Our material matters
During the year, we underwent a full materiality review to determine the relevance of our material matters within a dynamic context. The change in reported matters has resulted from this review.
Determining what matters most
Our external environment influences our ability to create value and achieve our strategic pillars, along with our relationships with our stakeholders and the risks and opportunities derived from these contexts. Therefore, we determine material matters by assessing these factors and aligning them with our strategy.
Our external environment is dynamic and ever-changing. The Group’s ability to monitor, assess and respond to the external environment and our material matters determines the Group’s sustainability.
Quality stakeholder engagement is a key component of our ability to create value. Effective feedback and communication channels enable the Group to identify and address risks and opportunities. Stakeholder engagement also informs our material matters and our strategic response.
Our enterprise risk management process evaluates the external environment and our stakeholders’ expectations. We then outline the risks and opportunities that can significantly influence our ability to create value. The Group considers the likelihood and the potential impact of the risks and opportunities within defined quantitative and qualitative parameters.
Our materiality assessments are based on matters identified as key risks and opportunities as management continues to align its strategic approach with critical factors in our operating environment. All assessments are aligned with our strategic, financial reporting, IT, compliance, reputational and operational risks. The materiality determination process ranks our material matters based on relevance and impact on our ability to create value for our stakeholders.
To ensure our strategy is both responsive and progressive, a robust understanding of our material matters is critical. We ensure that our strategy incorporates matters that have the potential to influence our ability to create value in the short, medium and long-term.
The heat map below depicts how these material matters were evaluated and prioritised based on their impact and likelihood.
A. Access to healthcare and medicine
B. Member satisfaction for clients
C. Cybersecurity and information security
D. Business continuity and business model adaption
E. Legal, regulatory and compliance management
F. Political and societal risk
G. Employee acquisition, talent management and retention
healthcare
and medicine
Link to macro trends
- Access and affordability
Related capitals
Impacted SDG
What it entails
This matter covers initiatives aimed at expanding access to comprehensive, quality healthcare services. It includes initiatives that target cost reduction and increasing access to medicine and treatments for more people.
Why it matters most
The pandemic has exposed the lack of capacity of most medical systems and led to shortages of medical supplies, lack of support for medical staff and delayed treatment of emergencies and chronic diseases. Furthermore, as unemployment rises and GDP/capita declines, quality healthcare becomes increasingly inaccessible for the majority of the population.
How we’re responding
- Implemented disruptive strategies to eliminate inefficiencies in the healthcare value chain
- Adopted technology and other initiatives to curtail costs
- Collective bargaining
- Alternative reimbursement models with risk-sharing agreements
- Successful tariff negotiations
- Management of supplier-induced demand
- FWA initiatives
Related risks
- NHI: Uncertainty surrounding implementation could impact investor perception, and Medscheme’s client base may be affected once implemented
- Loss of clients: Reduction of client base
- Membership: Attracting/retaining members for our clients
- Technologies: Remaining relevant in the face of new disruptive technologies
Related opportunities
The private sector can play a crucial role in funding health for all by developing innovative and relatively affordable business models. The exponential mobile phone penetration growth, combined with the use of new technologies, can offer vast opportunities for member education and disease prevention to increase members’ overall health and decrease medical costs. Telemedicine and artificial intelligence for diagnostics provide further opportunities to reduce costs and increase access through automation.
Strategic levers 
satisfaction
for clients
Link to macro trends
- Access and affordability
- Healthcare technology and cybersecurity
Related capitals
Impacted SDG
What it entails
This matter encompasses strategies and processes that seek to meet or surpass member expectations to create a positive experience and build member loyalty for our clients.
Why it matters most
Escalating healthcare costs place pressure on member retention for our clients. Ensuring excellence in customer service models is critical in retaining members considering options due to economic forces. Furthermore, COVID-19 accelerated the digitisation of business and customer engagement models. Successful digitisation impacts customer satisfaction as customers now expect to be serviced digitally.
How we’re responding
- Focused on providing innovative digital solutions to meet member needs and enhance efficiencies
- Designed innovative scheme products and interventions to address declining affordability
- Enhanced our actuarial and analytics capability to understand our scheme lives and develop products and services to delight and assist members
- Partnered with various institutions, including Sanlam, to develop value-added products to assist with other elements of financial constraints for members
- Focused on improving call centre productivity
- Created specific teams to address retention for members, either directly or as service consultants for brokers
Related risks
- Loss of clients: Reduction of client base
- Membership: Attracting/retaining members for our clients
- Technologies: Remaining relevant in the face of new disruptive technologies
Related opportunities
New technologies offer significant opportunities for automation, thereby reducing the costs and time involved in healthcare, particularly diagnostics. The new technologies also provide enhanced member education and disease prevention options, which can significantly increase member satisfaction and reduce disease and claims. In addition, innovative approaches and collaborations with other industry partners can provide more holistic and patient-centric products and services that support member retention.
Strategic levers 
and information
security
Link to macro trends
- Healthcare technology and cybersecurity
- Specialised skills shortages
Related capitals
Impacted SDG
What it entails
This matter refers to securing critical information systems and networks from security breaches, which might disrupt core operations or lead to illegal access, destruction, alteration or disclosure of protected data.
Why it matters most
Cybersecurity was rated as the top business risk in South Africa for 2021 by Allianz. The push for telemedicine and virtual care, the development of new technologies, as well as the increase in remote work arrangements significantly heighten the importance of cybersecurity and information security, converting cyber threats and data privacy management into one of the core risks and priorities for business globally. In South Africa, the shortage of skilled workforce in the sector, paired with adverse conditions like power shortages, lack of digital infrastructure and outdated infrastructure only increase cyber risks and the need for cybersecurity and information security strategies and models that are up to date. Furthermore, POPIA became effective during the financial year, escalating the critical importance of protecting personal information.
How we’re responding
- Applied a proactive approach with improved evaluation and analysis of cybercrime and data security risks
- Enabled faster detection and response to rapidly evolving cyber threats
- Implemented Privileged Account Manager, which is a supervisory tool to track activities and changes by privileged users
- Advanced threat analytics technology strengthens the security of our systems
- Cybersecurity strategy review ensures continuous updating of systems, including web application firewalls
Related risks
- Cybersecurity: Ineffective cyber defence controls and mechanisms to protect critical infrastructure, systems and data against malicious cyber attacks
Related opportunities
While cybersecurity is largely defensive, we recognise an opportunity to be a leader in skills development in this area and be seen as a leader in the field.
Strategic levers 
adaptation
Link to macro trends
- Healthcare technology and cybersecurity
- Specialised skills shortages
Related capitals
Impacted SDG
What it entails
Refers to the plans, protocols and systems to ensure continuity of business operations during and after crises. It also entails strategies to enable business model adaptation in the face of actual or potential changes in the external environment.
Why it matters most
The risk of infectious disease remains high beyond the current crisis (ranked 4th in terms of likelihood in the World Economic Forum’s Global Risk Report). In a connected world, an outbreak anywhere is a risk everywhere. Business preparedness in the face of this and other business continuity risks therefore remains critical.
The growing use of technology in all areas of life and business is likely to further increase the risk of cybercrime and therefore the need for cybersecurity and information security strategies to support business continuity. These require ongoing optimisation, investment and skills development to ensure business preparedness and continuity.
Business model adaptation, especially in terms of technological innovation, remains critical to our ongoing success. In a rapidly evolving digital environment, increased digitisation improves client experience and is a competitive advantage. Furthermore, COVID-19 and the resultant lockdown amplified the need for digital solutions and accelerated the uptake of digital means of engaging with and delivering services to clients and scheme members.
How we’re responding
- Business continuity planning within the Group continuously updated and reviewed by the Audit and Risk Committee
- Continuity plans are in place to ensure the services we provide to our clients are not materially impacted
- ICT Committee reviewed all ICT policies, including the business continuity plan
Related risks
- Technologies: Remaining relevant in the face of new disruptive technologies
- People risk: Skills shortage or inability to attract necessary dedicated resources
- Staff retention: Failure to attract/retain critical staff and scarce skills
Related opportunities
Business continuity planning is largely defensive in nature – protecting against value erosion resulting from the inability to provide critical services to our clients and their members.
Strategic levers 
management
Link to macro trends
- Access and affordability
Related capitals
Impacted SDG
What it entails
Ensuring compliance with relevant laws, policies, and regulations is critical. This matter also includes several processes for recognising and proactively addressing risks of litigation or regulatory action, and seeking to prevent disputes from arising or escalating.
Why it matters most
The NHI Bill has come about to address universal access to healthcare in our country. Therefore, we are supportive of the NHI system, believing it will lead to better access and quality of healthcare for all South Africans. This does, however, represent a structural change to the healthcare system and impacts our business from a legal, regulatory and compliance management perspective.
Looking globally, we see an overall global trend towards higher levels of corporate accountability, going beyond regulatory compliance into additional voluntary social and environmental responsibility. Moreover, multilateral agreements such as the Paris Environmental Accord and the African Continental Free Trade Agreement, to which South Africa is a signatory, are likely to affect compliance in the coming years in the areas of emissions, pollution and trade tariffs. The rapid technological acceleration we are experiencing also impacts regulatory compliance criteria.
How we’re responding
- Diversified revenue sources and service and product offerings
- Partnered with government to drive universal healthcare agenda
- Leveraged existing contractual arrangements with National and Provincial Departments of Health (DoH). For example, CCMDD, to roll out COVID-19 pandemic responses
- Leveraged existing relationships with private hospital groups to design and implement interventions to support National and Provincial DoH in dealing with COVID-19 related infections
Engagement with government to pledge support, offer solutions and identify opportunities for private sector involvement in the COVID-19 pandemic response
Related risks
- Loss of clients: Reduction of client base
- Membership: Attracting/retaining members for our clients
- CMS Section 59 investigation: The current CMS investigation into forensic practices
- NHA litigation: Alleged Breach of Copyright claim against Medscheme
Related opportunities
AfroCentric is positioning itself as a private sector partner with the expertise and experience to constructively participate in an evolving healthcare environment.
Collaborative approaches that include active engagement and transparent communication with communities and stakeholders can provide significant opportunities to address potential reputational threats early on, enabling AfroCentric to be positioned as an accountable and responsible corporate citizen. We therefore utilise a stakeholder management framework throughout the business.
Strategic levers 
societal risk
Link to macro trends
- Access and affordability
Related capitals
Impacted SDG
What it entails
This matter encompasses economic, political and societal issues that may pose risks to the Group.
Why it matters most
In South Africa, high levels of inequality remain largely unaddressed, with the country showing the same income and wealth inequality levels as in 1994 (GINI Coefficient 0.66). In addition, increasing living costs and growing unemployment enhance social risk. The social unrest experienced in regions of South Africa during July 2021 can be seen as evidence of this growing risk.
AfroCentric is an empowered business committed to South Africa’s transformation agenda. Transformation is a strategic objective, and we aim to comply with the B-BBEE codes and other relevant legislation.
How we’re responding
- Maintained our B-BBEE status at level 1 (this status is valid from 22 December 2020 to 21 December 2021)
- There are increased partnerships within the Group to achieve B-BBEE priority objectives, emphasising skills development, enterprise and supplier development and ownership
- Facilitate Black Economic Empowerment through targeted interventions to achieve more inclusive growth
- Create an environment enabling transformational development in an equitable and socially responsible manner
- Extended relationships with critical stakeholders for the betterment of the organisation in relation to B-BBEE
- Promoted a professional, ethical, dynamic competitive and customer-focused environment with regard to B-BBEE
- Ensured all stakeholders are aware of the purpose of the B-BBEE Act
- Increased visibility by providing activities, education and resources
Related risks
- Transformation: Maintaining level 1 B-BBEE status
Related opportunities
Transformation – across all parts of the business – is a critical imperative. We seek to support the national agenda, including alleviation of poverty and inequality and believe that our B-BBEE initiatives should go beyond a tick-box approach to genuinely seeking to redress inequalities and promote real transformation. Considering the lack of quality education for a majority of youth in the country, ongoing long-term investments into skills development and employability programmes for youth can provide a significant opportunity to tackle the general skills shortage while also providing solutions towards youth unemployment, youth disillusionment and civic unrest.
Strategic levers 
management and
retention
Link to macro trends
- Specialised skills shortages
Related capitals
Impacted SDG
What it entails
This matter includes how we go about recruiting, managing and retaining employees to build a skilled and capable workforce that supports sustainable growth.
Why it matters most
Our talented people are the driving force behind our success. An overall skills shortage in the sector is therefore a significant risk. This skills shortage is due mainly to limited skills development, lack of attractivity of the industry and an additional brain drain towards countries with higher revenues. A further significant risk is found in shifting demographics and different work expectations and career trajectories in millennials and younger generations that present a much higher employee turnover than previous generations. Younger generations choose jobs that offer them opportunities for personal growth and a sense of purpose and fulfilment.
How we’re responding
- Building an external pipeline of critical talent and an internal pipeline of successors for critical roles
- Implemented a leadership competency model to create common leadership behaviour that promotes employee engagement
- Implemented a scarce skills retention strategy
- Undertook numerous training and development initiatives
- Developed internal talent pipelines for critical roles
- Reviewed short-term and long-term incentives
Related risks
- People risk: Skills shortage or inability to attract necessary dedicated resources
- Transformation: Maintaining level 1 status
- Staff retention: Failure to attract/retain critical staff and scarce skills
- Organisational culture risks: Necessity to optimise organisational culture to enhance individual and organisational performance
Related opportunities
Investments in skills development programmes offer an opportunity to tackle the skills shortage, address growing youth disillusionment, benefit the development of the industry while enhancing social capital and social stability.
If harvested, the desire of younger generations for more agency, inclusion and purpose on the job offers significant benefits to companies. AfroCentric, as a purpose-driven Company, is wellpositioned in this regard. In addition, initiatives to improve mental health within the Company and the local community also provide long-term health and financial benefits and further strengthen human and social capital.
