Congo Plans to Issue First Licenses to Private Insurers by March

KINSHASA (Capital Markets in Africa) – The Democratic Republic of Congo plans to issue its first licenses to private insurance companies early next year.

The central African nation plans to end more than four decades of state monopoly of an industry the Insurance Regulatory Authority estimates is worth $850 million annually and could grow threefold in the next five years. Congo is the continent’s fourth-most populous nation, with about 84 million people.

ARCA, as the authority is known, received bids for licenses earlier this year after inviting them in December 2017, Interim Managing Director Alain Kaninda said in an interview in the capital, Kinshasa. The authority is assessing about a dozen applications, he said, declining to identify individual companies.

“Our wish is to be able to make it that the new companies which get approval start operations in the first quarter of 2019,” Kaninda said.

Congo passed legislation in March 2015 to liberalize the insurance industry. The new laws didn’t come into force for another year and efforts to open up the sector were further delayed when ARCA’s former managing director was suspended in October 2017.

The industry is dominated by state-owned Societe National d’Assurances, or Sonas, which has been the only insurance company allowed to operate in Congo since 1967. The company’s application for a license will have to be accepted by ARCA if it’s to continue operating, Kaninda said.

Liquidity Boost
The new law requires insurance companies to keep 25 percent of total premium income in Congo to boost domestic financial liquidity.

“It’s important for us to have actors who keep premiums in the country to finance the economy,” Kaninda said. While there’s no fixed legal obligation for approved firms to have local ownership, it’s encouraged, he said. “It should be a significant shareholding” starting at about 20 percent, he said.

Data about the Congolese insurance market is limited to Sonas’ revenue, which was about $60 million in 2016, Kaninda said. The liberalized insurance market could grow to $3 billion by 2023, according to ARCA.

The authority hasn’t yet decided how many licenses to grant in the first tranche, Kaninda said. “That will depend on the ambitions and the projects that the companies submit.”

Source: Bloomberg Business News