AFREXINSURE, the insurance arm of the African Export-Import Bank, is seeking to partner with up to five Zimbabwean reinsurers to strengthen its continental efforts in protecting insurers.
These insurers are currently facing the challenge of premiums being reinvested outside Africa, resulting in capital flight that hampers local economic growth.
An insurer collects premiums and can re-invest them before paying them out as claims.
However, it has emerged that the industry did not have sufficient capacity to retain an adequate ratio of premiums and these monies were being reinvested outside Africa.
In an interview at the recently concluded 46th Organisation for Eastern and Southern African Insurers Conference and Annual General Meeting (AGM), AfrexInsure chief executive officer Jonas Mushosho stated that the organisation is actively identifying various risk carriers.
This initiative aims to collaborate with reinsurers through the African Reinsurance Corporation (Africa Re), the leading pan-African reinsurance company.
Mushosho emphasised that the proposed insurance initiative will cover the entire continent and focus on identifying reinsurers with strong balance sheets.
“Yes, as I said, the market in Zimbabwe is very sophisticated. We already have institutions in Zimbabwe that are within our framework partners, but we are seeking to increase,” Mushosho said.
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“As we speak, we are negotiating with some Zimbabwean entities to try to increase the reach of our collaboration and partnerships.
“If we can achieve in the near term four or five partnerships, I think it should serve the Zimbabwean market well.”
Despite prevailing challenges, Mushosho noted that Zimbabwe's insurance sector is well-developed, with the necessary skills and infrastructure.
“At an individual level, you have agents that distribute those products, you have the brokers, you have the primary insurers, then you have the reinsurance companies and so forth, and a very well-regulated insurance industry,” he said.
Mushosho highlighted the resilience of Zimbabwe's insurance sector, which has managed to recover and adapt despite the disruptive effects of hyperinflation.
“The fact that we still speak about an insurance sector, here in this country, after the devastating effects of hyperinflation, speaks to the resilience, the strength of that industry,” he said.
“It has been able to recover and is still recovering, but it has also been able to transform itself and respond to the changes that have taken place in the environment. That is very commendable about the industry in Zimbabwe.”
Mushosho pointed out that African insurers often have to borrow capital from overseas to support businesses on the continent.
“But, sometimes, some of that capital that we are borrowing comes from premiums that have been raised on the African continent. But, when they come back to us, those entities then say Africa is very risky,” he said.
“They put a risk premium on money that they got from this continent, and we end up getting capital that is very expensive and borrowing capital that is expensive.
“Actually, it means that when you factor that into your pricing, Africa’s goods become less competitive on the global stage.”
