Kenya Re enters Southern Africa market

“We see trends in many countries to protect their markets,” Mr Mwarania said. “The primary root of late appears to be domestication of all or certain classes of business. We have seen this in Nigeria, Ghana, Zimbabwe and lately India. With the set-up of Nepal Re in Nepal, and Ethio Re in Ethiopia, up to 25 per cent of these markets have been localised.”

The Nairobi Securities Exchange-listed company, which is 60 per cent owned by the Government, said it specifically chose to open an office in Zambia, as opposed to the other countries in Southern Africa, because of the single taxation policy between Kenya and Zambia.

“Unlike other Southern Africa countries, Kenya and Zambia operate a single taxation policy,” Mwarania said. “This is where profits realised in each one of the two countries, cannot be taxed again after they have been taxed either in Kenya or Zambia depending on the country the company operates in,” he further explained.

Kenya Re boss also said that language barrier was another key challenge they looked at while setting up the office. He averred that it would be difficult to set up in countries like Angola and Mozambique since these countries converse in Portuguese which would have deterred communication with local players.

Innovate and expand

Apart from language barrier, Mwarania also said there was little competition in Zambia to challenge Kenya Re’s entry into that market.

“Zambia has only three re-insurance companies. Our entry through Zambia can therefore meet little challenge. Also Kenya and Zambia have done a lot of business together in recent times and naturally, getting into Southern Africa through Zambia would be appropriate,” Mwarania asserted.

The CEO also explained Kenya’s projected GDP growth of 5-6 per cent was not sufficient to support local insurance firms. What these firms needed in order to grow was to innovate and expand their services into neighbouring markets.