Globally, Takaful – a Sharia-adherent insurance scheme – is registering unparalleled development. The product is being offered in the form of either family or general Takaful to cater to the need for protection and cooperation at times of risk. Takaful insurance became effective in Ethiopia on the 15th day of June 2020 with the issuance of the National Bank of Ethiopia’s (NBE) Directive No. STB/1/2020, a Directive to license a takaful operator or a takaful window operator. Conversely, the product is at the early introduction and premature stage, while a massive potential exists. Records in Ethiopia demonstrate that the expanding Muslim population is anticipated to be a driving force for the takaful market. However, the question lies with the availability of innovative and value-adding products apart from simply naming the existing conventional insurance products under the guise of Islamic insurance.

The Key Line of Defense Against Mounting Cyber Threats in Ethiopia

Cybercrime has been on the rise in Ethiopia and elsewhere in the world causing substantial financial losses, business interruptions, and impairment to the reputation of endangered companies. Official reports from Information Network Security Agency (INSA) officials indicated that Ethiopia has recorded more than 2,800 cyber-attack attempts during the year 2021, cataloging an alarming increase in such attacks, which is more than double the 1,080 similar cyber-attack attempts recorded during the previous year. Observing the cyber risks affecting Ethiopia, the agency cautioned companies to reinforce their cyber security systems to safeguard against imminent challenges. We have also heard that cyber attacks have been increasing in the country principally in association with the second filling of the Grand Ethiopian Renaissance Dam (GERD).

Independent Regulatory Authority:
The What and Why
The necessity for regulation and supervision of the insurance sector is deeply rooted in the legal, sociological, and economic importance of insurance. Regulators are deemed as reactors, makers, and breakers of the insurance industry since they control and or facilitate the operations of insurers and related parties from their establishment up to their liquidation. This makes them highly responsible for the success or failure of the insurance market.

Despite academic recommendations of integrated water management and sustainable development among countries sharing trans boundary rivers to achieve social equity, economic growth, environmental and ecological protection, there is always misunderstanding and sometimes conflict among upper and lower riparian countries. There have been such problems in the Nile basin in Africa, Tigris and Euphrates in the Middle East, Aral Sea basin in Central Asia, Parana basin in South America and Ganges basin in Asia. The fact remains that a uniform mechanism/convention to manage trans boundary water resources does not exist. Some water related customary and general principles of international law have, however, become the basis of major international conventions, treaties and agreements for trans boundary water resources cooperative management.

Calls for Innovative Insurance Products

The novel coronavirus (COVID-19) was recounted to have arisen from Wuhan in China towards the end of December 2019, and the first case has been reported in Ethiopia by the Federal Ministry of Health effective from 13 March 2020. In a bid to curtail the spread of the virus, various preventive measures have been put in place by the government and insurers have also introduced some insurance products. The measures taken by the Government, among others, include declaring a state of emergency and working on urging the public to wash hands frequently, maintain social distancing, place reliance on reliable and up-to-date information about the pandemic, wear masks and ensure isolation after infection or when in suspicion of infection. In addition to social and health-related measures, the State-Owned Insurer has pledged to place life insurance for health professionals in direct contact with COVID-19 patients.

We have shockingly witnessed Ethiopian artists seeking donations and financial support to cover emergencies such as medical or funeral expenses time and again. Most of them are either unable or unprepared to cover such costs which in turn have led many of them to untimely death, and public disgrace. If the art community could plan and negotiate affordable insurance coverage, they can avoid both ill-fated consequences. In a country of rich art collections and profound artists, underwriting suitable insurance for art and artists could indeed be in high demand.

Considering the existing reality in the Ethiopian finance sector, one may propose that an excessive short-term focus by some boards of directors, corporate leaders and shareholders combined with insufficient regard for long-term strategy can cause an imbalance in the companies’ long term and sustainable growth. Particularly, shareholders represented by a board of directors typically affect company operations and decisions differently than other stakeholders concerned with the business.

Just like any other aspects of the economy, the insurance industry had been significantly affected by the overall economic and other policies existed in Ethiopia. Though the potential for growth is strong, the insurance industry is not delivering as expected due to structural bottlenecks and challenges at macro as well as micro levels.
Hence, to develop the industry, and achieve the growth envisioned, deeper understanding of the realities on the ground and enabling legal and regulatory framework is needed. On top of these, broader understanding of the industry perspective through the value chain, establishing industry conduct that will enhance consumer trust, identifying growth avenues and by crafting right strategies is also required. Above all liberalizing the sector in every aspect is needed to emancipate the industry.

Succession planning isn’t as straightforward as just christening one or more workers as surrogates, or enumerating a list of would-be substitutes. Rather, it is a strategic, planned and cognizant effort to cultivate future leaders who can ensure a business’s sustainability. Arguably the most critical decision a given board makes for a company’s future is electing a CEO. It must also be a standing board agenda item and the board should be kept appraised of development plans so that it assures that the organization’s future leadership needs are met. To everyone’s wonder, in Ethiopia’s financial sector most boards know least, or bother less as to how to choose their next CEOs.

Ethiopian Business Review | EBR is a first-class and high-quality monthly business magazine offering enlightenment to readers and a platform for partners.

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