Regional cooperation critical for insurance sector: Bimha

HARARE - Zimbabwe's credit insurance companies have been called upon to cooperate with other regional institutions to find solutions to challenges besetting the sub-Saharan regional economy, deputy Industry minister, Mike Bimha said.

“May I take this opportunity to encourage Credsure and other players in the insurance sector to work in partnership with other regional institutions and apply their synergies towards finding solutions to many of the problems that currently affect the economic development goals of the region,” said Bimha at the inaugural Credit Insurance Conference yesterday.

Bimha said Zimbabwe as a member of the African Trade Insurance under the auspices of Common Market for East and Southern Africa (Comesa) will enjoy huge benefits as more business opportunities would be availed for locals.

“This institution promotes and supports international and intra-regional trade and investment on behalf of African member states through the use of insurance, reinsurance, coinsurance, guarantees and other financial instruments,” said Bimha.

He said the scheme would cover credit and political risks on investments and trade transactions into, within and out of Africa that is hindering growth of productive activity in Africa.

“My ministry is working closely with that of finance to avail financial resources to meet our payments to this institution and once this is done, huge benefits can accrue to our business people,” said Bimha.

Credsure managing director Lovemore Madavo noted that coming out of a hyperinflationary environment to recovery period where credit was now availed, there was need to create awareness in the market that credit insurance was now accessible.

“Credit insurance is important for developing our market, because the more you can sell on credit and if you have insurance cover the more you can grow your company in terms of business.

“A lot of people are not sure whether they are going to be paid when they give credit, so we are bringing awareness that there is an insurer who can help you,” said Madavo.

He said they had added international flair by inviting speakers particularly from South Africa, who are Zimbabwe’s major trading partners so as to keep abreast with international trends as well as share experiences and draw lessons.

South Africa’s Moosa Jooma of Credit Guarantee Insurance Corporation of Africa said there were two primary export credit risks that include sovereign risks where there will be non-payment due to foreign government action.

The second one is debtor default owing to non-payment due to some action or non-action by the foreign debtor.

He cited examples of sovereign risks such as that of South Africa prior to 1994 defaulted on its foreign obligations under the “debt standstill agreement” and in Bolivia and Venezuela which saw the effective nationalisation of foreign oil interests.

Jooma urged stakeholders to make use of credit insurance in order to cover goods against risk as it  would help smoothen business transactions.

Zimbabwe’s credit insurance was suspended due to hyperinflationary pressures and resumed at a slow pace owing to dollarisation in 2009.

The conference comes at a time when issues of credit risk management are paramount within the financial institutions and expected to provide solutions for industry players.

Credit insurance is an insurance policy and a risk management product offered by private insurance companies and governmental export credit agencies to business entities wishing to protect their accounts receivable from loss due to credit risks such as protracted default, insolvency or bankruptcy.

It can also be described as a trade finance tool, thus playing a critical role in international trade.

The insurance policy can also include a component of political risk insurance which is offered by the same insurers to insure the risk of non-payment by foreign buyers due to currency issues, political unrest and expropriation among others.

Credsure is the fifth-highest capitalised and most solvent insurance company on the Zimbabwean market and is one of the fastest growing short-term insurers.

The company has maintained its focus on growth, expansion and profitability in spite of the challenges that continue to affect small indigenous reinsurers of the region and afar.

This has seen the company becoming a member of the credit alliance giving online access to over 20 million buyers and debt networks around the world.


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