Interview: Coenraad Vrolijk
Could Casablanca become a regional hub for insurance and financial services in the near future?
COENRAAD VROLIJK: Casablanca could become the gateway to Africa for companies operating in the financial sector. It is well placed to fill this role, being geographically close to Europe, with 10 daily flights to Paris alone. However, the continent still faces integration challenges that makes setting up any hub in Africa, whether in Johannesburg, Nairobi or Casablanca, a challenging endeavour. For example, value-added tax is never deducted when trading services in Africa, so providing a service from a hub to a remote African location always implies paying tax rates.
More bilateral trade agreements between African states could make a significant difference in this regard. Company establishment in Casablanca is tax incentivised and works effectively, but in order to make Casablanca Finance City a genuine capitalistic centre, Morocco needs to negotiate new specific bilateral agreements with all African states that will enhance current agreements. This will give the country a competitive advantage from the perspective of any big international conglomerates with multinational ambitions. As it stands currently, trade agreements between Cote d’Ivoire and France, Ghana and the Netherlands, and Nigeria and Germany are easier. Morocco doesn’t currently have many bilateral agreements, but then no African country does. In terms of attracting talent, Morocco could also evolve towards a more cosmopolitan society through a wider network of trade agreements.
How does the Moroccan insurance sector compare with that of other countries in the region?
VROLIJK: The Moroccan market is the most sophisticated in Africa, after South Africa. Regulators now play a significant role in pushing down the base capital of companies, which has led to challenging conditions for some local firms. In a typical developed economy such as France, insurance is a €3000-per-capita business, while in Morocco it sits at €100-per-capita. At some point it is reasonable to expect that Morocco will evolve into a genuine developed economy, and when that does occur the potential for business will be huge. At that point we anticipate that all segments of the economy should grow positively, with health insurance leading the way. One of the main challenges currently is the low market penetration rates, although segments such as takaful (Islamic insurance) and micro-insurance will help to expand this reach.
With regard to the long term, I suspect we will see a broader differentiation between banks and insurance. In the US and Europe there are very few banks that still own insurance companies of any size.
How could agriculture insurance help to develop the African continent further?
VROLIJK: Agriculture insurance has not yet taken off in any African country, although there are two types of products that could be of particular interest: drought and flood insurance. Some insurers do have initiatives in East Africa and in Sahelian countries, however they have not yet reached a large scale. Today, thanks to technology, agriculture insurance has become easy to track and manage. For example, if there is less than 200 mm or more than 1000 mm of rainfall during a given period of time, a farmer receives compensation. If the level of rainfall remains between these two numbers, then the farmer does not. This gives significant peace of mind to farmers, as they know they will receive revenue anyway. The challenge is to reach small farmers. Distribution could take place through seed companies, agriculture cooperatives or harvest buyers. This process is still in the early stages, but it will certainly make a difference, particularly with the threat of climate change bringing more volatility and increased risks.
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