Africa regional workshop
Regional Workshop on Best Policy Practices in the Implementation of Accounting Standards and Insurance Regulation for the Financial Inclusion of SMEs in Africa (July 19-20 2017).
Background and Issues
- SMEs can be responsible for up to 85% of GDP in developing nations when considering all formal, informal and residual SMEs.
- Yet, SMEs are chronically underserved by the financial service industry.
- Most viable SME insurance clients are those with a specific insurable risk (e.g. business machinery) or those that have grown to a point where they experience a delineation between business and personal risks.
- These SMEs are underserved for several reasons:
Insurers shy away from tailoring products that fit the needs of SMEs due to lack of revelant knowledge on SMEs needs and distribution barriers
Insurers have not yet tailored their offer to meet unique needs of SMEs and doing so via a delivery channel that these clients view as trustworthy.
-Demand: unawareness of coverage options.
-Regulatory framework: lack of an enabling environments for companies and clients. Through strategic use of available regulatory tools available, regulators can help breach the gap between insurers and SMEs.
Potential Policy Interventions
UNCTAD is raising awareness of policymakers through knowledge exchanges and increased access to practical information regarding entrepreneurship policies, accounting and insurances for SMEs. UNCTAD is in the process of studying innovative approaches such as:
- Public provision approach where the state identifies the risk to be covered and either acts as a risk carrier itself or directly/indirectly subsadizes insurance to the population.
- Directive approach where the state requires insurers to meet certain targets in terms of access to insurance. Regulatory tools are used to leverage the market mechanism.
- Concessionary approach where one relies on market incentives rather than direct state intervention to achieve desired access to insurance.
- Nudge approach where the state creates an enabling environment for access to insurance.
- Long term market development approach which entails no state direction of the market , but rather focusing on building market and state infrastructure over time.
- The realisation of any objective requires coordination between the State, market mechanisms and contextual factors.
Learn More and Documents
- Facilitating Access to Affordable Insurance Products by SMEs (PDF to essay)
- UNCTAD’s “Insurance Guide for SMEs in Morocco” helps business owners identify their most pertinent risks. http://unctad.org/en/PublicationsLibrary/diaeediuMisc01_en.pdf (2016)
- Other useful links
- ILO’s Impact Insurance Facility http://www.impactinsurance.org/our-resources
Introduction, Ms. Tatiana Krylova, Head of Enterprise Branch, Division on Investment and Enterprise, UNCTAD
Financial Inclusion: Best Policy Practices and Guidelines on Accounting and Insurance Regulations for Micro, Small and Medium sized Enterprises (MSMEs), Mr. Lubega Alhaj Kaddunabbi, Chief Executive Officer, Regulator Insurance Authority of Uganda
Financial Inclusion – Best Policy Practices & Guidelines for SMMEs, Mr. Makhuvha Thakani, Chief Executive Officer, Small Business Finance Agency, Republic of South Africa
Regulatory And Institutional Requirements On Accounting and Auditing for MSMEs, Mr. Abdulwahid Aboo, SMP Committee Member, IFAC
Capacity building practices and challenges on accounting for MSMEs, Dr. Jim McFie, Director of the School of Accountancy, Strathmore University
The Private Sector Perspective to Financial Inclusion, Ms. Naomi Ndele, Head of SME and Agribusiness, KCB Bank
How can insurance protect and enable MSMEs?, Ms. Cristina Martinez, Economic affairs officer, UNCTAD
An Overview of Insurance Market in Tanzania, Mr. Bahati Ogolla, Tanzania Insurance Regulatory Authority