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Tunis, 23 February 2011- The Board of Directors of the African Development Bank (AfDB) approved on Wednesday, 23 February 2011 in Tunis, a USD 9,094,389 equity investment to acquire 15% of the current shareholding in ZEP-RE, a specialized COMESA reinsurance company. The objective of the facility is to strengthen ZEP-RE’s underwriting capacity in support of growth in demand for insurance products across the continent.
The aim of the AfDB investment is to strengthen ZEP-RE’s profile, improve its credit rating and catalyze private sector investment to further boost the balance sheet of ZEP-RE. The financing will support the first phase of ZEP-RE’s capital increase which targets a 27.4% rise in share capital to USD 47 million.
An increase in the capital base is important for ZEP-RE to retain its strong credit rating while at the same time undertaking the business expansion outlined in its strategic business plan and better serve the reinsurance needs of the Common Market for Eastern and Southern Africa (COMESA) region.
ZEP-RE Company’s vision is to be a world class leading reinsurer and to provide first class security and services to clients. Among its objectives, ZEP-RE seeks to: (1) foster the development of the insurance and reinsurance industry in the COMESA sub-region (2) promote the growth of national, sub-regional and regional underwriting and retention capacity; and (3) support sub-regional economic development. The expected growth in the insurance sector in Africa offers an opportunity for ZEP-RE and other reinsurance companies operating in Africa to expand their businesses.
The AfDB’s participation as a shareholder in ZEP-RE and a member on the ZEP-RE board will support the Company’s effort to obtain more attractive funding terms and attract additional capital investments.
This will allow ZEP-RE to meet a growing demand for insurance services, supporting a broadening of the financial sector in Africa. Given the additional focus of ZEP-RE on coverage of SMEs and micro-insurance, the investment will also encourage entrepreneurship and SME development.
This investment is well aligned with Kenya’s national priorities as the insurance sector is specifically mentioned as a target area for growth in the country’s ‘Vision 2030’. The transaction also supports regional integration and economic cooperation on the continent. Supporting ZEP-RE is also consistent with the Bank’s approach to supporting the development of Africa’s financial sector as a means to driving growth in the private sector.