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Blue slows African expansion as market funding dries up  Comments
November 4, 2009

By Mzwandile Jacks


Blue Financial Services had cut back on expanding aggressively into Africa, a senior executive at the AltX-listed pan-African micro financier admitted yesterday.

Morné Reinders, the corporate affairs executive at Blue, said the company had decided on this move because international funding had dried up due to the global economic downturn.

The move is significant in that it highlights the impact of the global economic downturn on the company.

This is also the first time in more than three years that Blue has put the idea of starting new operations on the African continent onto the back burner.

"With the money that we have, we are now going to consolidate all our branches in different countries," Reinders said.

"Nigeria is the only country where we are going to expand our branch network."

Blue has operations in 14 African countries, including Ghana, Tanzania, Nigeria, Kenya, Botswana and Cameroon.

Early last month, a Johannesburg newspaper reported that Blue had been involved in chaotic financial reporting and questionable business practices. It said Blue had hired its third auditor in two years and appointed its fourth finance director in three years.

Blue has always said the appointment of the fourth chief financial officer did not indicate the company was in trouble.

It appointed former Absa Capital executive Shaun Strydom as chief financial officer this year, after Johan Maritz, Johan Coetzee and Grant Chittenden had held the position for short spells since Blue's listing on AltX in 2006.


Blue executive chairman Dave van Niekerk previously told Business Report that as a fast-growing company, Blue had always realised certain expertise would be applicable at certain times.

As the business grew, the need for a financial director with significant international corporate finance experience in addition to a solid accounting base became more evident, Van Niekerk said.

"That is what excited us about Shaun."

The late release of the group's earnings and change in auditors were at the heart of the newspaper's report.

But Reinders said that these problems were now water under the bridge because "we now have a new auditing firm".

Steve Meintjes, a senior analyst at Imara SP Reid, said he still believed that Blue's problems were fixable.

"But we have come to the conclusion that, with new financial management, new auditors and, in due course, the new independent chairman... this could take some time," he said.

"The new broom effect could also result in increased provisions in the short term, all of which could result in uncertainty in the minds of funders."
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Showing page 1 of 1 comment pages, 6 total comments
43 Weeks ago Anonymous wrote :
speak to vendors and staff and find out if they getting paid? from what i hear not!
43 Weeks ago Anonymous wrote :
a good short going to 5 cents
43 Weeks ago melba_mh wrote :
What do you expect organisations to do at this time? Expand at all cost? Or consolidate during the downturn? This downturn is affecting many SA businesses, I don’t see this as an issue that is unique to this organisation.
43 Weeks ago Rooiwillie wrote :
How long are they going to try an put blame on the auditors for their inability to govern this company properly. It is quite interesting to note that despite the change in auditors which according to them "fixed" the problem the interim results are extremely late, something that did not happen with the previous incumbent auditors. One can only wonder what would happen at year-end; are we going to see the fourth set of auditors soon??
43 Weeks ago melba wrote :
What do you expect organisations to do at this time? Expand at all cost? Or consolidate during the downturn? This downturn is affecting many SA businesses, I don’t see this as an issue that is unique to this organisation.
43 Weeks ago JohnB wrote :
What do you expect organisations to do at this time? Expand at all cost? Or consolidate during the downturn? This downturn is affecting many SA businesses, I don’t see this as an issue that is unique to this organisation.
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