The insurance sector in Africa can push for the inclusion of insurance particularly as the African Continental Free Trade Area (AfCFTA) has come into effect since 1 January 2021, according to
Mr Ekerete Olawoye Gam-Ikon, a management consultant with a specialisation in strategy and insurance.
In a commentary in ProShare, he says that it is imperative to lean on the financial inclusion strategy, if Africa has to get insurance into AfCFTA.
The pact will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3bn people and has been signed by 54 of the 55 African Union member states. Eritrea has not yet joined. Thirty-four countries have ratified the agreement as of early December.
But experts view AfCFTA's launch as largely symbolic with full implementation of the single market expected to take decades. Obstacles – ranging from red tape and poor infrastructure to political unrest and the entrenched protectionism of some of its members – must be overcome if the bloc is to reach its full potential.
Mr Gam-Ikon says that for the insurance sector, while the responsibility to create, or recreate, and drive such collective vision rests on the Africa Insurance Organization (AIO) and the Association of African Insurance Supervisory Authorities (AAISA), it is expected that active conversations would emerge from the engagements of various insurance stakeholders, now that AfCFTA has become operational.
The insurance industry urgently needs the opportunity that AfCFTA presents in some policy areas—Public Procurement, Labour Market Regulations, Environmental Laws, Intellectual Property Rights and State Trading Enterprises—that it offers a comparative advantage over the subregional Preferential Trade Agreements (PTAs) such as Common Market for East and South Africa (COMESA), and Economic Community of West African States (ECOWAS).
“It will become possible to reinforce what was happening between re/insurers and PTAs or initiate provisions of insurance services that were not previously available,” Mr Gam-Ikon said.
With AfCFTA boosting manufacturing and exports by double digits, increasing employment and wages as well as lowering the gender wage gap, insurers and reinsurers in Africa cannot afford to watch these economic development efforts from the sidelines, he said.