10 October 2024
The Global Federation of Insurance Associations (GFIA) has written to Zambia’s Finance Minister, raising concerns over the country’s Insurance Act No. 38 which sets strict requirements on local shareholding for licensed insurers, reinsurers and insurance brokers. GFIA warns that it will impact foreign investment coming to the country and called for the Act to be reviewed.
Section 49 of the Act, which must be complied with by 2026, will require that at least 30% of an insurance and reinsurance company’s share capital be owned by citizens or a citizen owned company. Similarly, the law will mean that at least 51% of a licensed insurance broker’s subscribed share capital in Zambia must also be owned by citizens or a citizen owned company.
In the letter to Mercy Munoni, Zambia’s Acting Minister in the Ministry of Finance and National Planning, GFIA warns that by introducing equity caps on foreign ownership, the legislation is at odds with the government’s objective of advancing development and attracting foreign investment. This also contradicts global trends whereby many countries have removed limits on foreign ownership of insurance companies, including in European and North American markets, as well as numerous countries in Africa.
GFIA therefore calls on the Zambian Government to revise the Act either by repealing Section 49 entirely or, at the very least, by amending it so licensed insurance brokers are treated on the same basis as licensed insurance companies, meaning that the capital restrictions applying to brokers do not exceed 30% of the subscribed share capital. Furthermore, GFIA proposes introducing a ‘grandfather clause’, which would limit the provision of Section 49 of the Insurance Act only to companies established after the Act comes into force.
