Africa’s reinsurance market could grow more than fivefold from its current size of about $6.27 billion to over $30 billion if the African Continental Free Trade Area (AfCFTA) is fully implemented for financial services, according to Afreximbank.

The continental lender said the creation of a single African market for insurance and reinsurance services would enable insurers to underwrite risks across borders, pool capital, access a wider customer base and syndicate large transactions that are currently beyond the capacity of individual national markets.

Speaking at the 52nd Conference and Annual General Assembly of the African Insurance Organisation (AIO) in Cairo, Egypt, Executive Vice President, Intra-African Trade and Export Development at Afreximbank, Mrs. Kanayo Awani, said Africa’s fragmented insurance landscape was limiting the sector’s ability to support trade, industrialisation and infrastructure development across the continent.

According to her, Africa’s entire reinsurance market generated about $6.27 billion in premiums in 2024, accounting for only 1.6 per cent of global reinsurance premiums, despite the continent’s growing economic importance.

She noted that fragmented regulatory regimes, underdeveloped capital markets, weak data infrastructure and the dominance of informal employment continue to constrain insurance growth across much of Africa.

“A continent assembling itself into one market cannot remain a patchwork of small, fragmented, undercapitalised pools of risk,” Awani said.

She explained that the AfCFTA Protocol on Trade in Services, once fully operationalised for financial services, would allow African insurers to underwrite continental risks from a single licence, pool underwriting capacity across multiple jurisdictions and access data from a market of about 1.5 billion people.

“That is how a $6.27 billion reinsurance market becomes more than a $30 billion market. That is how thin pools become deep capital,” she said.

Awani argued that stronger insurance markets are essential to Africa’s industrialisation ambitions, stressing that trade, infrastructure investment and project finance cannot scale without adequate risk protection.

She cited research showing that higher insurance penetration is closely linked to higher manufacturing value-added and stronger economic development.

According to Afreximbank, insurance penetration across most African countries remains between two and three per cent, significantly below the global average of 6.8 per cent. Only South Africa, at 11.5 per cent, and Namibia, at just over seven per cent, currently exceed the global benchmark.

Awani said the insurance industry would play a critical role in supporting the AfCFTA’s objective of creating a single African market with a combined gross domestic product of approximately $3.4 trillion and a population of 1.5 billion people.

She noted that free trade requires certainty in payments, transit, investment and project financing, all of which depend heavily on insurance and risk management mechanisms.

The Afreximbank executive called on regulators, insurers and reinsurers to work together to harmonise rules, deepen capitalisation and build the institutional capacity required to retain more African risks within the continent.

She warned that unless African underwriting capacity expanded significantly, the continent could continue to export substantial amounts of premium income to foreign markets through offshore reinsurance arrangements.

Industry experts say greater integration under AfCFTA could create one of the world’s fastest-growing insurance markets, while helping African economies retain more capital, improve project bankability and strengthen intra-African trade.