Cross-border insurance is emerging as a vital tool for unlocking trade, investment, and economic resilience across Africa, with industry players calling for derisking trade and investment through insurance, credit ratings, and regulatory harmonisation.
Home to more than 1.4 billion people across 54 countries, Africa has a rapidly growing intra-continental trade landscape driven by the African Continental Free Trade Area (AfCFTA), which officially launched in January 2021.
AfCFTA aims to create a single continental market for goods and services, enabling the free movement of business, investment, trade, and people. One of its key goals is to reduce tariff and non-tariff barriers, with the agreement projected to increase intra-African trade by up to 52% by 2035, spurring economic growth, industrialisation, and job creation.
Despite this potential, discussions at the ongoing Southern Africa Insurance Indaba in Victoria Falls—hosted by the Insurance Institute of Zimbabwe—revealed that Africa’s insurance landscape remains fragmented. Most nations have underdeveloped insurance markets, with penetration rates averaging less than 3% of GDP. Limited data, inconsistent regulatory frameworks, and country-specific risk profiles make it difficult for investors and businesses to operate confidently across borders.
As a result, cross-border insurance, supported by credit ratings and risk assessment tools, is increasingly seen as a critical enabler of trade and investment under AfCFTA.
A panel discussion on cross-border insurance highlighted the crucial roles played by insurers, credit rating agencies, and regulators in derisking investment and facilitating seamless cross-border trade.
Francis Nzwili, managing director of Continental Re Botswana, emphasised the importance of accurate risk assessment in cross-border trade.
“If risk is known, investors are more confident, pricing becomes fairer, and insurance companies can underwrite projects across borders. Without proper risk profiling, trading partners operate in the dark, which inflates the so-called Africa premium,” he said.
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The panel noted that the insurance sector exists to underwrite both real and perceived risks. This strengthened the case for a credit rating agency that applies globally recognised methodologies to measure risk.
“So, there is an interrelationship between credit rating and the insurance sector. When you look at the African Continental Free Trade Area, you realise it is going to create one of the biggest markets—about 1.3 billion people—and you are bringing nations together,” Nzwili said.
“Ordinarily, each nation has its own inherent risks. The AfCFTA creates a huge market, even for insurance companies, including those in Zimbabwe.”
Nzwili added that derisking investments and infrastructure projects was vital.
Old Mutual Life Assurance general manager Linda Mariwande highlighted regulatory challenges and the need for tailored products.
“Africa-wide trade presents more opportunities than concerns, but inconsistent regulations across countries make it difficult to offer seamless coverage,” she said.
“Tailored products for SMEs, informal markets, and vulnerable communities—alongside multi-payment and parametric platforms—can make cross-border trade safer and more inclusive.”
She said product development and technological systems presented major opportunities, but regulatory hurdles meant that entering a new territory often required navigating different laws.
“The standards used to customise products become specific to each country. I’m concerned because there should be more sharing—even on pricing,” Mariwande said.
“It shouldn’t be so difficult or different. Some places lack adequate data, and as a result, the cost of insurance goes up because you are pricing in the dark.”
The panel also underscored the importance of cross-border risk pooling.
Nzwili noted that smaller African markets cannot independently cover large risks, suggesting the creation of insurance pools for catastrophes, terrorism, and climate-related events.
“Collaboration among insurers, reinsurers, regulators, and credit agencies is key to building capacity, retaining more premiums locally, and supporting economic resilience,” he said.
The discussion concluded with a consensus that Africa’s economic potential under AfCFTA can only be fully realised if cross-border insurance, regulatory alignment, and innovative risk management solutions are fully implemented.
Panellists agreed that industry leaders, regulators, and investors must work together to standardise regulations, deploy cross-border insurance solutions, and leverage risk assessment tools to make AfCFTA safer, more inclusive, and more resilient.
Ephraim Chaoneka, chief executive of the International Credit Rating Agency, stressed that credit ratings were essential for levelling the playing field.
“African countries that are unrated face higher costs and uncertainty in trade. Ratings enable fair comparisons of projects and investments across jurisdictions, fostering confidence and attracting investors,” he said.
