Could you give us a brief historical background on the Sudanese Insurance and Reinsurance Company, as well as an overview of the services the Company provides?
My company started dealing with insurance in 1967. It started as a joint venture between Polistrad company of Bulgaria, who had a 51% share of the capital and Sudanese businessmen. We maintained this framework til 1971, when the government declared the nationalization of the insurance activity in Sudan. So, the Sudanese shareholders bought the shares of Polistrad and from that time it became a Sudanese owned company. This process took place during the Nimiri regime where other nationalizations took place with the only difference that insurance remained into Sudanize private sector. They thought at that time that if they would give that sector to government, it would not develop the insurance industry as expected.
You know, the illiteracy rate is very high in Sudan; it is mainly an agriculture country and the farmers don't feel the need to get insured. The other element you must be aware of is that the chairman of the Sudanese Insurance Association, Mr. Izz Aldin Elsayed who was also the chairman of this company, was very close to the regime at that time, and I think he played a big role to keep the insurance industry within the hands of the private sector.
At that time we were 5 companies competing for the same market, and this situation prevailed until 1974 when new companies came in. There are presently about 16 direct insurance plus one professional reinsurance company, the National Reinsurance Company, which is a shareholding between the government and the private sector.
Before 1971 we used to have a lot of foreign insurance companies and branches all over the world: UK, Italy and India; approximately 38 companies, branches and brokers were operating here. Then, suddenly all stopped in 1971 when they " sudanized " the insurance market. But since Sudan signed the GATT agreement… they expect - of course - foreign investors to join the insurance sector; some laws have to be changed if privatizations are to be successfully implemented. The main obstacle will be the law governing insurance activity in Sudan, which is based on Sharia principles.
We are all now Islamic cooperative companies, we don't benefit from the insurance activities, there is no profit in insurance companies, so I don't know to what extent that would suit foreign investors when no return is to be expected. I think this is no logic unless we really do some amendments and changes to the law allowing foreign investors to have part of the profit, which we now call surplus. The idea we proposed to the authorities is to allow a part of the profit or surplus to be added to the capital.
Coming back to our company, we started with only the head office and expanded through other areas; we now have about 6 branches and agents all over the country except in the South because of the war. We are into all type of insurances except life insurance, which was stopped many years ago; the branches were giving a loss because it is difficult for us to market proper life insurance because of so many factors; people don't insure because they don't believe in insurance, and that has been of course overcome by introducing the Takaful, which is the life insurance in Islamic way.
Though we are not involved in life insurance, we are active in all other branches: motor insurance, marine and etc. We can also arrange financial guarantees for investors from abroad; from mid eighties up to 94 we used to work with contractors and different clients here and that was very successful for bid bonds, performance bonds, advance payment bonds and some financial guarantees for loans. But the Bank of Sudan stopped that in 94 claiming that banking business and insurance shouldn't interfere. But now there is a big increase in the demand of these insurance companies because the insurance companies are very flexible when providing guarantees and very selective when dealing with its clients. We used to do good business in that aspect. From that experience we built good relations outside, so we have 3 or 4 companies who can ride business on our behalf and to whom we can recommend some clients for guarantees. We are trying to enlarge this activity here in Sudan because there is an increasing demand especially from foreign investors. They want to come but request some sort of guarantee that they will get their money back or at least their profits back. This is what we are trying to establish now with the assistance of some foreign insurance and
reinsurance companies.
| What is the profile of the foreign companies who are so far showing interest in this way of securing their investment?
All those interested in investing in Sudan. There is a lot of potential around but we need to become a safe investment destination. The security surrounding local banks is not acceptable, but if you can arrange some security for foreign companies - well known companies, would be better - we can change things. We know people really interested in riding a business with our help and support, and we are now in the process of clinching 5 deals from different areas: some for food factory, another one for pharmaceutical industry and some trade business like heavy equipment. So, we are very active in this, we select the clients, we put reports and all the necessary data and the feasibility study for the project then we study them then we present them to the companies upon our recommendation. These activities have been encouraged by the government and the Bank of Sudan.
As far as agriculture is concerned, our plan is to start with the mechanized farms like Gezira board and Rahad scheme, and then build up little by little on that. Our philosophy is to start with vital projects and then build on with good reinsurance security.
In a mature market we can witness how banks are getting involved in the insurance business. Is that the case in Sudan, is it mature enough or do you expect the banks to get more involved in the next couple of years?
I don't think so. Some of the banks are agents for some of the insurance companies. We used to have about 6 banks as principal agents for the Sudanese insurance, and we established some branches to meet their insurance requirements inside the house. That was a very good idea because all has to be insured according to their cash movement and their clients. So they were rendering this service within the bank, and some banks were shareholders in some companies. So I don't think banks will get involved directly in insurance, probably indirectly by buying shares in companies or acting as principle agents to some companies, but as I said, I don't think they will interfere directly in this business.
How would you rate your relations with Asian economies, and with its companies in particular?
So far we don't have any sizable link with any company from the Far East. In the past we used to have relation with PICC - People Insurance Company of China. When they came in 1974 with some Chinese construction companies to build this Friendship Hall, this company came in looking for reinsurance for that project. Our market is mainly in Europe and the UK; we have, good relations with them and our main broker is the UK base broker Iron group, which is the biggest reinsurance broker in the world. It is mainly an American company but we deal with the London establishment, and maybe when years come we will have some investment from the Far East !
What do you consider to be the most critical issue to be tackled by the Sudanese government, beside the one of external debt?
Infrastructure is top priority: roads and communications. They are now good, but we still have to build a lot of roads to link the production areas with the consuming areas. Sometimes you have surplus in product in some area and shortage in other area, and that is mainly due to the lack of proper transportation. Sudan is an agricultural country and we export very little because there is no good connection with the ports, proper airports etc. So I think the priority should be on infrastructure, and energy of course. I also think packing industry is also important because if you want to compete in the international market you have to present your product in a decent acceptable way, and I think the government is following that trend.
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