The recent
past has seen Kenya shoulder the externalities of the terrorist Al shabab group , the unstable south
Sudan and the frequent border pastoral communal clashes on the Kenya – Ethiopia
border. To wrap it all up it seems we have got issues with our neighbour’s despite running joint
economic infrastructural projects , from
Uganda’s claim on Migingo Island , South
Sudan claim on Ilemi Triangle, Somalia claim on Indian Ocean territorial
boundaries , to Ethiopia’s construction of Gibe dam along river Omo the source
of Lake Turkana , a major environmental concern to the objection by
Tanzania regarding the construction of
an airport by Kenya in Taveta which was
viewed by the former as a direct threat to Kilimanjaro Airport.
From the
factors that led to the collapse of the Eac way back in 1977 to a new wider
eastern African dream driven by her new found beneath resources , that has seen
major projects such as the SGR construction from Mombasa to Kigali via Kampala
and the much talked about Lappset project on the northern corridor a lot is bound to change both economically
and politically on the regional front.
To tackle my
reinsurance topic one has just to look at the region with a chameleon eye,
Kenyan financial institutions have their wings spread firmly from banking,
insurance ,manufacturing and educational cum human resource services however , this seems not to have gone down well with the
respective countries considering that
most are advocating for absorption of local resources which indeed is a reasonable
act or rather thing to do . Having said that ,the most challenging problem is that one of war as
experienced in southern Sudan where
foreign business have to be shielded from losses by the parent companies either through creative accounting and or
transfer pricing models and or alternatively
close shop as Jetlink Airline once did
due to currency woes in south Sudan, Kenya
Airways on the other hand has been forced to temporarily stop its flights to the
Ebola stricken west African route hence loss of business.
The pacmans
rule states that the best way to defend is to attack , its high time Kenyan companies
form a large pool of insurance fund managed by the Kenya reinsurance
corporation to shield them from assorted country risks , this will prevent the government
from bailing out companies and Kenyan staff held in foreign countries ,
there is need to develop reinsurance products unique to the regional problems bedevilling
financial institutions from the various uncertainties across the region. Yes
the Jubilee administration has been on the forefront signing and advocating for
special status agreement with Ethiopia, Nigeria and the other African countries
at large in the spirit of pan Africanism and intra Africa trade yet no concrete
hedging institutional policies have been
formulated to safeguard local businesses abroad from massive local recruitment,
Health threats such as Ebola, political uncertainties and environmental concerns.
Speaking of environmental concerns ,Ethiopia’s construction of Gibe dam for energy
purposes greatly affects lake Turkanas eco system yet the irony of it is that
we are bound to purchase power from them.
As local
businesses expand regionally there is need to hedge this businesses from
external shocks in form of a well thought out reinsurance strategy that accommodates the peculiar nature of African
businesses, local financial institutions with respective regulatory authorities
must have some form of enhanced Terrorism and sabotage, Political ,Riots and
strike insurance covers to mitigate their
businesses and staff accordingly.
