By Ben Ssebuguzi
The recent launch of Tamini Insurance Company by President Yoweri Museveni during the ONC Iftar dinner at Lugogo last week is a landmark achievement in the socio-economic transformation of Uganda.
It is also a testament to the resilient leadership of Hajjat Hadijah Namyalo, the Manager of the Office of the National Chairman (ONC), in promoting the fundamental objectives of the National Resistance Movement, including advancing economic stability and securing the future of the Bazukkulu.
According to Namyalo’s maiden speech during the launch of the first Sharia law insurance company in Uganda, the need is to bridge the gap between the rich and the poor. It is a common experience in Uganda where fire destroys the businesses of timber dealers who suffer significant losses because they lack insurance products that suit their needs, something that exacerbates poverty. Therefore, the coming of Tamini is expected to be a game-changer in the industry.
One of the objectives of the National Financial Inclusion Strategy 2017–2022 by the Ministry of Finance, Planning and Economic Development was, among others, to reduce financial exclusion and barriers to access to financial services, and deepen formal savings, investment and insurance usage. This puts the launch of Tamini Insurance in line with government policy.
Although the Insurance Regulatory Authority of Uganda (IRA), a body responsible for regulating the insurance sector in Uganda, has been able to raise awareness and foster innovation in the industry, the sector is still grappling with a number of challenges. These include insurance fraud, low penetration and uptake of less than two percent for decades, low awareness and misunderstanding about insurance, high costs and affordability challenges, and cultural preferences, among others.
It should also be noted that the insurance industry has a duty to drive economic stability and growth by responding to new and evolving risks, including climate volatility, geopolitical tensions and shifting demographics.
Relatedly, the current insurance landscape is marked by unpredictability. Consumers, markets and organizations alike are looking to insurance companies as vehicles that can provide stability by offering a critical financial safety net for both businesses and individuals.
On the individual consumer front, insurance cushions against unforeseen expenses such as medical emergencies or property damage, thereby maintaining consumer spending, which is critical for the economic stability of the country.
Insurance is also seen as an engine that attracts investment and secures financing for businesses, since funders have greater confidence in the sustainability of businesses that are insured. This ultimately contributes to economic growth.
The entry of new insurance players such as Tamini Insurance is a significant addition to the financial ecosystem of our country because insurance companies participate in the securities market as institutional investors, thereby boosting the economy.
Besides receiving premiums, insurance companies are a lifeline to businesses during crises or disasters by providing payouts which offer essential liquidity for recovery, hence protecting jobs for the Bazukkulu.
A case in point of one of the most significant insurance compensations in Uganda is that of Mr. Kiyimba of Ambias Discotheque, who was compensated a staggering Ushs1.65 billion by Statewide Insurance Company in 2023 after his entertainment complex in Masaka City was gutted by fire. This incident cemented the role of insurance in the social and economic transformation of our country.
Statistically, as the global insurance sector continues to show a positive trajectory of about five percent growth, it is important to emphasize that organizations that pay for insurance coverage are bound to pay less tax because insurance is a deductible expense.
In summary, insurance premiums are generally considered a business expense that can be deducted from business income, thereby reducing the overall taxable income. This means that foregoing insurance coverage for your business is a disservice to yourself and the people who derive their livelihood from your business.
The writer is the Head of Research, Office of the National Chairman (NRM).
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