6 February 2018

Africa: How Local Maritime Insurance Cover Could Save Countries U.S.$1 Billion

interview

The ex-secretary general of the Intergovernmental Standing Committee on Shipping Kenneth Mwige spoke to Gitonga Marete about marine cargo insurance.

My main achievement at Iscos was the initiative to localise procurement of marine cargo insurance in member states -- Kenya, Uganda, Tanzania and Zambia -- which is expected to retain a minimum of $500 million every year in insurance premiums that were otherwise sent abroad.

I conducted research and collected data, then I wrote a policy advisory paper to the governments in March 2015.

The motivation was to save, through retention of insurance premiums in the local economies, a minimum of $500 million, and potentially $1 billion, every year in Iscos member states.

I lobbied the Government of Kenya to implement Section 20.

Principal Secretary for Shipping and Maritime Affairs Nancy Karigithu, Treasury Cabinet Secretary Henry Rotich and Director-General of Budget, Fiscal and Economic Affairs Dr Geoffrey Mwau embraced the initiative that led to the announcement in the budget speech of June 2016, directing Kenyan importers to insure all cargo locally.

Although the MCI law has been enforced, the premiums the insurance industry is recording tell a different story. What could explain this?

Kenya is the first Iscos member to implement the policy from January 2017. In the first three quarters, Kenya has realised a 66 per cent increase in marine insurance premiums, compared with 2016. Considering the haphazard implementation of the policy in Kenya, things can only get better.

You have also taken the MCI campaign to the other Iscos members. Have you succeeded?

I was in Dar es Salaam, working with the government and the private sector to implement the policy from January 1, 2018.

Tanzania is the second-fastest growing economy in Africa. Fantastic progress has been made, with expectations that the country will implement the initiative better than Kenya. Uganda and Zambia also plan to implement it this year.

What is affecting the implementation of the policy in Kenya?

Kenya's problem was that the national interest in 100 per cent retention of marine insurance forex premiums in-country was defeated by private sector interests.

The primary benefit of having centralised data and information on imports and exports, their value, their sources (exporting countries) and their destinations, was lost to the vested interests of various players.

There have been efforts to set up portals to help importers buy maritime insurance online. What should be done to achieve the intended targets?

A government policy, backed by legislation, in the interests of the country, is best served by leadership from the front by government. The private sector will never set aside their interests (bigger market share and profits) for the national interest.

Iscos is not well known despite 50 years of existence. What exactly is its mandate?

Iscos, which has been in existence since 1967, is not an implementing but a policy-making institution. It focuses on aligning policies of its member states in shipping and maritime matters. Implementation is left to national institutions through their respective ministries in charge of transport.

The emergence of the other institutions is not a threat. They specialise in issues affecting their respective corridors while Iscos takes a regional view and co-ordinates efforts to avoid duplication and maximise positive effects and changes.

What does the future portend for Iscos in the light of emerging trends in logistics?

The world is today networked and digitised. This is the challenge facing all institutions, not just Iscos. The challenge, therefore, is how to remain relevant.

For the first time in its existence, Iscos has Strategic Plan 2015-2019, which has identified the challenges and developed strategies to ensure it remains relevant.

Bio

Background: Strategic planning and programme monitoring and evaluation; legislation; institutional modernisation and transformation; national, regional and international impact.

Education: Lloyds Maritime University, London, University of London, England, Downing College, University of Cambridge, England and The Faculty of Law, University of Nairobi.

Experience

2013-17: Secretary-general/CEO Intergovernmental Standing Committee on Shipping Secretariat, Kenya, Tanzania, Uganda and Zambia;

2008-11: Executive director/CEO Public Complaints Standing Committee/Ombudsman/Precursor to The Commission on Administrative Justice;

2005-8: Counsel and P/A to the Director/CEO Kenya Anti-Corruption Commission.

2003-4: Consultancy on development of the departmental specialisation blue-print and modernisation/computerisation of operations at Directorate of Public Prosecutions, State Law Office; among many other appointments.

Consultancy: Development of The Public Officer Ethics Act & The Anti-Corruption & Economic Crimes Act.

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