The number four South African firm now has a 51 per cent stake in East African Underwriters Ltd (EAUL) of Madhvani Group, one of the largest conglomerates in Uganda.
The cost of the takeover has not disclosed.EAUL, an incorporated and licensed insurance firm, covers all commercial risks and medical needs.
The acquisition is expected to aid with insurance penetration in the country.According to reports, Uganda’s insurance penetration is said to be less than one per cent despite the country having several insurance companies.
This is not a new entry for the giant firm which has over 2.5 million clients. Kenya is said to have taken the lead in its East African growth plans.
Last year, the Pan-African financial services firm announced an approximately US$18.3 million expansion strategy in 16 African markets.
Meanwhile, Uganda's central bank has left its benchmark Central Bank Rate (CBR) unchanged at 17.0 percent, saying it "believes that this monetary policy stance will curb the rise in core inflation over the next two to three quarters and then gradually bring it back to the target of five percent over the medium term."
The Bank of Uganda (BOU), which raised its rate by 600 basis points in 2015, said the inflation outlook had improved slightly since December due to stability in the shilling's exchange rate and food price developments, with the impact of the El Nino weather pattern on food prices mild.
BOU forecast that core inflation would peak at 6-9 per cent in the second quarter of this year and then gradually fall back to the five percent target in the course of 2017. In December the BOU had forecast that core inflation would peak at 10 percent in the third quarter of 2016.
However, the central bank also pointed to "significant upside risks to this outlook," including the exchange rate and the possibility of adverse weather.Uganda's statistics office has rebased its consumer price index to 2009/10 to reflect an expanded consumption basket and a lower share of food crops.
As a result, headline inflation in December 2015 eased to 8.4 per cent from a previously reported 9.3 per cent while core inflation rose to 7.6 per cent from 7.4 per cent. In January 2016 headline inflation eased further to 7.6 per cent while core inflation fell to 7.1 per cent, but although core inflation eased in January, the BOU said the inflation rate had risen in the last three months, reflecting "persistence of underlying inflationary pressures."
Uganda's shilling started depreciating in April 2014 and fell steadily to the end of September 2015 when it hit 3,696 to the US dollar, a drop of 32 per cent since the start of 2014. Since then it has been trending firmer and was trading today at 3,412 to the dollar, down 1.2 per cent from 3,372 at the start of the year. Compared with the low on September 30, the shilling is up 8.3 per cent.
Uganda's Gross Domestic Product grew by an annual rate of 4.9 per cent in the third quarter of last year, down from 7.1 per cent in the second quarter, but the BOU said data indicated that growth in the fourth quarter was higher than in the third quarter and consistent with its forecast for growth of five percent in the financial year 2015/16, which ends June 30.
Earlier this month the central bank's governor told Reuters that the growth forecast for 2015/16 had been cut for the second time to five percent from 5.4 per cent forecast in August.
For the 2016/17 financial year, the central bank lowered its forecast to 5.5 per cent from a previous 5.8 per cent, with the reduction reflecting "the current global economic weakness and volatility in the international financial markets."