There is new hope for African insurance market, says Booth

Returning to South Africa—the country of his birth—to discuss his 40 years in the insurance industry, Clem Booth of Allianz, believes there has never been a better time for Africa.

“Africa is incredibly misunderstood,” according to Clem Booth, member of the Board of Management of Allianz SE, Global Insurance Lines & Anglo Markets. “Think back 30 years ago and the number of countries with an open democracy could be counted on one hand. Today you can count on one hand those that have not made major progress.”

 Interviewed by Commercial Risk Africa admitted there is large scale poverty but believed there are many more reasons to engage with business on the continent than to disengage. Among those reasons, he cited ‘a growing population, educated people, good regulatory environments and free access to markets.’

Those outside Africa, he said, should also look at the many developments that have come from the continent and the way in which Africa often leads Europe in terms of development. “If you look at insurance, for example, some multi-peril personal lines policies were available in South Africa maybe 10 years ahead of Germany.”

Booth recognised there is more to be done but is confident of success across the continent. Allianz, he said, has chosen to hub in South Africa, reflecting moves made by many clients and he believed it would remain a regional centre for many years to come.

 He acknowledged the country faced some tough challenges—notably unemployment and an unequal distribution of wealth—but did not predict any Arab Spring-type revolution. Used to questions about whether South Africans would remain sufficiently patient and wait for government-led change, Booth said: “South Africa has a democracy, there is a vocal discussion and a free market economy. It is a different scenario.”

 However, Booth recognised that ‘investors are fickle’ and in thinking about the Marikana mining dispute last year, he was concerned such events should not be repeated. He also believed that the event was widely reported because it was in South Africa and he urged “people to be more open-minded and more constructive. Africa is not homogenous but is far more democratic than parts of Asia or Eastern Europe, for example.”

 Mandela Factor

Europeans are concerned about what could happen after the death of former president Nelson Mandela but in contrast Booth believed it might well unite the country in remembering the good he had done and his legacy. He also questioned why people ask those questions. “Europeans do worry if it will be chaos if Mandela dies but will it be chaos in the UK if David Cameron were to die? It is another example of the negative thought process when it comes to Africa.”

 Nationalisation of major industries is another concern looming large in the minds of many investors but Booth remained confident it was unlikely to happen on any large scale in South Africa. He has always engaged with government, including talks with the ANC when it was a party in exile.

 In the past there were hopes that South Africa could develop as a southern hemisphere hub for insurance, for example, although Booth felt Singapore has probably stepped up and achieved that goal.

Acknowledging the problems brought by the financial crisis in Europe and which continue to dog many businesses, Booth still said that Europeans could be missing out on a major opportunity for growth if they do not consider investment into Africa—something, he said, the Chinese had recognised some years ago.