Investor Updates: Africa's Insurance Industry Set to Reach $116bn by 2027

Africa’s insurance industry to reach $116bn by 2027

Highlights

• The African insurance market reached a value of $75.3 billion in 2021. Looking forward, IMARC Group expects the market to reach $115.9 billion by 2027, recording a compound annual growth rate of 7.4% during 2022-2027.
• Due to the availability of affordable insurance across Africa, this is gaining widespread prominence among the masses, the report says, citing other reasons such as increasing awareness regarding the benefits of insurance among individuals. 
• Other factors reportedly driving the insurance market growth include the use of digital technologies in the industry, the growing working population, easy access to insurance through wider distribution channels, and increasing partnership activities.

Source: OpenPR

Our Takeaway

Despite projected growth, insurance in Africa remains a marginal product. As of 2018, the insurance penetration rate in Africa stood at a meager 1.12% or 3% including South Africa. The low uptake is largely due to the traditional distribution of insurance policies, which rely on brick-and-mortar channels to sell and process policies. While this is a major problem, it also leaves room for innovation. The rapid expansion of digital and mobile services is set to change all that with African insurtech (insurance + technology) startups actively overcoming the historically low penetration rates of insurance products across the continent.

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MaxAB raises $40m to fuel growth, regional expansion

Highlights

• MaxAB, a B2B e-commerce and distribution platform serving a network of traditional retailers across Egypt and Morocco, has closed a $40 million pre-series B equity round to fuel its expansion across the MENAP region.
• MaxAB connects suppliers with underserved traditional retailers and offers a wide range of embedded finance solutions. Since launching in 2018, it has served approximately 150,000 unique traditional retailers, delivering 2.5 million orders.
• The new capital will also be deployed to finance further growth in the e-commerce arm of the business, expand technology and product teams, and further scale the fintech arm.

Source: TechCrunch

Our Takeaway

Across Africa, digitizing informal markets is proving to be a gold mine. In Egypt, small traditional retailers serve as the backbone of the grocery industry with a similar dynamic existing in many other markets across the MENA region. MaxAB estimates that there are more than 750,000 mom-and-pop businesses requiring its services in Egypt and Morocco alone. Having gained unprecedented success in both markets, the startup has established a proven playbook that can be leveraged for launch into new geographies and is looking to replicate the same success across the region.

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Eswatini’s central bank plans to issue digital currency

Highlights

• The kingdom of Eswatini is considering the introduction of a central bank digital currency (CBDC), joining the growing list of African countries exploring the viability of an e-currency.
• The Central Bank of Eswatini (CBE) has appointed the German technology group Giesecke+Devrient (G+D) to research and explore the possibilities of a digital Lilangeni (the country’s currency) to complement banknotes.
• The CBDC project will involve a design concept, and other considerations such as governance, accessibility, interoperability, security, and programmability of the potential digital currency.

Source: TechCrunch

Our Takeaway

CBDCs, unlike cryptocurrencies like Bitcoin and Ethereum, are developed by central banks and are pegged on countries’ fiat currencies. G+D recently helped Ghana to pilot a retail CBDC, making it the second country after Nigeria to run such a trial. Nigeria’s eNaira was introduced in October last year and had by August 2022 been used to carry out transactions worth ₦4 billion ($9.2 million). Kenya, Namibia, Tanzania, Uganda, and Zambia are some of the other African countries eyeing digital currencies to enhance their access to financial services, cost reductions, interoperability, and enhanced cross-border payments.

Highlights

• The African insurance market reached a value of $75.3 billion in 2021. Looking forward, IMARC Group expects the market to reach $115.9 billion by 2027, recording a compound annual growth rate of 7.4% during 2022-2027.
• Due to the availability of affordable insurance across Africa, this is gaining widespread prominence among the masses, the report says, citing other reasons such as increasing awareness regarding the benefits of insurance among individuals. 
• Other factors reportedly driving the insurance market growth include the use of digital technologies in the industry, the growing working population, easy access to insurance through wider distribution channels, and increasing partnership activities.

Source: OpenPR

Our Takeaway

Despite projected growth, insurance in Africa remains a marginal product. As of 2018, the insurance penetration rate in Africa stood at a meager 1.12% or 3% including South Africa. The low uptake is largely due to the traditional distribution of insurance policies, which rely on brick-and-mortar channels to sell and process policies. While this is a major problem, it also leaves room for innovation. The rapid expansion of digital and mobile services is set to change all that with African insurtech (insurance + technology) startups actively overcoming the historically low penetration rates of insurance products across the continent.

---

MaxAB raises $40m to fuel growth, regional expansion

Highlights

• MaxAB, a B2B e-commerce and distribution platform serving a network of traditional retailers across Egypt and Morocco, has closed a $40 million pre-series B equity round to fuel its expansion across the MENAP region.
• MaxAB connects suppliers with underserved traditional retailers and offers a wide range of embedded finance solutions. Since launching in 2018, it has served approximately 150,000 unique traditional retailers, delivering 2.5 million orders.
• The new capital will also be deployed to finance further growth in the e-commerce arm of the business, expand technology and product teams, and further scale the fintech arm.

Source: TechCrunch

Our Takeaway

Across Africa, digitizing informal markets is proving to be a gold mine. In Egypt, small traditional retailers serve as the backbone of the grocery industry with a similar dynamic existing in many other markets across the MENA region. MaxAB estimates that there are more than 750,000 mom-and-pop businesses requiring its services in Egypt and Morocco alone. Having gained unprecedented success in both markets, the startup has established a proven playbook that can be leveraged for launch into new geographies and is looking to replicate the same success across the region.

---

Eswatini’s central bank plans to issue digital currency

Highlights

• The kingdom of Eswatini is considering the introduction of a central bank digital currency (CBDC), joining the growing list of African countries exploring the viability of an e-currency.
• The Central Bank of Eswatini (CBE) has appointed the German technology group Giesecke+Devrient (G+D) to research and explore the possibilities of a digital Lilangeni (the country’s currency) to complement banknotes.
• The CBDC project will involve a design concept, and other considerations such as governance, accessibility, interoperability, security, and programmability of the potential digital currency.

Source: TechCrunch

Our Takeaway

CBDCs, unlike cryptocurrencies like Bitcoin and Ethereum, are developed by central banks and are pegged on countries’ fiat currencies. G+D recently helped Ghana to pilot a retail CBDC, making it the second country after Nigeria to run such a trial. Nigeria’s eNaira was introduced in October last year and had by August 2022 been used to carry out transactions worth ₦4 billion ($9.2 million). Kenya, Namibia, Tanzania, Uganda, and Zambia are some of the other African countries eyeing digital currencies to enhance their access to financial services, cost reductions, interoperability, and enhanced cross-border payments.