The retirement fund assets constitute for the larger portion of the Non-Bank Financial Institutions (NBFI) sector assets. According to the Annual Statistical Bulletin for 2017 from Non-Bank Financial Institutions Regulatory Authority (NBFIRA), the retirement funds sector registered a 2 percent increase to P75 billion in 2016 from P74 billion in the prior year.
The retirement funds assets, the report says when expressed as a proportion of the NBFI sector assets, remained unchanged at 65 percent compared to 2015.
The total assets of the NBFI sector increased by 1 percent to P115 billion from P 113 billion in 2015. The NBFI sector revenues fell by P5 billion or 24 percent in 2016 from P21 billion in 2015. When expressed as a percentage of GDP at current market prices, the NBFI sector revenues were 9 percent compared to 15 percent in 2015, which remains a significant contribution to the economy of Botswana.
The NBFI sector registered a small increase of one (1) percent increase in capital levels to P 6.7 billion in 2016 from P6.6 billion in 2015.
The growth in the NBFI sector capital was underpinned by strong growth in the insurance and capital markets, which grew by 36 percent and 25 percent, respectively.
The report shows that liabilities of the NBFI sector were well contained, registering an overall decline of 1 % during the year. In general, liabilities of the NBFIs registered a decrease, except for the Lending activities whose liabilities grew by 49 percent.
Assets under management
During the year ended December 31, 2016, overall Assets under Management (AUM) of the NBFIs were P50 billion and only 1 percent higher than in the prior year.
When expressed as percentage of GDP at Current Market prices AUM of local investment institutions fell to 30 percent in 2016 from 34 percent in 2015.
The Retirement funds under management of local fund managers increased to P 41 billion in 2016 from P38 billion in the prior year.
Non - Collective Investment Undertakings (including locally managed pension funds) increased slightly by 0.3 percent on a year-on-year basis to P43.8 billion in 2016 from P43.7 billion.
While CIU Assets increased by 5 percent during the same period to P6.7 billion from P 6.4 billion in 2015.
Performance of Insurance business
Net profit of the life insurance sub-sector has seen a change of 21.3 percent decrease, from P891.3 in 2015 to P701.2 in 2016.
The life insurance sector also saw a decrease by 0.9 percent P19.5 billion in 2015 to P19.3 billion in 2016. Total liabilities decreased by 1.7 percent P16.7 billion in 2015, to P16.4 billion in 2016.
The general or short term insurance business has recorded major decline in net profit before tax between the years 2015 and 2016.
The sub-sector’s profit before tax went down by 57.7 percent, from P182.8 million to p77.2 million in 2016.
But this subsector’s assets was able to go up by 8.7 percent, from P1.8 billion in 2015 to P1.9 billion in 2016.
Liabilities for the short term insurance however surpassed assets, going up by 12.5 percent from P993.6 million in 2015 to P1.1 billion.
Perfomance of retirement funds
The total number of retirement funds was just 1 percent between 2015 and 2016 as the funds decreased from 87 in 2015 to 86 in 2016.
The Funds’ total investments now stand at P75.1 billion as at 2016, from P73.8 billion in the prior year which is a 1.7 percent increase.
Of the 2016 value, P47.4 billion was offshore investments, while the remaining P27.7 billion was invested locally, mainly in the equities whose value in 2016 was P15.9 billion from P14.6 billion in 2015.
Medical aid funds
This another sub-sector which witnessed a major fall in profits for the period under review, with profits before tax declining as much as 34 percent.
In 2015, profit before tax for the medical aid funds was P25.5 billion before going down 34 percent to P16.8 billion in 2016.
Total assets for medical aids between the two years increased by 26 percent, reaching P875 million in 2016 when compared with P695 million in the prior year.
Liabilities for medical aids decreased slightly by 2.6 percent from, P279 million in 2015 to P272 million in 2016.