The African Development Bank (AFDB) will this week, host a regional forum in the capital Gaborone aimed at addressing ways of accelerating insurance market development in Eastern and Southern Africa.
The dialogue presented by AFDB in conjunction with the Institute of insurance Botswana, will enable public authorities and private actors, as well as development partners, to discuss the progress of ongoing reforms and priorities as well as future actions aimed at accelerating the development of insurance in Eastern and Southern Africa. Recommendations from the dialogue will serve as a basis for articulating a roadmap for insurance market development initiatives in Eastern and Southern Africa.
The dialogue policy will address constraints that prevent the insurance sector from fully playing its role as a catalyst for growth and in supporting economic and social development objectives, both at the national and regional levels. Furthermore it will also focus on the development of insurance markets for infrastructure, SMEs, Agriculture and include cross-cutting aspects such as digital technologies.
While insurance protects livelihoods through guaranteed pay-outs, the AFDB has observed that African markets outside South Africa are underdeveloped. Rural and poor urban households, farmers and Micro, Small and Medium Enterprises do not have access to insurance; for this reason Insurance can be a catalyst for access to credit and markets for MSME, thereby contributing to job creation.
For Africa the AFDB has shared that total insurance premiums amount to $US 66 billion, including $US 48 billion from South Africa, which is barely 3% of the continent’s GDP. Obstacles which hamper the emergence and growth of insurance business are said to be on the demand side such as lack of awareness and insurance illiteracy, the supply side such as inadequate products and business models as well as unfavourable framework conditions such as weak regulatory regimes hamper the emergence.
Insurance industry presents a unique opportunity of allaying investor fears and worries as the G20 Compact with Africa (CwA) recognizes the critical role that infrastructure such as power, water, sanitation and roads plays in African countries in promoting investments and private enterprise-led growth. With lack of long-term financing being a key obstacle for investments in infrastructure, and adequate risk insurance not being available. The insurance sector can help unlock financing and private investments in such infrastructures.
Some key objectives expected to take center stage at the policy dialogue range from taking stock of the state of current reforms in key markets, Identifying priority areas and actions, including innovative instruments, where development agencies including DFIs such as AfDB can reinforce their contribution to supporting the industry.
The dialogue forum will also promote the inclusion of the identified priority areas and actions in the strategies of regional and international stakeholders as well as foster cooperation between private insurers, development agencies, regional regulators and other relevant stakeholders to accelerate insurance market development in Eastern and Southern Africa.