Comesa Feels Heat of Zim Crisis

Zimbabwe’s topline contribution to the sub-regional hub of the Common Market for Eastern and Southern Africa’s reinsurance company, ZEP-Re PTA Reinsurance, has dropped from 95% in the last six years to 73% due to continuing economic deterioration in the country with revenues seen coming down to US$17 million by year-end, businessdigest has learnt.

The regional grouping’s sub-regional hub, which was targeting US$20 million revenue for the 2018 financial year, says it is likely to miss the target to close at US$17 million.

ZEP-Re operates in 65 countries in Africa. Zimbabwe is a member of Comesa.

ZEP-Re regional director for the Southern Africa hub, Jephita Gwatipedza, told businessdigest on the sidelines of the Insurance Institute of Zimbabwe annual conference in Victoria Falls on Tuesday that the country’s contribution to the hub has been going down over the years, but the reinsurance firm had no intentions of exiting the country.

“When we started, there were no foreign currency exchange issues, but then it’s not only about Zimbabwe. We are in over 65 countries in Africa and our hub in Zimbabwe looks after eight countries. In Botswana and Namibia the business is very small and do we about half a million (US dollars), while Mozambique sits at about US$1,5 million.

Angola is even worse than Zimbabwe, there is good business, but it has been shrinking from US$1,4 billion to US$750 million due to oil price and corruption,” he said.

Gwatipedza said the future remains gloomy for Zimbabwe due to the worsening of the trading environment in the last two months which is not seen improving in the near future.

“There are many issues with the government that I see as stumbling blocks into the future. For example, I don’t see them making a change on the 2% tax (on transfers) which is impacting even someone on the street. Outlook remains uncertain, but we hope they will do something in the budget next week. It’s likely to start improving in Q3 2019 should there be any changes. In terms of revenue, in 2016 we did US$12,3 million, in FY17 we were sitting at US$14 million.

“We were looking at US$20 million but we are likely to close at US$17 million in the current financial year. Our budget for 2019 was US$23 million. We used to contribute 95% to our hub but it has come down to 78%. Overly, ZEP-Re writes US$200 million,” he said.

Gwatipedza said besides the foreign currency problems, the insurance sector was also struggling with the issue of debtors and brain drain as well as remitting money overseas, a major blow for most reinsurers in the country.

However, the parent company, headquartered in Nairobi, has been rescuing ZEP-Re Zimbabwe in terms of remitting money, he said.

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