Africa's trade insurance sector is experiencing an increase in growth after the launch of a new platform that provides a unified bond system for transnational traders. The platform, called the African Bond Alliance (TABA), is part of a joint initiative by the African Export and Export Bank (Afreximbank) and Zep Re (PTA Reinsurance Company) to strengthen the continent's insurance capacity and enable more African businesses to participate in regional trade.
Africa has around 110 borders and 16 lands trapped countries, requiring traders to safely move goods across African borders by relying on multiple transport and customs bonds. This fragmentation has been criticized for avoidable delays in the transport of goods, higher transaction costs and reduced trade between African countries.
TABA allows traders to transport goods from Cape Town to Cairo using a single traffic bond, effectively reducing delays and reduction costs associated with multiple bonds.
After speaking to African businesses at Taba launch in Nairobi, Dennis Deya, Senior Executive Vice President of Affair Bank, said the platform will utilize means such as transport bonds, performance bonds and standby letters of credit to ensure safe movement of goods and ensure compliance with customs regulations.
Increase your insurance capacity
Denya expressed optimism that the platform not only reduces trade costs for local businesses, but also helps maintain more premiums in Africa. This will help to boost the capabilities of African underwriters, he said.
He explained that over the long term the platform will help drive growth for existing trade insurance providers on the continent.
“Through this collaboration, our goal is not to move to local operators, but to increase the capacity and efficiency of the interstate transport regime and pave the way for the continental framework under the AFCFTA (Africa Free Trade Area).”
He expressed concern about Africa's low share of global reinsurance premiums, noting that the initiative aimed at increasing the capacity of local underwriters ultimately has its own capital to deploy for development.
“We need to hold more premiums in Africa. We are 2% of global premiums, while North America is 44%, Asia is 20%, and Latin America is 10%,” he said.
Welcoming the collaboration with Afreximbank, Hope Murera, managing director and CEO of Zep-Re, said Taba represents a bold “re-imagination” of Africa's trade ecosystem.
“We are in a new era, and it's a rethinking of how we can promote trade, manage risks, and support cross-border movements across continents,” Murera said.
She noted that Taba would have a positive impact on the AFCFTA, and that Zep-re would deepen partnerships with African Bank and other African financial institutions, boost intra-African trade and deepen economic integration under the trade agreement.
Economic cooperation
Denya emphasized that the joint venture between Afreximbank and Zep-Re (two founding members of Africa's multilateral financial institutions) has sent important signals to the world about where Africa stands in terms of cross-border border trade, economic cooperation and multilateralism.
“This (taba) could not come at any other time except when the pillars of global cooperation and integration were falling apart and fragmentation, isolationism and protectionism were entrenched in our world,” he pointed out.
