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The East African : April 28th 2014
40 UGANDAN INSURERS Microinsurance products key to sector’s growth Insu≥ance fi≥ms have been u≥ged to develop mo≥e p≥oducts following the slow g≥owth of the t≥aditional segment By DICTA ASIIMWE Special Correspondent to invest more in developing microinsurance products, following flat earnings from the traditional segments. That is the observation of several U players in the sector following the slow growth of the non-life segment, which has traditionally sustained most of the 22 insurance firms in Uganda. Microinsurance is insurance aimed at low income populations. Those covered by microinsurance often work in the informal sector where irregular cash flows and lack of savings are the norm. Microinsurance provides simple and basic protection against random events such as natural disasters, financial loss, lifecycle and health related events. The Insurance Regulatory Au- thority (IRA) has reported an improvement in the life segment and players are being encouraged to invest more in microinsurance products. “The introduction of these microinsurance products is improving penetration in life products, although loss ratios are usually high because of the cost distribution and claim handling channels,” said Kaddunabbi Ibrahim Lubega, the chief executive officer at IRA. The Uganda Insurers Association released a report two years ago that concluded that to grow the uptake gandan insurers seeking to grow their premiums will have of the life segment, companies will have to invest more in microinsurance products that are attractive to ordinary citizens as business from corporate companies, who mostly use services of the non-life segment, slows down. Although the 2013 annual mar- ket insurance report shows that non-life is still dominant, accounting for 77 per cent of the premiums collected during the year, growth of this segment has been slowing over the past five years, suggesting the need for more focus on the life segment as a way to boost growth. The annual IRA performance results show the non-life segment growing at a decreasing rate over the past three years, from 21.2 per cent in 2011, to 19.3 per cent in 2012 and 12.3 per cent in 2013. The 2013 growth figures are the lowest in the non-life segment since Uganda’s insurance regulator started compiling growth figures on the sector in 2008. The reduced growth in the non- life segment comes at a time when the sector in general grew at a faster rate compared with previous years on account of better economic growth and investment in emerging products. In 2013, the insurance sector grew premiums written by 30.1 per cent compared with 18.7 per cent the previous year. In total insurance gross premiums were Ush456.9 billion ($179.2 million) in 2013 compared with Ush351.2 billion the previous year. Donato Laboke, the Lion As- The EastAfrican BUSINESS APRIL 26 - MAY 2, 2014 Launch of wo≥k pe≥mit study in EA By YVONNE KAWIRA Special Correspondent THE EAST African Business Council (EABC), a regional business lobby, is seeking a consultant to conduct a study, on harmonisation of the policy, legal and regulatory regimes governing work permits in the bloc. This will see the five East African countries harmonise their work permit, forms and supporting documents, fees and procedures. While the EAC Common Mar- ket Protocol was adopted and signed on November 20, 2009, officially allowing for free movement of labour, member states continue to maintain work permit restrictions. Recent World Bank findings show that the region would benefit greatly from free trans-border flows of labour, as it would allow for a more efficient allocation of skills that are relatively scarce in some partner states while providing employment for partner states with high levels of unemployment. Commissioning The study is to be commis- GROWTH POTENTIAL Microinsurance has an estimated potential market of about four billion customers and $40 billion in premium income per year. Life is the dominant microinsurance product; however, health and agriculture insurance are also slowly gaining prominence. surance marketing manager, said that despite the growth in the economy, private sector borrowing from banks has not grown at a desirable rate. “Lending from commercial banks didn’t pick up as we had expected and that alone had an impact on insurance premiums,” he said. The microinsurance industry is expected to witness significant growth led by increasing insurance awareness through low cost innovative products and distribution channels being gradually introduced by insurers. www.kpmg.com Figures from the Bank of Ugan- da’s monetary policy report for December 2013 show credit to the private sector grew from Ush148.2 billion (58.1 per cent) in 2012 to Ush162.3 billion ($63.7 million) the following year, suggesting that there could be other reasons for the slowdown of the non-life segment. Tanzanian pay TV fi≥m to expand to Uganda, Kenya By ISAAC KHISA The EastAfrican TANZANIAN PAY TV service provider Azam TV plans to expand into Uganda and Kenya in coming months, heightening competition in a segment dominated by South Africa’s MultiChoice and China’s StarTimes. Azam TV, owned by grain miller Bakhresa Group, has announced plans to launch broadcasts in Uganda in May, and in Kenya in June. Simon Arineitwe, the Azam TV general manager for Uganda, said the firm will expand into Burundi and Rwanda later in the year. “Demand for better entertainment channels and programmes is on the rise in sub-Saharan Africa,” said Mr Arineitwe. The firm has entered into an agreement with French-based Eutelsat Communications to use its Eutelsat 7A satellite to broadcast its channels across sub-Saharan Africa. Mr Arineitwe said Azam plans to charge less than $100 for the initial high-definition multimedia interface (HDMI) kits that will allow subscribers to record and review programmes. Azam joins MultiChoice, StarTimes and Zuku TV in the fast growing pay TV segment as the region prepares to switch to digital signals from analog. Mr Arineitwe said Azam subscribers will continue to receive free-to-air channels at no cost after expiry of their monthly subscriptions, in line with a requirement set by the communications sector regulator, one which the existing players have opposed. Countries in the East African Community “Demand for better entertainment channels and programmes is on the rise in sub-Saharan Africa.” Simon Arineitwe, Azam TV general manager for Uganda have set up regulations requiring that pay TV service providers offer at least five free- to-air channels to their subscribers. Azam TV’s entry into Uganda comes at the time when current firms StarTimes and Zuku TV struggle with operational demands. In Kenya, the Kenya Consumer Protection Advisory Committee last week threatened to sue GOtv and StarTimes if access to KTN, NTV and Citizen TV, which are regarded as free-toair channels, is not restored within seven days. Also, an April 11 Court of Appeal ruling barred GOtv and StarTimes from broadcasting content from the three media houses without their consent. Azam TV currently has 50,000 subscribers, having launched its services in Tanzania in November last year. The firm said it plans to launch services across Africa and attract over 750,000 households in the next five years. Free trans-border flows of labour would allow efficient allocation of skills across the region. Picture: File sioned on May 5, and the report expected out on June 6, said EABC, which has made the establishment of easy access to free work permits within the region one of its key priorities this year. “We want to see a situation where an engineer from one EAC member country is recognised in all other states within the bloc and accorded the same privileges,” said EABC chairman Felix Mosha, adding that he also intends to work closely with EAC governments to harmonise domestic taxes. The cost of a work permit in Tanzania is $2,000; in Zanzibar $150; Burundi charges 30 per cent of the salary; in Kenya, Rwanda and Uganda, the permits are issued free of charge to East African nationals.
April 21st 2014
May 5th 2014