The African Insurance Company Growing Its Footprint In Ethiopia and the DRC

The Export Credit Insurance Corporation (ECIC) provides political and commercial risk insurance cover to South African exporters of goods and services and to cross border investors. Its strategic focus is on emerging markets in Africa and outside the continent that are considered too risky for conventional insurers. Ethiopia and the Democratic Republic of Congo (DRC) are amongst the largest economies in Africa and are therefore key markets for South African exporters and the ECIC.  

Ethiopia, with over US$50 billion worth of infrastructure projects in the pipeline, is the fastest growing economy in Africa. To further boost growth and attract foreign direct investment the government of Ethiopia embarked on an economic reform program which will diversify the economy away from agriculture and allow for greater private participation in key sectors of the economy. This will create opportunities for exporters and investors and therefore increase demand for export credit insurance.  

The ongoing civil war, which started in November 2019, created a highly uncertain environment in Ethiopia. The recent release of opposition political party officials from prison by the central government is a significant step towards a resolution of the civil war. Investments into Ethiopia for which ECIC was involved include a US$12,5 million in a cement plant by South Africa’s Pretoria Portland Cement (PPC) and a USD121,5m by Vodacom South Africa in 2021. ECIC provided political risk insurance cover for both investments.   

The DRC is endowed with exceptional mineral resources including cobalt and copper, significant arable land, and huge hydropower potential. This continues to attract significant investment into the country making it the third largest recipient of foreign direct investment in Sub Saharan Africa. South Africa can supply capital, skills, machinery, and consumer goods to help the country reach its development potential. The ECIC supported projects in various sectors of DRC including mining, transport, food, and construction sectors. The country’s good infrastructure investment outlook and the first-ever peaceful transfer of the presidency in January 2019 creates room for further support.    

The ECIC seeks to diversify its portfolio and increase its presence in many African countries including Ethiopia and DRC. The expansion of ECIC’s product offering to include non-capital goods will enable it to provide support to a wider set of sectors and therefore expand Ethiopia and DRC trade with South Africa. This will be supported by the removal of trade barriers that will result from the implementation of the Africa Continental Free Trade Area agreement.