Africa’s insurers and reinsurers will play a significant role in enabling the reindustrialisation that is taking place as today’s apparently cyclical disruptions harden into tomorrow’s structural shift.
Africa Ahead attended a recent Swiss Re webinar that put geopolitics and its macroeconomic implications for the insurance industry on display.
Those who expected Africa to feature strongly during the discourse will have left disappointed; but the information shared on geopolitical themes and perceived political power will prove invaluable for decision-makers on a continent that is dominated by Chinese and American foreign direct investment (FDI). UNCTAD’s World Investment Report 2025 shows that Africa attracted US$97 billion in FDI inflows in 2024, while its stock data show that the United States still has a larger accumulated investment position on the continent than China.
Anthony Kennaway, head of group public affairs at Swiss Re, started the event, asking about the ‘big moving pieces’ under the transition currently underway.
“The two big changes are the rise of China and the changing role of the United States; and I think at the moment, the latter is more prominent,” said James Crabtree, who was introduced as a leading commentator on politics, geopolitics and international affairs.
One of the interesting tales in the political power struggle is evident in the changing relationships between the US and its traditional allies. “You see it in the way that President Donald Trump is willing to praise autocratic leaders like Vladimir Putin and President Xi; this is a very different US from the one that we have been used to. And that has ramifications all throughout the global order,” Crabtree said.
The presenter introduced the phrase ‘weaponisation of dependencies’ to explain how countries were leveraging their economic and trade prowess to press an advantage by, for example, controlling access to a vital shipping route; limiting access to artificial intelligence (AI) models; or restricting the supply of rare earth minerals, to name a few. (This writer appreciates that the Strait of Hormuz development is a response to military action, but it also fits the broader ‘weaponisation’ context.)
According to Crabtree, countries are trying to diversify away from their reliance on the two big global powers, and particularly away from the US. It is a move that may test Africa’s leaders given the already significant skew towards China.
Yes, a large slice of accumulated FDI comes from Europe and the US, but China has a far greater physical presence. The dominant view is neatly captured in South Africa’s January 2026 joint naval exercise with China, Russia and Iran. And the country’s voting record at the United Nations offers another clear ‘tell’.
Although Africa has not been overly impacted by the nearly four-month-long stand-off around the Strait of Hormuz, the continent will breathe a sigh of relief following the June 18, 2026 signing of a 14-point memorandum of understanding (MOU) between the US and Iran. This decision paved the way for the most likely of three Middle East oil shock scenarios shared by Swiss Re just days prior.
Their central scenario was for a partial transit recovery during the Northern Hemisphere summer, limited damage to regional oil infrastructure, and a Brent oil price trending back towards $85 per barrel by the fourth quarter of 2026.
Jérôme Haegeli, group chief economist and head of Swiss Re Institute, said there were plenty of issues that still had to be resolved. Although manageable at the macro level, “the best-case scenario will not see energy flowing back to 100%, but rather to about 50% of pre-crisis flows,” he said.
Crabtree offered a no-nonsense assessment, calling the MOU a “minimal deal [that] reopens the Strait, but does not address most of the complex issues that have been a problem for the last 20 years.” These include nuclear proliferation and the fact that Iran now maintains control over the Strait. The fear was that this arrangement created an alarming precedent for other important shipping-lane chokepoints.
These points aside, the MOU plays into the broader structural change. Haegeli offered fragmentation, fragility and regime shift as key considerations for insurers and other economic actors trying to make headway amidst geopolitical uncertainty. On the plus side, the presenters forecasted that the current and ongoing oil supply shock would not be as impactful on global growth and inflation as initially thought.
Recession and stagflation should be avoided; but businesses will still have to prepare for a 0.3-0.7% contraction in global GDP growth for 2026, and 1-1.5% higher inflation. There will, however, be strong divergences, with Europe and emerging Asia, excluding China, most at risk of a deteriorating growth and inflation backdrop.
The IMF’s April 2026 World Economic Outlook had already downgraded sub-Saharan Africa’s 2026 growth forecast to 4.3%, warning that energy-importing economies were exposed to higher fuel and fertiliser costs.
The AI revolution and US exceptionalism were held up as underpinnings for ongoing financial market strength, particularly in the US. “Despite all the risks that we are talking about, markets are actually positive … the AI revolution is for real,” Haegeli said. He noted that it would take a significant inflation and interest rate ‘shock’ to derail the prevailing outlook.
What does the future hold, and how should the private sector position for it? According to Haegeli, we are in a global race for AI, digital resources, natural resources, rare earth metals and fintech, signalling a reindustrialisation of sorts. He said the US was leading the race; that China was also in it; and that Europe was way behind. Africa was not mentioned, but one might assume that aside from a few standouts, the continent is chasing after Europe.
At a theme level, insurers will be keeping a close eye on the US midterm elections and the US inflation and interest rate outlook. Swiss Re does not expect a major impact from elections, even if control of the House and Senate is split; but “market volatility surrounding policies and the policy reaction functions will remain very high.” The base case is for US interest rates to remain higher for longer, with 10-year rates pushing into a 4.5-5% range.
Your writer found Swiss Re’s commentary on trade fragmentation quite fascinating. Despite reams of negative news feeds over US trade tariffs, the data confirms the world effective tariff rate to be virtually flat.
“Yes, you have trade tensions; but you did not have a trade war,” Haegeli explained. He spoke about the ‘weaponisation of dependencies’ spreading from goods trade into AI access and FDI restrictions, just as the world faces “the biggest capital expenditures move in our lifetime, outside of war periods.”
This is where the insurance industry enters the frame. The economist hinted that insurers and reinsurers would play a huge role in unlocking the capital needed for this AI-led reindustrialisation, especially in countries facing significant gaps in infrastructure investment. Insurers will lead the way in analysing risk, bundling risk and providing the underwriting services that make new infrastructure projects more bankable.
African countries will lean heavily on both domestic and global insurers and reinsurers to make long-duration investments possible. And the list of projects that require risk transfer and specialist underwriting capacity before capital can be deployed is formidable, spanning digital infrastructure such as data centres; energy, including solar and wind installations and transmission infrastructure; logistics, through road and rail; and resources, notably rare earth minerals.
Crabtree offered the neatest closing, urging business leaders to prepare for the shift from a just-in-time to a just-in-case world. To position for the latter case demands a tighter focus on diversification and de-risking alongside clearer thinking on risk. It also requires accepting lower profits consequent to positioning correctly for future risks.
“Businesses must understand that this is a very fundamental shift, and that the world is very different from 10 or 20 years ago,” he concluded.
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