Need to strengthen our reinsurance capabilities in the wake of regional uncertainties.

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.