Dunn, shared, “It’s fantastic to see market leaders like aYo adopting such a customer-centric approach to collections and payments. Today, the customer payment experience is almost as important as the customer experience of the product. aYo’s team deeply understands its customer base and has invested in the capabilities to reach new customers and retain them for longer. We’re excited to support them on this journey.”
Revio, which recently raised $5.2 million in funding from leading investors QED Investors and Partech, aims to reduce the complexity, cost, and risk of payment operations in Africa. Its single API is pre-integrated with more than 50 payment methods, with the ability to selectively expose methods and route transactions based on success rates and local adoption.
“Africa’s collection challenges are complex and unique. By helping aYo collect revenue from its customers using their preferred payment methods, we not only increase payment success rates, but reduce lapse rates and churn,” said Dunn.
The partnership will reduce aYo’s integration effort to launch new markets, and ongoing operational cost associated with managing multiple payment methods and providers. It is estimated that it will save at least 10 months’ development effort per market. In the process, aYo will reduce integration and setup costs considerably through a single integration project for all of the company’s existing markets.
The partnership is live in Nigeria and will soon be launching in aYo’s other markets. Not only will aYo customers have access to more localised and accessible payment methods for premium collections, but also payouts. Together with Revio, aYo has solutioned a new payouts process that offers multiple payout options to customers for the payment of claims, giving customers and beneficiaries options in respect of how they receive their claim payout, shared Bloemstein.
Since starting operations in 2017, aYo has evolved into a major player in the African microinsurance market, using a ‘pay as you go’ insurance model that gives policyholders the flexibility to have the cover they need at any given time. Its vision is to grow into the largest insurance technology platform in Africa by providing a range of affordable and accessible financial services products
Microinsurer aYo Zambia has launched a new General Illness Cover product, which will provide cover for customers who spend up to three days in hospital because of sickness or disease, as it looks to drive greater insurance penetration in the country.
The new illness cover is an extension of the company’s existing ‘Recharge with Care’ product, which provides hospital cover for customers if they are involved in an accident.
“To date, more than 3.5 million Zambian consumers have purchased cover to protect themselves against hospitalisation in the event of injury, or loss of life,” said aYo Zambia CEO Andrew Nkolola. “But many of our customers have been asking us: ‘How will we deal with the financial blow of falling ill? We don’t want benefits only when we’re in an accident.’ We realised it was a huge gap in the market and have responded accordingly.”
Nkolola says aYo Zambia is committed to contributing to the growth of insurance in the country. Earlier this year, Finance Minister Situmbeko Musokotwane expressed his concern over Zambia’s low insurance penetration levels, which leaves millions of Zambians without cover if a disaster strikes.
When it first launched in Zambia, aYo offered hospital and life cover to individuals through two insurance products, ‘Send with Care’ and ‘Recharge with Care’. A growing market demand for insurance for the whole family prompted the company to create the new Family Cover product last year, which allows policy holders to add up to seven people, including themselves.
Now, the new General Illness Cover adds a further layer of protection that helps ordinary Zambians stay afloat when the unexpected happens. It pays up to K3,250 if a policyholder is hospitalised through illness.
As with aYo’s existing products, General Illness Cover customers must maintain active Mobile Money (MoMo) accounts to pay premiums and claim. Customers can sign up and claim by dialling the USSD code *296# on their mobile phones and following the prompts. They can also claim using ayo4u.com/zm. All Family Cover claims are paid directly to the claimant’s mobile money wallet without any hassles.
aYo Zambia has been voted best microinsurance product of the year for both 2021 and 2022.
AllLife CEO, Steph Bester (Image: Supplied)
AllLife, providing life insurance to South Africans living with dread and chronic diseases, today announced that it is making R50 000 accidental death cover available to South Africans. The announcement is a critical step in the organisation’s core business proposition that everyone deserves the right to life insurance. Fewer than four out of ten South Africans have any form of life cover in place. This places enormous pressure on families and loved ones in an economic climate that requires multiple breadwinners per household.
“Business is about so much more than profits. At AllLife, we have made it our mission to bring access to life cover to marginalised communities over the years. Today’s announcement highlights that we are ready to take the next step on that mission,” says Steph Bester, CEO at AllLife. “By offering accidental death cover to the majority of South Africans, we want to show everyone that they not only deserve life cover but that there are ways for them to get that cover. Our entire team is exceptionally proud of this offering and to be involved with a business that believes in making a difference that’s bigger than ourselves.”
The R50 000 accidental cover is available to all South Africans between the ages of 18 and 75 with a valid ID number and email address, with no exceptions. As per the working model, AllLife will carry the premium for the policy in their quest to ensure a better tomorrow for those left behind when the unthinkable happens.
The policy is available to all South African earning over R5000 a month, the application process takes ten seconds and is as simple as entering an individual’s name, surname, ID number and email address on an easy-to-navigate webpage. Afterwards, policy documents will immediately be emailed to the new policyholder.
“We are not stopping here. We recently launched an extension to our portfolio with a product that ensures all people in South Africa are covered, regardless of whether they live with dread or chronic conditions such as cancer or heart conditions. In fact, one of the biggest reasons people are being denied access to life cover is for being deemed overweight, a demographic we now also offer cover to. We continue to make it our mission to uncover and offer life cover products that are inclusive to all South Africans, regardless of someone’s health,” adds Bester.
In 2005, AllLife was the first company to offer life cover to people living with HIV, a population segment entirely ignored and even feared by the many big life insurance companies at the time. Next, in 2013, it included life cover for people living with diabetes, yet another segment largely avoided by the mainstream life insurers.
“In a world where real-life challenges mar our every day, it is refreshing to find some hope and good news, knowing someone has your back. Many South Africans have monthly budgets that don’t balance, leaving tough decisions around what to keep and cancel. Knowing that someone in a family unit has cover in place without worrying about the monthly debit order goes a long way,” ends Bester.
