By Adonis Byemelwa
Kigali–Africa Re recently released an industry white paper, Unlocking Africa’s Growth Potential: The Strategic Role of Insurance and Reinsurance, in Kigali, Rwanda. Leveraging the white paper’s launch, the organisation issued a core appeal to African national governments, calling for the integration of insurance and reinsurance into the heart of each country’s economic and climate development strategies.
The white paper explicitly states that insurance reform is a necessary prerequisite for Africa to achieve industrialisation, noting that weak insurance markets are continuously slowing Africa’s overall development. It argues that only by advancing insurance reform and embedding risk management into the core of development policies can Africa support its industrialisation targets and long-term economic growth.
Citing views from Corneille Karekezi, the white paper states that Africa does not lack talent, resources or development ambition, but only a suitable risk management framework.
“Insurance should be positioned as a development strategy tool of equal importance to banking, capital markets and industrial policy,” the report states.
The white paper presents cross-regional comparative data to back its claims: in the early 2000s, per capita GDP in Africa was roughly on par with that of emerging Asia. Two decades later, per capita income in emerging Asia had tripled, and its non-life insurance penetration rate rose to 1.7% of GDP.
Over the same period, Africa’s non-life insurance penetration rate fell from 1% to 0.8%, and this gap represents the economic transformation opportunities the continent has missed.
On the front of local risks, only 6%-7% of catastrophe losses in Africa are insured, meaning that over 90% of disaster costs are borne by local governments, businesses, and households.
In some countries, the overall insurance penetration rate is only 5%-25%, so climate or natural disasters can directly become unexpected burdens that strain public finances.
The white paper also cites authoritative research findings from the Bank for International Settlements and the European Central Bank: economies with high insured loss ratios experience milder post-disaster recessions, faster recoveries, and lower public debt pressures.
Currently, several African countries have piloted scalable new insurance models, and the core prerequisite for implementing such models is strong national public policies and mature reinsurance systems.
Kenya has incorporated parametric insurance, emergency funds, and contingent credit facilities into its public financial management reforms to address climate shocks.
Morocco has launched a national catastrophic event protection scheme that combines mandatory catastrophe insurance, a solidarity fund to protect uninsured citizens, and support for reinsurance and capital market tools.
Nigeria has partnered with the International Finance Corporation and Africa Re to extend agricultural insurance coverage to more than 1.47 million farming households via index insurance and risk-sharing mechanisms.
These three localised disaster risk financing practices in Africa align with the conclusions of relevant industry reports: solutions adapted to Africa’s context, such as parametric products, microinsurance, and public-private partnership models, can only scale up rapidly if supported by a robust reinsurance system.
A separate white paper further puts forward another core value of insurance markets: beyond protecting against disaster losses, insurance markets can mobilise domestic savings to support infrastructure and development financing.
In four countries, South Africa, Namibia, Mauritius, and Morocco, the assets of insurance firms account for over 35% of GDP, which can form long-term capital pools allocated to government bonds, infrastructure, and real estate projects.
However, Africa’s annual demand for infrastructure financing reaches 130–170 billion US dollars, while annual government investment is only around 80 billion US dollars, leaving an annual gap of 50–90 billion US dollars.
Africa Re judges that if regulatory reforms are implemented to allow insurance firms to allocate long-term assets more efficiently, the insurance industry could fill part of this gap.
The white paper also lists five specific reform roadmaps for African policymakers: updating legal frameworks, strengthening regulatory capacity, scaling up microinsurance, improving financial literacy, and integrating insurance into national disaster risk financing systems.
It also requires that regulatory reforms balance innovation and public trust, with supporting measures to strengthen consumer protection mechanisms and build a more transparent claims settlement system.
“The development of insurance markets is not a spontaneous market outcome, but the product of the combined effects of deliberate policy choices, strong governance institutions, and structured collaboration,” the report states.
Policymakers gathered in Kigali must remain alert: without a mature insurance system, Africa’s economic development goals will stay continuously exposed to climate shocks, fiscal instability, and investment risks.
