The west African insurance market facing the challenge of the resurgence of coups d’étatCredit: Shutterstock/Dancing_Man

The west African insurance market facing the challenge of the resurgence of coups d’état

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West Africa has experienced an upsurge in military coups since 2020. In less than two years, almost three elected heads of state have been ousted from power by men in uniform. This situation is not without consequences on the insurance market with the increase in the risks to be covered. It also instils a feeling of panic among companies which do not hesitate to turn their backs on these countries in troubled waters to see other destinations more conducive to the development of business.

The west African part has been plunged since 2020 into a spiral of military coups. In less than two years, there have been three successful putschs in three west African countries. First, it was in Mali, on 18 August 2020, that the overthrow of the Head of State, Ibrahim Boubakar Keita, took place by a group of Colonels led by Assimi Goita. In the same month, the military announced the creation of the National Committee for the Salvation of the People. Despite the strong pressure exerted on Mali, the military legalise their respective positions and continue to remain at the head of the authorities. In 2021, the military perpetrated a new coup by sweeping away the transitional president Bah Ndaw and his Prime Minister Moctar Ouane.

In the same year, precisely on 5 September 2021, Guinea, another west African country, entered the dance. The soldiers, under the leadership of Mamadou Doumbouya, seize the presidential palace and arrest President Alpha Condé. The constitution suspended, the government and institutions dissolved and the borders closed.

The military set up a National Rally Committee for Development (CNRD). International sanctions fall on the new men of power in Guinea.

In January 2022, Burkina Faso took over with the seizure of power by a group of soldiers led by Lieutenant-Colonel Paul-Henry Sandaogo Damiba. The President of the Republic, Roch Marc Christian Kaboré, hands over power to the military. The curse of the coup continues in the west African zone. On 2 February 2022, the President of Guinea-Bissau, Umaro Sissoco Embalo, escaped a coup attempt that reportedly left several dead.

This wave of coups taking place in these aforementioned countries is not without consequences on economic and financial activities in the ECOWAS region. Indeed, it is enough to observe a few indicators to realise the seriousness of the situation and to measure the harmful effects on the business. The closing of borders has significantly affected a good part of commercial activities. Among the activities affected by these political and military instabilities would figure prominently in the insurance sector. The west African insurance market remains marked by a strong presence of major global and African insurance groups. One of the first consequences is undoubtedly the increase in the risks to be covered by these insurance companies; this is due to the numerous violent demonstrations in the capitals of Mali, Guinea, Burkina Faso and Guinea Bissau.

People’s protest marches in the streets are often accompanied by the destruction of vehicles, houses, shops, markets and other property belonging to others. The numerous collateral material damage linked to breakages and violence only increase the risks to be covered by insurance policies and consequently lead to an increase in the premiums paid by insurers. A situation that can seriously affect their turnover, or even their annual financial statement. The other impact generated by these coups is the propensity for insurance companies to reduce their activities in the country so as not to suffer acts of vandalism by demonstrators. These numerous coups d’etat also risk pushing certain companies, which are very cautious, to leave the country to go to other more attractive destinations and offer a business environment much more conducive to business. This would be a serious blow to economic activity. Today, we cannot deny the fundamental role played by insurance in west African economies, both in contributing to the gross domestic product and in creating jobs.

Overview of the insurance market in Mali, Guinea and Burkina

According to the 2019 insurance market report published by the Treasury and Accounting Department of Mali, the insurance sector has seen an improvement. Indeed, its turnover increased from FCFA48.2243bn in 2018 to FCFA52.312bn in 2019. At the end of this year, the nominal GDP stood at FCFA10,238bn, which gives a penetration rate of 0.51%, a slight increase compared to the previous year (0.50%).

In 2019, eight non-life companies and four life insurance companies operated on the Malian insurance market, according to the management of the Treasury of Mali. As for Burkina Faso, the insurance market recorded a turnover of FCFA108bn in 2020 against FCFA94bn in 2019, an increase of nearly 15%. Regarding the number of operating players, there are seven life insurance companies, eight non-life insurance companies and one reinsurance company.

Finally, in Guinea, according to the Direction de la Supervision des Assurances (DSA), a structure housed at the Guinean Central Bank, the Guinean insurance market closed the year 2018 with an overall turnover of GNF411.46bn against GNF356.18bn in 2017, an increase of 15.52% against 11.81% in 2017.

It should, however, be noted that the border closures and the sanctions imposed by the political authorities of ECOWAS may also disrupt the insurance market in the community space. With these coups, threats also weigh on certain initiatives such as the ECOWAS Brown Insurance Card. The main objective of this brown card is to guarantee victims of traffic accidents prompt and fair compensation for damage caused to them by non-resident motorists visiting their territory from other member states of ECOWAS. The Brown Card System operates through a network of 14 national offices located in each of the 14 member states.


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