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Sindiso Ngwenya

Prosper Ndlovu Business Editor
THE insurance sector should position itself for big business opportunities offered by the growing global trade in services, which is presently dominated by western-owned conglomerates, Sindiso Ngwenya, the secretary-general of the Common Market for Eastern and Southern Africa (Comesa) has said. The Zimbabwean-born technocrat said the imminent launch of the Tripartite Free Trade Area (FTA) — linking Comesa, Sadc and EAC in June this year, would provide huge opportunities for insurance firms in Africa.

The facility would be a major economic breakthrough for Africa, aimed at increasing intra-regional trade and integration anchored on robust industrialisation through value addition.

A majority of insurance players in Zimbabwe and across Africa are experiencing low revenues due to relatively suppressed economic growth.

The implementation of the tripartite FTA after the launch by heads of states on June 10 in Egypt, Ngwenya said, would need huge insurance cover required by the service industries.

Trade in services with the rest of the world and within Comesa is dominated by transport, communications, and insurance and government services.

“This is where you come in as insurance companies. Services are very important for our economy as they account for about 60 percent of the Gross Domestic Product.

“There’s a need to have high value services and you should be asking what’s it that you’re or how are you are going to participate in the trade in goods and services,” said Ngwenya in a recent interview.

“The insurance sector has got a huge market but you’re not taking advantage of that opportunity. This brings me to the point that when it comes to the World Trade Organisation and the current negotiations, all developed countries are pushing for the opening up of the services sector.

“Why? Because they know the services are the fastest growing part of the global economy. They know they can make more money than from manufacturing items and products.”

The tripartite FTA has a combined population and gross domestic product of 625 million people and $1,3 trillion respectively that would constitute the single largest market. Ngwenya said the challenge remains on top executives of insurance firms who should come up with a collective stance on how to grab the opportunities offered.

He said while a regional policy was ideal, there was a need to domesticate its provisions in every Comesa member state to facilitate effective implementation.

“We’ve mining firms that are investing billions in Africa, in gas, petroleum and refinery projects, but are you participating in these businesses? We need to bring the insurance industry together. This is a big business we can’t allow to be taken by outsiders. We’ve unlimited opportunities here, let’s look at the bigger picture,” said Ngwenya.

The Comesa boss said the challenges facing the insurance sector were partly due to lack of innovation and effective marketing. He expressed concern over incidences of fraud through issuance of fake cards to non-members.

Ngwenya said the adoption of information communication technologies was critical in curbing graft and enhancing effective security, management and tracking systems for insurance players.