At Mable Busagwa’s store in the central Ugandan district of Wakiso, the six kids playing on the verandah give the impression it’s a daycare center, but the branded merchandise on the cabinets quickly betrays that. Busagwa, 52, has run the store, where she also lives, for two decades, often helping take care of her neighbors’ kids as the mothers go off to work in the capital, Kampala.

A grandmother of one, Busagwa holds no insurance policy – be it for fire, accident, property or health – despite being diabetic. When she falls ill, Busagwa can count on her neighbors for nursing and her adult children to pay medical bills. If a fire destroyed her store, material and financial support would pour in from the community members, helping her rebuild.

This age-old reliance on family and community has served as an informal type of insurance for a majority of Africans on a continent where insurance penetration in most countries accounts for less than 1% of GDP.

But for Corneille Karekezi, Chief Executive Officer of Africa Re (African Reinsurance Corporation), one of the largest reinsurers in Africa and the Middle East, it’s time the continent put an end to the system commonly known as Ubuntu.

“My vision for the insurance industry on the continent is a vision where every African citizen will know that there is a mechanism of risk sharing, of solidarity which can improve his/her life,” says Karekezi at an industry conference in Kampala in May. “We cannot count eternally on our traditional structures of solidarity which are under immense transformation because of the social, economic and demographic transformation of our continent.”

“In our culture, we have developed self-insurance and community resilience based on families, communities, villages. Because of the good culture of African countries of helping each other in families, expanded families, communities, villages, that is an informal way of insurance,” he says.

“Now we are talking about a formal way of insurance where any African citizen will pay premium to an insurance company which will be ready to assist him in case of a claim or accident or loss. We have to create that trust, that education.”

Corneille Karekezi (Photo by Joseph Burite)

Karekezi, a Rwandan who boasts 25 years’ experience in the insurance industry, has served as Africa Re’s CEO since 2011, rising from Chief Operating Officer and Deputy Managing Director. He previously served as the Managing Director at Sonarwa S.A. and has been a Director at Shelter Afrique. Karekezi also served as a Governor of the Eastern and Southern African Trade and Development Bank.

Africa Re, established in 1976, is owned by 41 African Union member countries which control 33.59%. The African Development Bank has an 8.17% shareholding and 111 African insurance and reinsurance companies hold 32.85%. Canada’s Fairfax Financial, France’s AXA and Proparco, as well as IRB Brasil RE of Brazil, control a combined shareholding of 25.39%. The reinsurer has opened a seventh office in Kampala, Uganda, to tap opportunities emerging from the East African nation’s oil and gas sector, says Karekezi.

Africa Re accounts for one third of Africa’s reinsurance market capacity as measured by shareholder funds, which is an estimated $2.9 billion, including South African reinsurers. The continent has 47 reinsurance companies that write only 35% of African reinsurance premium income, according to Karekezi.

Africa Re estimates the reinsurance market of Africa in 2015 fell by 12.5% in US dollars but grew by more than 15% in local currencies. It likely “contracted further in USD terms because of the massive depreciation in Sudan, Egypt and Nigeria.”

“The currency in Nigeria is really under pressure and that has impacted the topline in USD. For Africa Re, the decline in USD has been 5% but this is really a matter of conversion and reporting, but underlying business has been growing by almost 11% in different currencies,” says Karekezi.

“Insurance uptake is still very low in Africa due to the high poverty rate and lack of capital and expertise within insurance companies,” reads a report by the African Insurance Organisation. But “shifting demographics, changing cultural norms, an increasing urbanization as well as declining influence of extended family as a source of informal insurance are likely to accelerate insurance sales further,” the report, known as the Africa Insurance Barometer, says.

Oil And Farming A Boon For Insurers

While Karekezi sees a need for consolidation, African insurance companies will need help.

“More cooperation, more integration of markets and more importantly, enough capital in the insurance and reinsurance industry will be the major factor if we want Africa to retain more risks and premium income,” he says.

“Today, 65% of reinsurance premiums generated on the continent are leaving the continent because of a lack of financial capacity.”

South Africa, the continent’s most industrialized country, accounts for 72%, or $46 billion, of Africa’s insurance premiums. The other major markets are Morocco, Egypt, Kenya and Nigeria, according to the insurance barometer report. Life, motor and engineering are the fastest growing lines of insurance business, the report shows, while the fastest growing distribution channels are bancassurance and mobile phones.

“We know that in our dignity as Africans, when we had elders among us we used to accommodate them and stay with them in villages but now families are scattered with children going to study and work across the cities and countries… a child will be sending money via mobile phone to his father to help him buy this and that, to buy medicine for his cow. Very soon, the means of payment will be electronic, even in the villages, it’s coming with mobile money and other systems of payment,” says Karekezi.

“All those things cannot be managed as we used to manage them in the past. The sooner we increase the education of insurance, the better we will manage our various challenges in terms of risk management in our lives, families, communities and even state,” he says.

“If we don’t do that, we will have tremendous challenges and problems.” – Written by Joseph Burite