Batanai Matsika 
THERE appears to be consensus that global and regional growth prospects in 2021 are hinged on the pace of vaccine deployment.
The World Bank estimates that in a downside scenario, global growth will be much more subdued at -1.6 percent in 2021 and 2.5 percent in 2022 if vaccine deployment is delayed and the pandemic is not brought under control.
Bringing the pandemic to an end calls for the need for a large share of the population to be immune to the virus. The safest way to achieve this is with a vaccine. Vaccines are a technology that humanity has relied on in the past to bring down the death toll of infectious diseases.
Within less than 12 months after the beginning of the Covid-19 pandemic, several research teams rose to the task of developing vaccines that protect from SARS-CoV-2, the virus that causes Covid-19.
Now the next mission is to make these vaccines available to people around the world. It will be key that people in all countries — not just in rich countries — receive the required protection. There is evidence on Our World in Data that Israel has conducted the fastest campaign to vaccinate its population against Covid-19 so far.
The world is now watching how the pandemic in the country evolves to assess whether vaccinations are having the intended effect and how effective they might be in preventing infections.
As illustrated in the infograph, the United Arab Emirates, United Kingdom, America, Chile and the European Union are leading the pack in terms of vaccination campaigns.
The concern however, stems from the slow pace of deployment in other regions such as sub-Saharan Africa (SSA). The region is also set for a slow recovery and marked increases in poverty as it will have to deal with lasting scars of the pandemic.
The World Food Programme expects food security to deteriorate for at least a decade. The share of population with insufficient food consumption is estimated at 35 percent for Zimbabwe, 32 percent for Mozambique and 10 percent for Zambia.
High debt levels (averaging c70 percent of GDP in the SSA region) will also negatively impact on growth. A key trend that we have observed is that companies that operate in the region will feel the pinch in 2020.
Old Mutual Limited recently released a detailed trading statement for the year ended December 2020. The financial services group expects adjusted headline earnings per share to be between 69 percent and 79 percent lower than a year ago, because of the impact of the recessionary environment on customer disposable income and the significant impact of Covid-19 on claims and reserving.
The group also raised concerns that there are emerging expectations of a third wave given evidence of virus mutation. The slow pace of the vaccination rollout, upcoming public holidays and the winter season also presented several risks, particularly in South Africa.
Actual claims in H2 2020 were higher than the provision raised in H1 2020 given the acceleration in infection and excess mortality rates at the end of the fourth quarter. This acceleration was consistent with early patterns of second waves noted in other countries.
The business continues to monitor claims experience in 2021 and has recorded approximately ZAR1.9 billion of Covid-19 related mortality claims for January and February of 2021. The Old Mutual Limited case study demonstrates the need for better testing and treatment of Covid-19 patients, broadening of social protection systems to avoid rising poverty and widespread vaccination campaigns.
Overall, the Old Mutual Limited Group remains well capitalised despite the material once-off negative items impacting 2020 earnings.
On the local market, we like Old Mutual Zimbabwe Limited given that it is part of a strong Africa-focused premium financial services group and a market leader across its business units of
Insurance (Life Assurance and General Insurance), Banking and Asset Management.
We view the counter as a long-term play given its massive securities and property portfolio which offers an ongoing hedge against inflation while preserving value and earning consistent dividend streams. We rate the stock BUY!
Matsika is the head of research at Morgan & Co, and founder of piggybankadvisor.com. He can be reached on +263 78 358 4745 or batanai@morganzim.com / batanai@piggybankadvisor.com
