As the MENA region continues its slow climb out of the economic trough caused by the COVID-19 pandemic, leaders in the insurance and reinsurance sectors might be hoping not just for business-as-usual but for a growth spurt caused by the release of pent-up demand.
If such a bonanza occurs across the wider region, it is likely to pass Sudan by, as the Northeast African nation falls prey to an internal conflict of its own.
At the time of writing, a growing dispute between the president and the vice president looks like it might spill over into something catastrophic as the army faces off against a paramilitary group, the Rapid Support Forces.
Sudan has been ruled by the military for most of the time since it achieved independence from the UK and Egypt in 1956.
The worry is that the opening days of the conflict that saw at least 100 people killed and hundreds more injured could descend into a civil war that could set the emerging nation back decades in terms of growth and development.
As recently as last year, the International Crisis Group said, “A new civilian government may be in the offing in Sudan, but considerable work remains to keep things on track in the country’s transition away from authoritarian rule. On 5 December 2022, the military concluded a framework agreement with dozens of civilian leaders, in which the generals promised to relinquish much of their political power. The agreement, which had been under quiet discussion for months, is a major accomplishment, but it faces long odds.”
Both Saudi Arabia and the UAE have in the past demonstrated financial support for the vice president. Egypt, by contrast, has been a supporter of the president of the military government.
While reliable and current data on the size of the insurance sector in Sudan is hard to find, a guesstimate of total premium volumes of between $300m-$500m per year seems about right – with much of the market sold on the principles of takaful.
The hope has been that as the nation matures and grows more affluent, the insurance sector will see significant growth of its own.
Lines of insurance business written in Sudan include precisely those areas that would benefit quickly from more commerce and higher disposable incomes - life, property, motor, liability, personal accident and health, marine, aviation and transit. But any disruption to the social order in Sudan could have a dampening effect domestically as well as have impacts outside of the nation’s boundaries.
The dispute between the president and vice president is about the future of the country – in terms of power, economics and finance. But it will also cause worries for anyone with an interest in commerce conducted via the Red Sea, which is an important trade route and an equally important contributor to global marine insurance premiums as approximately 10% of all global trade passes through these waters.
Hoping for peace is rarely enough and all concerned must hope that common sense prevails and peace can descend on Sudan once again. M
Paul McNamara
Editorial director
Middle East Insurance Review