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How We Create Value

How we create value through the group’s business model and the six capitals

Capricorn Group’s business model aims to deliver on the group’s strategic purpose and create value for stakeholders over the short, medium and long term. It operates as a system which transforms inputs through a range of business activities into outputs and outcomes.

Capricorn Group exists to create opportunities for stakeholders and will continue to do this by responding appropriately to their needs. The business model summary on page 62 sets out the various elements involved.

Financial and manufactured capital

Capricorn Group’s banking, asset management and insurance activities are primarily shaped around the availability, use and creation of financial capital. Financial capital input takes the form of share capital and reserves and can be measured by the group’s capital adequacy ratio (see the key measurements on page 17).

Bank Windhoek, for instance, made a strategic shift and renewed its focus on deposits as a source of financial capital. Whereas the bank traditionally had an asset-led approach, a challenging external environment, particularly regarding limited market liquidity, raised the importance of deposits and transactional accounts to increase the availability of financial capital and earnings capacity.

A key competency for the group is the ability to price for risk, which relies on its inherently strong institutional and market knowledge. This is supported by a decentralised decision-making model that allows branches at all three banks to manage loans and credit based on their understanding of their market and long-term relationships. A strong risk management culture, entrenched governance structures and a responsible investment philosophy underpin the management of financial capital.

Since taking on a 26% share in the group in 2017, the GIPF has enabled the creation of a capital buffer to mitigate financial risk and to provide sustainable and stable funding.

Physical expansion predominantly takes the form of new branches and ATM facilities. These two channels are also the main forms of manufactured capital used and created by the group. The focus is on repurposing branches as the group prioritises investment in digital infrastructure rather than the opening of new branches. The group’s recent investment in data facilities and networks, through the acquisition in Nimbus, thus creates further manufactured capital with long-term value creation potential.

Through mobile banking, the group is reducing reliance on manufactured capital; thus, increasingly, financial capital flow can be distributed and managed through data networks and personal devices. Nonetheless, call centres, branches and offices are likely to remain core examples of manufactured capital.

Human, intellectual, social and relationship capital

The group’s brand purpose statement emphasises its role as a connector of positive change. This role requires the use and application of human, intellectual, and social and relationship capital. Stakeholder engagement is at the core of these three capitals, as it increases aspects of all three through feedback, relationships, innovation, service improvements and higher levels of stakeholder satisfaction. It enables Capricorn Group to address any issues that prevent value creation and increases systemic awareness and responsiveness. Read more about stakeholders on page 42.

The Capricorn Way is a key enabler of human, intellectual, social and relationship capital as a way to unlock potential. It also defines the culture and set of behaviours that the group aspires to embed in all its engagements. The launch of the Connector Programme was a significant step towards a cultural shift in the group, aligned to The Capricorn Way.

The group relies on the appropriate skills to deliver on the four strategic choices and on its brand promise. The creation of a pool of skills between the different entities, supported by a resource centre in Johannesburg in South Africa, is an example of how sustainable human capital is managed. Targeted training, investment in human capital and the conception of capability models deliver operational excellence.

The group enhances its social and relationship capital through its corporate social investment projects. Read more about these projects in the BSEC report on page 101.

Natural capital

Capricorn Group is a relatively modest consumer of natural resources in its business activities. Direct impacts are measured in terms of water and electricity use at the group’s three main buildings in Windhoek, and the launch of a carbon footprint initiative.

The group’s more significant exposure to natural capital is indirect, through loans and insurance for entities that rely on natural resources and are at risk of climate change impacts. This includes industries such as mining, agriculture, fishing and construction.

At Bank Windhoek, the future availability of natural capital is primarily managed by the best practice ESMS, which is used as a guide to credit allocation and lending activities. The future availability of natural capital could also have a significant impact on the future availability of financial capital.


Business model trade-offs

In an interconnected, dynamic operating environment, Capricorn Group makes strategic choices that result in trade-offs between different stakeholders’ interests over varying periods of time. Where these choices are made deliberately, value destruction can be mitigated, and sustainability ensured.

The choice between developing local skills and establishing a resource centre in South Africa is an example of a trade-off where the group’s immediate needs take precedence over the longerterm investment in local skills development.

The group finds itself in the unique but challenging situation as a 100% locally owned entity that is expected to recruit locally while also meeting customer and regulatory expectations to deliver value.

The choice to access skills outside of Namibia, for example, was necessitated by the shortage of information technology and risk specialist skills in the country. This was compounded by trade restraints in the region that create barriers to people movement between the countries. These skills are critical to the group’s capacity to execute its strategy, manage risk and ensure sustainable growth. The resource centre was established in South Africa to provide central support and facilitate easier travel between the banks. To mitigate the risk of perpetuating the skills shortages in the three countries, the group is exploring several long-term skills development initiatives.

Business model outcomes

Capricorn Group creates a range of outcomes for its stakeholders. These are briefly described below:

As a financial services provider, Capricorn Group partners with customers in growing their wealth, funding their business ventures and providing insurance to mitigate their unique risks. Customers trust Capricorn Group to safeguard their assets and provide them with advice, products and experiences that meet their needs and expectations. Capricorn Group’s decentralised decision-making structure means that customers can connect with the group where convenient and can depend on a quick response, based on an understanding of local challenges and opportunities.

As a creator of skills, Capricorn Group provides stable employment and development opportunities for Namibian, Botswanan and Zambian people. As employees, they are able to advance their careers nurtured by a culture focused on building relationships and unlocking potential to drive positive change internally and externally with stakeholders – with rewards and recognition supporting high performance. Read more in the remuneration report on page 79.

Capricorn Group delivers stable, sustainable and attractive returns for shareholders seeking exposure to the financial sector of the NSX.

The group’s growth prospects, portfolio spread and solid governance give its providers of capital confidence in its ability to drive positive change, manage risks, meet competitive challenges and maximise new opportunities.

By adhering to high ethical standards, including all relevant legislation, guidelines and standards, Capricorn Group is a committed economic partner to the governments of its three jurisdictions. In this role the group is an enabling force for a stable and accessible regional financial services industry. Capricorn Group also maintains a close relationship with its regulators.

The group aligns its initiatives with governmental and regulatory imperatives and actively promotes initiatives that drive positive change, such as the Harambee Prosperity Plan, to guarantee a flourishing social and economic environment for all its stakeholders.

Through its social investments and sponsorship activities, and its ability to leverage interpersonal connections effectively, Capricorn Group has been creating value for communities through partnerships for more than 20 years. Beneficiaries and members of communities typically gain access to educational, entrepreneurial and health improvement opportunities that allow them to be more economically active. Capricorn Group delivers impact through collaboration and alignment of cooperative initiatives to governments’ social development agendas.​

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