Call for regulatory harmonisation across Africa

Speaking to Commercial Risk Africa at the African Insurance Organisation annual conference earlier this month, key players said greater harmonisation would benefit the individual insurance companies, with a resulting benefit for the insureds. Dr Olufemi Oyetunji, Group Managing Director and Chief Executive Officer, Continental Re, summed it up: “There is new interest in going beyond your national borders,” he said. “Providing services to 300 million or 400 million Africans is more exciting than building up services in just one country. There are economies of scale, expenses are shared and there can be a pooling of resources.”hideDr Oyetunji said people were beginning to expect cross-border opportunities. But more than that, he argued: “Africa needs strong institutions. We have strong institutions in individual countries but we need more pan-African strengths.” Such institutions, he believed, could help focus on delivering services that Africa really needs, tailored to the local environment. They could also help develop education across the continent, improving maths and literacy levels, which would satisfy the demand for homegrown talent across the region. The Organisation of African Unity is moving towards freedom of access for people and goods across borders and Dr Oyetunji says there are some regional developments which allow for people and goods to cross borders without difficulty. But he believed that more could be done to the benefit of everyone. “Too often these initiatives fail because people are too interested in being the ‘top dog’ and don’t want to lose their power. But I think if we were to open up more, stronger countries would be in a position to help weaker countries and develop higher standards for all,” he said. “We have been asking for harmonisation of regulation across Africa. Some regional harmonisation has been taking place which is a good place to start,” said Dr Oyetunji, but there are still some physical barriers. “It is a nonsense that it is cheaper for me to fly from Lagos to London and then down to Zambia, rather than direct. Equally, it is a waste of time that my passport has to be sent away for two weeks if I want to travel to another African country. “It affects people’s ability to do business and it also impacts their willingness to do business,” he warned. Newton Jazaire, Managing Director of Kampala-based Lion Assurance, agreed that regional development was a more achievable goal than pan-African in the short term. “In east Africa, we are already seeing changes,” he said. “The changes are coming economically. For example, regulators are syncing laws within Kenya, Uganda and Rwanda. Burundi may also become part of that but Tanzania is still going it alone.” Mr Jazaire sees it benefiting the larger economies as more firms will be in a stronger position to move into neighbouring territories but, like Dr Oyetunji, he believed that will benefit business as a whole. However, Simon Chikumbu, Chief Executive Officer, Aon Benfield Africa, also saw some regional development but said: “Different regulators are still asking for different things and are very protective of their markets.” One suggestion being made at the event in Kigali was that any company operating in an African country should have a physical presence in the country, or at least in the region. Such protectionism was being argued for and against. However, Israel Kamuzora, Commissioner of Insurance in Tanzania, dismissed any suggestion that companies should be required to have a physical presence to be allowed a licence, saying it would discourage major investors and be counter-productive for the continent as a whole. He did agree, however, that regional cooperation could go further. Chairing a meeting of African regulators as part of the event, he reported: “Every regulator understands that without coming together or working together we cannot make a big difference in the industry.” Problems do exist in bringing greater harmonisation, he said. The insurance, banking and financial systems need to be synced before any form of single market approach would work, he believed. His vision for harmonisation was not that regulators would merge the rules but that they would accept approval by another regulator in their own country. So, for example, approval for operations by the Kenyan regulator would be accepted in Tanzania and vice versa. This would allow for cross-border insurance, giving the insured confidence that claims would be met. Mr Kamuzora said there are already targets in place to achieve this level of cooperation within the insurance arena. Likewise, he said there are plans afoot to achieve harmonisation among the SADAC countries. But when pushed on the possibility of pan-African harmonisation, Mr Kamuzora said regional differences were very great, often for historical reasons, making that goal much harder.

Call for regulatory harmonisation across Africa

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