Kigali. The African Reinsurance Corporation (Africa Re), a pan-African reinsurance institution owned by African states, insurers and development finance institutions, is urging African governments to treat insurance and reinsurance as strategic economic tools, arguing that stronger insurance markets could help East African countries manage climate shocks, finance infrastructure and reduce dependence on costly external borrowing.
Launching a new strategy report during the Africa CEO Forum in Kigali on Friday, May 15, 2026, Africa Re warned that African economies continue to suffer heavy losses from floods, droughts and other disasters because most risks across the continent remain uninsured.
“Africa is not short of ambition. Africa is not short of resources. As we have been saying in this conference and in others, we are short of execution and resilience, and insurance and reinsurance are designed to build exactly that,” said Africa Re Group Managing Director and Chief Executive Officer, Dr Corneille Karekezi.
The report, titled Unlocking Africa’s Growth Potential: The Strategic Role of Insurance and Reinsurance, argues that insurance should no longer be viewed merely as a financial product, but rather as a strategic development tool capable of strengthening resilience, supporting infrastructure financing and mobilising long-term domestic capital.
For East Africa, where governments are simultaneously grappling with climate shocks, infrastructure financing gaps and rising debt pressure, the report presents insurance as part of the solution rather than a secondary financial service.
According to Africa Re, only six to seven percent of catastrophe-related losses across Africa are insured, leaving governments, businesses and households to absorb more than 90 percent of damages directly.
“The macroeconomic impact of a disaster is not primarily determined by its size, but by the proportion of losses that are insured,” the report states.
Floods, droughts and storms continue to place enormous pressure on African economies, particularly in countries where governments are forced to divert resources from development projects towards emergency response and reconstruction.
“When there is flooding, when bridges are wiped out, when houses collapse, governments stop other priorities and start reallocating budgets. It’s better to have something to rely on when catastrophe hits than to start rebuilding from scratch,” said Dr Karekezi.
In East Africa, where agriculture remains the backbone of most economies, the financial consequences are particularly severe.
Millions of farmers across Tanzania, Kenya and Uganda continue to rely heavily on rainfall, yet only a small proportion have agricultural insurance coverage.
When crops fail or livestock die because of drought or floods, governments often step in with emergency support while affected families struggle to recover.
Africa Re believes expanding insurance coverage could significantly reduce such vulnerabilities while easing pressure on public finances.
“We are calling for action. If we don’t do this, then every climate shock becomes a fiscal shock,” said Dr Karekezi.
The report cites Nigeria as one example where agricultural insurance programmes supported by the International Finance Corporation (IFC) and Africa Re have already extended coverage to more than 1.47 million farmers through index-based products linked to weather conditions.
“In Nigeria we are helping to scale index-based agricultural insurance reaching over 1.4 million farmers. That is still scratching the surface. We should do this more and more so that we protect our farmers and help them rebuild when disasters happen,” said Dr Karekezi.
The institution says East Africa could replicate similar models on a larger scale, particularly because the region already has advanced mobile money and digital payment systems.
Kenya’s mobile money ecosystem, Tanzania’s growing fintech sector and Rwanda’s digital transformation initiatives are creating opportunities for insurers to distribute low-cost products through mobile platforms instead of relying solely on traditional insurance branches.
Africa Re says such innovations could help extend insurance coverage to millions of informal workers, farmers and low-income households that have historically remained outside formal financial systems.
“Today we have technology, satellites, mobile phones and digitalisation of supply chains. All these things are available and we are calling for action,” said Dr Karekezi.
However, the corporation insists technology alone will not be enough.
The report argues that stronger insurance markets require deliberate policy reforms, better regulation and greater government involvement.
Among the reforms proposed are stronger insurance regulators, modernised legal frameworks, expanded microinsurance programmes and national financial literacy campaigns aimed at improving public understanding of insurance.
Africa Re says many Africans still rely on family networks rather than formal insurance because the culture of risk planning remains weak.
“If an average hustler in Lagos has an accident, he calls family members to help him. He does not go first to an insurance company. So we have to change mindsets through reforms, education and enforcement,” said Dr Karekezi.
The institution also wants governments to integrate insurance more directly into national disaster management and development planning.
One of the examples highlighted in the report is Morocco, where coordinated reforms involving regulators, ministries and insurers significantly increased insurance penetration over the past decade.
Morocco later established a national catastrophe coverage system capable of mobilising rapid payouts after disasters.
“When Morocco had the earthquake near Marrakesh in 2023, they could mobilise close to $300 million within weeks. That is what we need to build in Africa,” said Dr Karekezi.
Africa Re says such systems demonstrate how insurance can reduce economic disruption after disasters while protecting government budgets from sudden shocks.
The institution is also positioning insurance as a potential source of long-term development financing for African economies.
According to the report, Africa requires between $130 billion and $170 billion annually for infrastructure development but currently mobilises only around $80 billion, leaving a financing gap of between $50 billion and $90 billion each year.
Africa Re believes stronger insurance industries, especially life insurance, could help close part of that gap by mobilising domestic savings and directing them into infrastructure, housing and government bonds.
“Infrastructure and housing are long-term projects. To find resources which match that profile, you need insurance, especially life insurance,” said Dr Karekezi.
In countries such as South Africa, Namibia and Mauritius, insurance company assets already exceed 35 percent of GDP, creating large pools of long-term capital available for investment.
East Africa’s insurance markets remain relatively small by comparison, but Africa Re says the region has strong growth potential because of its expanding middle class and rapid urbanisation.
“We cannot wait for outsiders to develop Africa. Financial resources are what drive development,” said Dr Karekezi.
At the same time, the institution acknowledges that the insurance sector still faces significant trust challenges across many African countries.
Many consumers remain sceptical because of delayed claims settlements, poor customer experience and limited understanding of how insurance products work.
The report therefore calls for stronger consumer protection frameworks, improved transparency and faster claims settlement systems as part of efforts to build public confidence in the sector.
“Insurance is not sexy because we are asking people to bring money today to build a future. But those savings are what finance economies,” said Dr Karekezi.
Africa Re is also encouraging greater regional cooperation so that more African insurance risks are retained within African financial systems instead of being transferred to international markets.
“Our dream is that African risks are first absorbed in Africa. That would be incredible for building strong African financial systems,” said Dr Karekezi.
For East Africa, where climate pressures are intensifying and governments continue searching for sustainable development financing, Africa Re says insurance may no longer be an optional financial service.
Instead, the corporation argues, it could become one of the region’s most important economic tools for protecting livelihoods, managing risk and supporting long-term growth.
