Ethiopia: Insurances Push for Govt Action to Maximize Economic Contributions
The government should back the insurance industry considering its vital role in supporting national projects and driving economic growth, insurance companies emphasized.
In an exclusive interview with The Ethiopian Herald, the National Insurance Company of Ethiopia (NICE), Chief Strategy Officer Gizeaddis Balemual stressed the critical need for the Ethiopian government to prioritize the insurance industry on par with the attention given to banks and other financial sectors.
He argued that the insurance industry plays a vital role in underpinning numerous national projects, providing essential guarantees that support economic stability and growth across the country.
Despite Ethiopia being the first African nation to establish insurance companies, Gizeaddis noted that the current landscape is significantly underdeveloped. With only around 18 insurance companies operating in the country, he stated that this number is quite small relative to Ethiopia’s large population.
In contrast, other African nations such as Kenya, Ghana, and Nigeria have significantly expanded their insurance sectors, establishing numerous insurance and reinsurance firms since the 1960s. This progress has allowed them to better serve their populations and manage risks more effectively, he added.
In recent years, Ethiopia established Ethio-Reinsurance, a joint venture between banks and insurance companies. While Gizeaddis acknowledged that this initiative represents a positive step forward, he pointed out that the country still relies heavily on foreign reinsurance institutions. This dependence results in millions of dollars flowing out of the country–funds that could be better utilized domestically, he noted.
Nib Insurance Company (S.Co.) Finance and Investment Director Malede Adugna stressed the need for the government to expand local reinsurance companies to help reduce the foreign exchange costs currently paid to overseas reinsurance firms. He also emphasized the need for investment in capital, manpower, and technology across the insurance sector nationwide.
Malede further called for government incentives to strengthen the capital base of insurance companies and support the growth of domestic reinsurance firms. He highlighted that a strong insurance sector is particularly vital during natural and man-made disasters and is a crucial component of the nation’s resilience.
The insurance industry is not merely a financial service–it plays a significant role in the country’s broader development efforts. For instance, local insurers are already providing essential support for major national projects, including the Abbay Dam. Industry leaders emphasized that the government should work to ensure a more secure economic future for its citizens by fully harnessing the potential of the insurance industry and making strategic investments in its growth.
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