First Mutual Reinsurance Botswana (FMRE) has established a regional hub in Rwanda as it seeks to expand its reinsurance business across East and Central Africa, with cyber, agriculture and digital insurance identified among areas with growth potential.

The reinsurer, which provides life and non-life reinsurance services to insurance companies, officially launched its Rwanda operations on September 7 at Kigali Convention Centre, bringing together insurers, brokers and other players in the financial services sector.

Reinsurance allows insurance companies to transfer part of the financial risks they assume to another insurer, known as a reinsurer. This enables primary insurers to take on larger or more complex risks while strengthening their ability to absorb major losses.

FMRE says the Rwanda entry is part of a wider strategy to establish regional hubs from which it can expand business across Africa.

FMRE Chief Executive Officer Bongai Muhau said the company currently operates in 17 countries and has already developed a hub model in Southern Africa. The company now wants to replicate that approach in East and Central Africa, with Rwanda serving as its base.

"Our vision for East Africa is that we want to build a big portfolio in East Africa,” he noted.

Why Rwanda?

Rwanda’s development trajectory and business environment, he said, were among the factors that influenced the decision to establish the regional operation in Kigali. The choice also reflects the importance of scale to the reinsurance business.

Dr Ben Karenzi, the Founder and CEO of Reinsurance Brokerage Solutions (RBS), said establishing the hub in Rwanda gives FMRE an opportunity to look beyond the country’s domestic market and tap into the wider Great Lakes and East African region.

He underlined Rwanda’s geographical position, noting that a business operating from Kigali can potentially reach markets including eastern DR Congo, western Uganda, western Tanzania and Burundi with estimation of wider regional market accessible from Rwanda at more than 350 million people.

"Moving to Rwanda means we are moving into the Great Lakes market,” he said.

The two arguments point to the same proposition that Rwanda provides the base, while the wider region provides the scale.

Creating new insurance capacity

Rather than positioning itself solely as another player competing for existing insurance business, FMRE says it wants to help develop segments that remain relatively underinsured.

Muhau identified cyber insurance as one of the areas the company intends to develop and specifically with the emergency of e-Kash, which is Rwanda’s national instant and interoperable digital payment system, enabling customers of banks, mobile money services and microfinance institutions to transact across different platforms, and other sister digital payments system.

Rwanda’s rapid adoption of digital technologies across government, financial services and businesses has created new economic opportunities, but has also increased exposure to cyber-related risks, according to insurers.

Muhau noted that FMRE wants to use its experience in cyber insurance to provide additional capacity to insurers and help the market respond to emerging risks.

"We’re not here to come and take up mostly space that is already existing. Our view is that when we are fully fledged here, we would want to create our own new space,” he said.

Reinsurer targets agriculture insurance gap

Muhau said agricultural insurance remains insufficiently developed in many African markets despite the sector’s exposure to weather and climate-related shocks.

The company believes greater reinsurance capacity could enable primary insurers to develop products capable of reaching farmers who remain outside conventional insurance schemes.

The approach could also support the development of more specialised insurance products as African economies become increasingly exposed to new forms of risk.

Digital financial services present another potential area for future expansion. FMRE said growing platforms such as Rwanda’s e-Kash could eventually create opportunities for embedded or digitally distributed insurance products, although its immediate focus is establishing its core reinsurance operations.

Affordability remains a challenge

Muhau acknowledged that affordability is one of the major challenges limiting insurance penetration across African markets.

However, he said FMRE would not compete by simply offering the cheapest products.

Instead, the company plans to pursue scale and innovation, arguing that a larger and more efficient platform can eventually support products that are accessible to a wider section of the population.

"For us, it’s not about coming with the cheapest product into the market,” he said.

The strategy, officials said, is important because reinsurance operates largely behind the scenes. While consumers and businesses generally purchase insurance from primary insurers, reinsurers provide those insurers with additional capacity to underwrite risks.

Greater reinsurance capacity can therefore help insurance companies enter areas where risks might otherwise be difficult or expensive to cover.

Building Rwanda’s insurance ecosystem

Karenzi said FMRE’s arrival should also be viewed in the context of Rwanda’s efforts to position Kigali as a regional financial-services centre.

He pointed to the Kigali International Financial Centre and Rwanda’s efforts to create an environment that attracts international financial institutions.

He urged FMRE to engage with institutions within the financial ecosystem as it develops its regional operations.

For Muhau, however, the investment is not intended to be temporary.

He said the current operation represents an initial step toward a larger presence, including plans to transition the Rwanda office into a fully licensed reinsurance operation as the business grows. The company also expects to build a larger local team.

Beyond underwriting capacity, FMRE stated it is also seeking to contribute to the development of technical expertise in Rwanda’s insurance industry.

The company held a technical training programme for insurance sector stakeholders around the launch and plans additional sessions, including specialised training in reinsurance, cyber and agriculture insurance.

The services will be available through FMRE’s Kigali offices and online platforms, with the Rwanda hub expected to coordinate the company’s activities across East Africa.