General News
CognitiveTechnology Reshaping Africa’s Insurance Sector
By Uzo Nwani
Underinsurance remains a feature of many African economies. With the African Development Bank(AfDB) revising its projected GDP growth rate for the continent to 3.7% from 4.2% by 2018, the region’s relatively low uptake of insurance is one key indicator of its underdevelopment. For folks in the technology space, the insurance sector’s micro and macro issues are often opportunities for technology adoption and utilization.
Technology adoption is however not the key challenge confronting Africa’s insurance sector. A more fundamental problem plaguing the growth of Africa’s multi-trillion-dollar insurance industry is the issue of trust.
Nigerian lawyer and human rights activist Femi Falana recently explained at an insurance colloquium that while most insurance companies in Nigeria are anxious to collect premiums, they are reluctant to pay claims. And when they agree to pay, the payment is deliberately delayed. “One account of such delays is when motorists and drivers fight on the roads to determine who would fix their damaged vehicles,” Falana explained.
In a recent interview with the UK’s Financial Times newspaper, Paul Norman of KPMG East Africa opines that without trust, the industry is as good as nonexistent:“There’s a trust deficit gap — people don’t buy insurance because they don’t trust the providers,” he says. “They don’t think the promise [that a claim will be paid] is going to be delivered. Claims are not paid quickly, fairly or correctly. It’s a huge pain point across the continent.”
While the adoption of advanced technologies like big data analytics, cloud and cognitive computing will certainly boost the operational performance and efficiency levels of insurance firms (and businesses generally), insurance industry practitioners and institutions must work harder to fix the sector’s trust issues, working in concert with technology firms who will support their market development plans with appropriate solutions and systems.
APA Insurance, a Kenyan insurer catering to both individuals and corporates, recently turned to IBM to optimize its claims processes. The insurance underwriter can now gain greater visibility into policies, premiums and loss ratios through IBM Analytics Solutions, ultimately improving its product offerings, service delivery and customers experience.
While IBM continues to evaluate APA’s adoption and integration of its business intelligence (BI) solutions, the bigger picture is that there is a pent-up demand for insurers and improved risk management services across sub-Sahara Africa. Technology could help unlock the sector, further contributing to the continent’s gross domestic product (GDP). The International Monetary Fund (IMF) has recently predicted that emerging markets and developing economies will be at the forefront of growth for 2017-18 at more than double the rate of advanced economies.
African insurers will no doubt increasingly use technology to rejig their business models, including as a tool to cope with changes in the markets and changes in regulation. Technology will also eradicate the industry’s traditional boundaries, allowing new entrants to compete with the established behemoths in the industry. And as markets mature, insurance practitioners will also have to come up with strategies to better manage risk and technologically savvy customers. To succeed, insurers will have to work faster, more efficiently and, above all, smarter.
The report of a study by the IBM Institute for Business Value (IBV), “Insurance 2025: Reducing Risk in an Uncertain Future” reveals that two technological trends will have a high impact on the future of business across industries: the rise of cognitive computing, and the increasing potential for decentralization of systems and decision making.
If systems are decentralized, the question will be where the center of control will sit, and how fragmented the networks will be. For example, limitations imposed by privacy concerns, regulation, or liability could hamper the use of devices encourage the device autonomy and the centralization of control.
Cognitive computing refers to next-generation information systems designed to accelerate, enhance and take advantage of human expertise. These systems can learn large amounts of data, reason with purpose, and interact with humans naturally. Their ability to handle unstructured data and range across wide subject domains gives them opportunity to remake business processes. We believe these technologies will have reached maturity by 2025.
An IBM IBVinsurance survey in 2016 found that 79% of insurance company leaders believe technology will have a major impact on their organizations, and 71% said they have begun to use cognitive technologies. When combined with artificial intelligence (AI), cognitive systems can enable insurers to assess the risk of loaning to an individual to a high degree.
We believe that insurance companies should consider these four moves to succeed in the next decade:
1) Increase flexibility: Take out expenses and build in flexibility by moving core systems to a hybrid cloud that are available as-a-service, which enables experimentation and entry into new markets entry at low costs, on secure platforms. As products move to “as-a-service” models, turn legacy systems into components to help sustain cost competitiveness.
2) Develop partner ecosystems: Organizations in the insurance industry will need to collaborate to have the best data about consumers and the risks of loaning money to them. The goal is to cultivate partnerships and membership in ecosystems within the insurance industry. When using “as-a-service” products, an insurance company will need to cooperate with service partners to offer the complete package.
3) Improve predictive capabilities: Insurance companies will need to improve their speed of change by bringing together technology, business capabilities and product investment. They should use analytics, pattern recognition and data to chart progress, as well as understand customer behavior and risk parameters.
4) Embrace innovation: Leading innovators build an organization with a corporate culture and design processes that encourage innovation. Corporate structures can be made more flexible by streamlining internal innovation processes, with centralized funding and investment models.
Embracing innovation will build skill with component technologies of whichever future scenario wins, providing the capabilities necessary to prosper in changing conditions. And building agile development and business service composition skills will keep your organization nimble enough to capitalize on market changes.
As African economies expand and evolve, C-suite executives in Africa’s insurance sector will need to look towards the future, embracing cloud and cognitive systems to maintain their organization’s competitive advantage. By using this holistic approach, they can continue to transform their business even as their industry is restructuring all around them.
General News
AfDB, AfCFTA Unite to Unlock $3.4 Trillion Continental Market Through Strategic Infrastructure Development
The African Development Bank Group, the African Continental Free Trade Area (AfCFTA) Secretariat, and Africa50 have signed a Memorandum of Understanding to catalyse infrastructure development across the continent and unlock the full potential of the largest free trade area in the world since the establishment of the World Trade Organization.
Signed at the Africa50 General Shareholders Meeting in Maputo, the tripartite agreement establishes a comprehensive framework for cooperation in identifying, designing, constructing, and maintaining critical infrastructure projects that will enhance intra-African trade, accelerate regional integration, and drive digital transformation across the continent’s market of 1.3 billion people.
Currently, intra-African trade accounts for just 15–18% of total African trade, compared to 68% in Europe and 59% in Asia. The new partnership between the three institutions aims to dramatically increase this figure by addressing the infrastructure gaps that currently constrain trade flows across African borders.
It will prioritise developing multimodal transport corridors, cross-border infrastructure, logistics hubs, ports, and airports to seamlessly connect African markets and reduce the cost of doing business across borders.
Recognising the transformative power of the digital revolution, the partners will also work together to establish cutting-edge data centres and digital trade platforms, enabling African businesses to compete in the global digital economy.
“The African Development Bank has played a lead role in supporting the development and operation of regional economic corridors throughout the African continent by investing over $55 billion in the last nine years to develop road corridors, ports, railways, and expand power pools to interlink countries and boost trade,” said Solomon Quaynor, the Bank’s Vice President for Private Sector, Infrastructure & Industrialization.
Specifically, the Bank invested over $8 billion across 109 cross-border, economic corridors, and infrastructure projects between 2014 and 2024
He added: “The tripartite agreement between the AfCFTA Secretariat, the African Development Bank, and Africa50 underscores the paramount importance of realizing the full potential of the AfCFTA single market with its combined annual GDP of $3.4 trillion through the establishment of transport infrastructure.”
Alain Ebobissé, CEO of Africa50, emphasized that the agreement will support “the development and financing of trade-enabling infrastructure to boost intra-African trade, one of the continent’s greatest endeavours.”
The partnership will operate on six strategic pillars: ensuring alignment with the AfCFTA Agreement and regional policies; jointly identifying bankable projects; mobilising capital through innovative finance mechanisms; establishing robust tracking systems; encouraging stakeholder dialogue; and integrating environmental, social, and governance standards throughout project lifecycles.
The three-year memorandum of understanding will be operationalised through detailed joint work plans and specific implementation agreements that will define projects, timelines, and financing arrangements. Technical working groups will be established to ensure effective coordination among the partners and alignment with national and regional development priorities.
Speaking on a panel at the Africa50 event, Wamkele Mene, Secretary-General of the African Continental Free Trade Area, said: “In the global context, we are facing an unprecedented challenge in Africa.
“But this challenge is a unique opportunity for Africa; it is a wake-up call for us that we have to invest in our institutions, in infrastructure, and our skills. Infrastructure development is at the heart of trade and is a prerequisite to doubling intra-African trade to 25% by 2030.”
Vitel Wireless, Nigeria’s first Mobile Virtual Network Operator (MVNO) has entered into partnership with Slot Systems Limited for distribution of its SIM cards and other gadgets around the country.
Chudi Nwabueze, managing director, Vitel Wireless who described the partnership as a defining moment for his company said Vitel Wireles’s purpose is clear: to transform connectivity in Nigeria through innovation, affordability, and seamless access.
Nwabueze, who spoke in Lagos recently at the official engagement with Slot said Vitel Wireless, as the nation’s first Mobile Virtual Network Operator is committed to creating smart, reliable solutions that break down barriers to communication and make it easier and more cost-effective for people to stay connected anytime, anywhere.
“This partnership with SLOT is a meeting of shared values and vision. By combining our innovative mobile services with SLOT’s extensive retail presence, we are making Vitel Wireless SIM cards and the connectivity they offer more accessible than ever before. Customers will now be able to purchase, register, and top-up their SIM cards conveniently within their own communities.”
He described the collaboration as more than just distribution, ”it is about empowering people. It is about bridging the connectivity gap with technology, accessibility, and affordability at the heart of everything we do.”
Nwabueze further explained Vitel Wireless SIM card is a location technology awareness card. It can track whereabouts of a person. This information can help the police, on official demand, in case of unfortunate incident.
He said the disadvantages of tracking a person’s whereabout outweighs the advantages.
He explained that access code is given to another person for tracking.
“We operate as a core network and we have integrated with all the major networks in Nigeria, including international calls. So, on a simple language, we are a GSM company, that you do call, SMS, data and we offer more value like safety. And the good news is that we are spread out in the 36 States plus Abuja FCT in Nigeria.
Digital Realty Nigeria, a carrier-neutral data centre operator, will be launching its ServiceFabric® platform alongside opening of its new LKK2 Data Centre in Lagos today.
ServiceFabric Platform in Lagos Nigeria, aligned with Digital Realty’s commitment to enabling seamless global interconnectivity for businesses, providing enterprise customers in Nigeria with the ability to connect whenever, wherever, and to whoever they need to.
Engr. Ikechukwu Nnamani, managing director, Digital Realty Nigeria, said that the presence of ServiceFabric in Lagos will support the growing demand for hybrid IT and multi-cloud connectivity, empowering businesses with a secure, software-defined interconnection platform.
Located in the nearby coastal area of Lekki, LKK2 adds nearly 2MW of installed IT capacity across nearly 13,000 square feet of data hall space, supporting the growing demand for scalable, high-performance infrastructure across Nigeria and the broader region. LKK2 will be interconnected with Digital Realty’s existing LKK1 facility, which serves as the landing station for the 2Africa subsea cable, offering customers seamless access to the cable’s 46+ landing points in 33 countries across Africa, Europe, the Middle East, and Asia.
The integration of LKK2 with the 2Africa cable landing station at LKK1 enables businesses in West Africa to leverage low-latency connectivity and reliable access to global cloud and network services. This setup supports improved application performance and enhances access to international digital ecosystems through a carrier-neutral platform.
This new facility integrates with ServiceFabric®, Digital Realty’s global interconnection and orchestration platform, ensuring low-latency, high-throughput connectivity to local, regional, and international destinations. Through ServiceFabric®, LKK2 will interconnect with LOS1, the region’s top internet peering point, and LOS2, Digital Realty’s highly connected data centers located on Victoria Island in Lagos.
Together, this ecosystem delivers robust resilience, redundancy, speed, and scale for enterprise and hyperscale customers seeking to expand into a fast-growing digital market, ensuring continuous, reliable operations.
“LKK2 is a significant milestone in our journey to support digital transformation in Africa,” said Ike Nnamani, Managing Director, Digital Realty in Nigeria. “Our continued investment in Nigeria and the broader African region reinforces our commitment to enabling seamless global interconnectivity and providing a future-ready infrastructure platform for local and global enterprises.”
This strategic expansion reinforces Digital Realty’s commitment to advancing Africa’s digital transformation by delivering the infrastructure and connectivity needed to support innovation and growth across the continent. Recently ranked number one in Africa on Cloudscene’s Data Center Ecosystem Leaderboard, the company continues to cement its position as a leading enabler of the continent’s digital future. With the exponential growth of data and the acceleration of digital initiatives across the region, LKK2 provides the additional capacity which enterprises and content providers need to grow, scale, and connect – wherever and whenever they need to.
LKK2, due to become operational later this year, will support both local enterprises and multinational organizations seeking reliable, secure, and interconnected infrastructure in Africa.
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