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Africa Outlook

Trustco

TRUSTCO

Finance you can trust



When it comes to financial services, Trustco is a company that tries to re-create and redevelop products, breaking new ground in the process and enticing new customers to their businesses

Writer Emily Jarvis
Project Manager Sheridan Halls

Ryan McDougall, Acting CEO of Trustco, likes to think of his company as a "good old fashioned conglomerate", boasting a variety of different business lines including property development, insurance, student lending, air charter, print media and education. With 57 branches across South Africa and Namibia, Trustco are geared up for future expansion and extension of their services into pastures new. Trustco, a JSE listed group, has a market cap of USD130million, revenues of USD80 million per annum and generated earnings in excess of USD23million in its 2014 financial year.

Trustco likes to be different, striving to change people's perceptions and connotations of a conglomerate by providing a set of unique and innovative products to somewhat niche markets. "We have tried to solve age old problems with the distribution of affordable products through a blend of new ideas and technology into what we see as stale industries; creating a little bit of lateral thinking," explains McDougall. "Having such diverse products means there was a need to develop excellent IT platforms, which have helped us merge products such as insurance, education and microlending over the past few years."

In Namibia, Trustco are making waves into the social development of insurance and education, in order to try and find an inclusive financial sector which affords the ability for entry level employees and the self-employedto achieve financial inclusion. "Our education model is one that enables people to afford relevant education via student loans. Additionally, in insurance, our products have affordable premiums, which are small enough so as to not hurt the pocket and therefore enhance the impact of financial inclusion in the lower end of the market," cites McDougall.

Understanding a Conglomerate
McDougall feels that Trustco can be quite a difficult company to "unpack", as he goes on to explain: "By this I mean that as a conglomerate, we have many strings to our bow which is traditionally seen as an outdated concept of over-diversification in business, this worries some investors. However, I think the more investors understand our story and our history, the more value they ascribe to the business and the better return they will get; they will see the beauty of the synergies in Trustco," McDougall continues: "What we do differently from the rest of the market is that we look at each of our industries as only part of the whole; with the ability to achieve cross-selling and leverage off our other business lines. When you then look at how clever some of our combined products are, you will see conglomerates in a different light."

Equipping Namibian People
Due to the emerging nature of the financial sector in Namibia, Trustco have found it difficult to secure staff with the right skills to "grow up through the industry" as McDougall comments: "Often we find that some of our more educated professionals tend to leave for Europe or South Africa, so it is a struggle to develop and maintain quality staff, partly because of the lack of numbers of Namibians as well as these other factors. However, when people have great skill they tend to go on to occupy a management position, which means they have less time to devote to training entry and middle level staff." This matter is something Trustco are cognisant on and it has been an ongoing issue that is being addressed. The company has around 870 employees at present, but this number is set to grow.

Trustco try as far as possible to employ recently qualified professionals and university graduates and build these young starters in life into their business. "We don't necessarily train them in a specificrole, they are trained in a broad and diverse range of general business and life skills, so they can form an understanding of as many of our business lines as possible," remarks McDougall, who wishes to create a well-rounded individuals, so as to equip them for management positions.

"Mobile Banking is the way forward"
At the end of 2013, the mobile penetration rate in Namibia stood at 113 percent. Like many other financial institutions in Africa, Trustco have taken advantage of mobile banking by tailoring some of their products to mobile devices. "We can use these services for communicating with clients, marketing new products to people and data gathering; in order to gain a better understand of our client needs and wants. This will allow for a more convenient setting up of a service, without having the client visit the branch or meet us face to face."

Securing Investment and Expansion
Over the last year, Trustco have been able to make significant moves in the property division of their business. Simultaneously, they have seen a 30-40 percent growth in their insurance and education sectors as McDougall highlights: "This has been partially attributable to securing investment from organisations like the IFC, who made an additional R235 million investment into Trustco in 2013, specifically for insurance and education products. This allowed us to streamline our services to great success, helping to develop a much more open and responsible lending process." The IFC are now a 4 percent equity holder in Trustco.

Trustco recently announced that they are in the process of acquiring a bank in Namibia, which is a large achievement when you consider that there are currently only 7 banking institutions present in the country. "Banking is a very restrictive market still but it affects everyone's lives. We feel that by obtaining a bank Trustco can certainly reach more customers, with a bigger offering of innovative products and services," McDougall confidently states.

Over the next year-eighteen months, Trustco will continue looking at ways to expand into emerging markets; where the first products to be heavily utilised will be mobile products, life cover and insurance. The company have recently rolled out some of their more traditional microfinance products across their 50-strong branch network in South Africa. "These products target the entry level worker looking for affordable premiums; we really want to provide a value-added service to this area, which has been relatively niche thus far."

Informanté
When it comes to the local community, Trustco targets their CSR projects towards various educational themes including AIDS/HIV, diseases and financial matters. Apart from actual donations and sponsorships, their main method of displaying this information is through a national newspaper called Informanté, which they print and distribute nationally on a weekly basis.

Furthermore, part of Trustco's CSR is to help local schools in any way that they can, but the company are also heavily into sponsoring local sports teams including football and squash. Recently, the company sponsored a talent search in Namibia, where the finalists proceeded to go on to win the international final of the competition, in Orlando, Florida. "This was a great event to be a part of and we are proud to have local Namibians go on to win," McDougall emphasises.