Executive Cases: Interviews with Senior Executives of Early-Stage Companies:
Saham Finances – Morocco
Prepared by George Foster
The Saham Group is a Morocco-based conglomerate primarily engaged in the insurance, pharmaceutical, healthcare, agriculture, real-estate and call centre industries. It was founded by Moulay Hafid Elalamy, a leading Moroccan businessman, who has extensive experience in the insurance industry in Canada and Morocco. He was also President of the influential Employers’ Federation of Morocco until 2009 (and is currently honorary Chairman) and was previously Chief Operating Officer of the King’s holding company (ONA). He started the Saham Group in 1995 and has built it into a leading conglomerate through organic growth and a series of acquisitions.
Insurance is by far the main business within the Saham Group. It is managed by Saham Finances and owned by the Abraaj Group and the International Finance Corporation (IFC), as well as the Saham Group.
Q1: What was the source of the initial idea, and how did that idea evolve into a viable, growing company? How did it change over time?
Q2: What were the major growth accelerators for your company in the early years of high growth?
Elalamy: “In addition to the fundamental economic growth of the markets we are engaged in, the growth of our company was accelerated by:
- strategic and differentiating choices with regard to products, positioning and communication
- a promise of high-quality service
- management with high HR qualities
- high-performing distribution networks
- established partners with solid reputations”
Q3: What role did key aspects of the entrepreneurial ecosystem surrounding your company play in the growth of your company?
Elalamy: “Our strategy has been deployed in the context of promoting Morocco as a regional hub for the African continent. This was done by seeking accompaniment with regard to financing, the use of quality partners and the help of local regulators who choose to back strong and structured companies.”
Q4: What key aspects of the entrepreneurial ecosystem surrounding your company that were absent (or existed only in a weak form) created the greatest challenges for growing your company? Please describe and discuss how you met/were impacted by these gaps in the ecosystem and their resultant challenges.
Elalamy: “Morocco operates a controlled currency. As a result, acquiring foreign firms is at the very least a challenging exercise and usually unfeasible. To convert the Moroccan dirham to another currency, one has to demonstrate the ‘value add’ of this investment to the Moroccan economy (such as rapid return of cash flows), and maintain the clear traceability of the funds. Also, this is highly dependent on the current balance of payments situation. In a year of high deficit, investing abroad is very challenging.
“The other issue we have faced is human resources. It has been challenging to find multicultural and mobile employees to fuel our growth.”
Q5: At what stage did you invest significant resources seeking to grow your company internationally/beyond your domestic country or region? What factors were pivotal in deciding when to seek growth internationally and where to seek that growth?
Elalamy: “Once our positioning on the local market was consolidated (through mergers and acquisitions), the opportunity to invest abroad became the new priority. Strategic studies confirmed that the development of financial services in Africa was solid, and the much improved regulatory environment comforted this choice.”
Q6: What were the biggest challenges in building growth internationally? How did you meet or adapt to those challenges?
Elalamy: “The challenge has been choosing the right countries and, in each country, the best method of implementing ourselves. Our international development was started through external growth. We therefore had to find a solid network of insurance companies. We studied multiple opportunities before choosing Groupe Colina, which correlated best to our expectations and our corporate culture.
“The difficulty then lies in exporting the skills of Saham while respecting the local culture and preserving the current position.
“The choice of our group has been to continue trusting the local management while bringing them the commercial and technical support necessary to attain our new ambitions.”
Q7: What major role, if any, did key aspects of the ecosystem in the country (or countries) you first sought international growth either promote or impede your ability to grow in those international markets?
Elalamy: “Our company was well received in the new markets and was perceived as a firm with international standards. However, we were aided by the fact that our cultural proximity made the interpersonal relationships easier in those countries than what they had experienced with European and North American firms.”
Q8: Seeking international growth often has both high moments and dark (low) moments. Briefly describe one high moment and one dark (low) moment in seeking international growth.
Elalamy: “Africa represents a very strong potential to develop a firm but is also characterized by strong political instabilities in multiple regions.
“Since the beginning of our expansion, we have known two crises:
“We purchased an insurance company in the Ivory Coast in December 2010, a couple of days before the country entered into a serious political crisis due to a power struggle between ex-president Laurent Gbagbo and president-elect, Alassane Ouattara. In a situation with dried-up funding, Gbagbo engaged in the nationalization of internationally-held firms as a source of cash to pay his troops. We held on to our investment throughout this conflict. As we believed in the country in the long term, we were willing to suffer transitory difficulties. We also took the decision to trust our local management team to handle this complicated situation. This has led to strong resilience of our local activities and the renewed trust of our principal clients whom we backed throughout the conflict. Fundamentally, the market had understood that we were there for the long term.
“Since the beginning of the year, we have also had to deal with the war in Mali. We have managed this crisis in the same manner. We kept calm and maintained support to our clients. During this period, we even launched a new campaign for our life insurance products.
“However, we have also had high moments in our geographic expansion. Most recently, we received regulatory approval to launch new insurance companies in three countries where we did not have a presence. These approvals were obtained in record time, demonstrating the status of the large insurance player that our Group has become on the African continent.”