ZIMBABWE Stock Exchange (ZSE)-listed assurance concern Fidelity Life (Pvt) Ltd has been given a new lease of life in its regional operations following the extension of its ma
nagement contract in Kenya.
Fidelity, managers of Kenya National Assurance Company (KNAC), had its contract extended by three months pending a Kenyan government decision on the way forward for the assurance concern.
The management contract rakes in US$25 000 monthly for Fidelity.
Businessdigest heard this week that the extension, granted by the Kenya finance ministry, was the culmination of shuttles between Harare and Nairobi by Fidelity managing director and chairman Simon Chapereka and Solomon Tembo respectively.
The Kenyan cabinet will also debate modalities to turn around the fortunes of the assurance concern sent by Fidelity, chief among them the injection of new capital into the company “to enable it to run new business”.
In addition Fidelity had also mooted the privatisation of the entity in which it will have a significant shareholding. Taking up the shareholding would result in Fidelity injecting US$2 million into KNAC.
When the Kenyan government invited bids to provide a management contract it said the “successful company will be accorded the opportunity to buy 100% of the ordinary shares of KNAC in competition with other companies after the achievement of certain benchmarks”.
The benchmarks included putting KNAC Ltd on a stable and sound management footing within a period of less than two years.
Fidelity’s bid for a stake would be in line with the regulations in Kenya governing privatisation of state entities.
Regulations in Kenya dictate that locals should have at least 35% equity in any privatised entity.
A wholly owned entity of the Kenyan government, KNAC was tottering on the brink of collapse until Fidelity was given a two-year management contract in 2002 to turn around the company. The contract ended in November last year.
Chapereka told businessdigest this week that the extension of the contract was a welcome development, saying “it shows the Kenyans had confidence in Fidelity”.
“This is welcome news to us and we hope that we will get a significant stake in the event of the privatisation of the country,” he said.
Chapereka said Fidelity had plans to consolidate the fortunes of KNAC chief among them the setting up of an asset management company in Kenya.
International conglomerate Old Mutual operates the only asset management in Kenya.
Regionally, Fidelity owns Vanguard Malawi, while locally it owns Fidelity Life Asset Management and Zimbabwe Actuarial Consultants. Plans are underway to bring Fidelity Securities on board.