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LIVESTOCK and mud houses belonging to subsistence farmers in rural Transkei were previously written off as unviable by the risk management and insurance industries, but this is about to change.

Last week the Old Mutual (OM) group, including Mutual & Federal (M&F) and Nedbank in partnership with empowerment company Wiphold, took a pioneering step by developing insurance products to cover mud houses as well as livestock.

The products were launched in Centane.

This comes almost one year after the previously exclusive up-market Nedbank rolled out financial services on a large-scale in rural Transkei – something the other “big three” banks have also done over the past three years.

Wiphold executive director and OM board member Gloria Serobe said the role of empowerment partners was to ensure these ventures extended to rural areas and contribute meaningfully to rural people’s lives.

Serobe said although the venture was risky it required an innovative approach that would ensure viability for the financial services group while empowering rural communities.

“We cannot just put up an ATM and sell this and that, we have to make a difference. We engaged with the people and they have created their own product.

“For Wiphold, as a BEE partner in these institutions, we needed an innovative approach to guide them and formulate products to make a difference in the so-called second economy. My role is to make a difference to the people of Centane through empowerment, while not neglecting my fiduciary duties as a board member to the OM Group.”

Serobe added: “We decided to facilitate wealth creation through enterprise support and backing first.”

The joint initiative follows three years of research and financial education in the Mnquma municipal area, which led to the development of insurance products tailor-made to their rural settings. It is expected to be rolled over to other rural areas.

Debra Marsden, also of Wiphold, said: “We started in Mnquma, specifically Centane, because the area has a sizeable population and other institutions have less presence. Mnquma is deeply rural and if we get the model right here, we can make it work anywhere.”

Speaking at the launch, imbizo convener and Old Mutual mass marketer Marshall Rapiya said their research found that rural people often fell victim to loan sharks and needed affordable access to the formal financial services market.

The financial services group also unveiled its “Green shop”, which houses Nedbank, Mutual & Federal and Old Mutual offices in a one- stop shop setting. The structure was built from recycled rubble of a burnt-down magistrate’s court using mostly female labour.

“During our imbizos, we learnt that people preferred to engage their financial services providers on a face-to-face basis. We have responded by building a Green shop in Centane which opened for business in February,” said the OM Group.

The Green shop premises are also home to a vegetable and herb garden that is used to teach people in the community ways to cultivate without using pesticides and fertilisers.

Vuyisile Vena, of Mthatha-based Vena Insurance Brokers, welcomed the move as a positive step forward for rural communities. However, Vena said promotions would be needed to educate more people about the value and need for insurance.

“This is a new development and really good for people because they are not aware that they are entitled to insurance. People are not well versed about short-term insurance so it would have to be advertised very well and should include household contents,” said Vena.

- By SIYA MITI

Business Reporter