22 May 2018

Tanzania: Plight of Uninsured Low Earners

Dar es Salaam — Tanzania has seen a significant growth in insurance coverage over the years, but a majority of low-income earners across the country are yet to reap the benefits--more so, in micro-insurance.

Mr Mwale Doto, who has been running his farm for about eight years, bears a testimony that epitomises the reality of many farmers who are also a potential market for investors in insurance business.

Mr Dotto has been earning about Sh1.5 million after each farming season and from this, he saves about Sh 800,000.

He spends the rest on welfare and family expenditures as well as fuelling his rickshaw. Mr Dotto places too much value on his farm, which is located at Masaki in Kisarawe and the rickshaw. He spends most of his time tilling, but also finding time to transport passengers in the evening.

His farm is about 38 kilometres from Dar es Salaam, but Mr Dotto transports his tomato produce to the city using the tricycle, which is commonly known as Bajaj.

My life not insured

"The bajaj is insured, but I am also looking forward to insuring my small farm if this kind of service is brought to us," said Mr Dotto in an interview with The Citizen.

However, even as his public transportation job has risks involved, Mr Dotto has not ensured his life because he is not aware there are products of this sort on the market.

Just like Mr Dotto, many workers do not ensure their lives. Not that they do not care, but because they cannot afford the services, experts say. He said: "When I spend for my family, farm and tricyle requirements, I am always left with little to pay for other insurance services."

Without life insurance, experts further say that low income earners are exposed to risks that threaten their wellbeing. According to the 2017 Tanzania FinScopesurvey, the country still has a room for growth especially in ensuring micro insurance reaches majority in rural areas.

Continentally, micro insurance accounted for 1.1 per cent of the total insurance premiums on the continent with South Africa leading, says a 2015 report on the Landscape of Micro insurance in Africa.

To encourage more low income earners into the insurance plan, Financial Sector Deepening Trust (FSDT) launched a 12-month campaign in Tanzania, dubbed, 'Bima Challenge Fund.'

This, according to the FSDT Executive Director, Mr Sosthenes Kewe, was meant to accelerate the development of the micro insurance sector in Tanzania with a primary focus on the low-income market segment.

"There is a huge gap in insurance penetration of the low-income market segment in Tanzania and our hope is that the Bima Challenge can address this with some innovative products that will touch the lives of individuals and families who fall within this category," he said. It works by inspiring innovation and putting in game-changing ideas that would drive and overhaul the way the Insurance business works in the country.

Speaking to The Citizen, the chairperson of the Micro insurance Technical Working Group, Mr Julius Magabe said that the campaign is an opportunity to revolutionize the insurance sector.

He said it would open a lot of doors for both the consumers and companies to benefit. He believes that the market players will grow, strengthen their product offerings, offer more efficiency to their clients, and build more capacity in terms of distribution channels and product delivery.

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