Seamless risk protection for mega-projects: Botswana

Karl Bishop, head: Niche Business at Santam.

Infrastructure development is booming across Africa, due in no small part to significant economic growth and foreign direct investment. In line with this, and as part of Santam’s strategic expansion into Africa in partnership with Sanlam Emerging Markets, Santam Specialist Business has launched a Seamless insurance solution which offers comprehensive risk protection for mega-projects across Africa. In this series of articles, we speak to Karl Bishop, head: Niche Business at Santam, and explore the opportunities in individual African countries for infrastructure development and the specialist insurance business. This month, the spotlight falls on Botswana.

Infrastructure for a growing economy

With 80% of Botswana’s imports coming from South Africa, we are Botswana’s largest trading partner. Having maintained economic growth above 9% for 33 years between 1966 and 1999, Botswana’s current growth rate is modest at 4.4%. However, it has a stable political and fiscal environment, which makes it a potentially favourable business environment.

“Botswana is part of the Southern Africa Customs Union (SACU) as well as the Southern African Development Community (SADC), which have favourable reciprocal trade and tax treaties with South Africa,” says Karl. “The country’s currency also holds up very well against the US dollar.”

Botswana's industrial output is growing at 5.3% per year, and diamond mining drives much of the country’s industrial development. Analysts have identified mining, transport, energy and power as the future drivers of Botswana’s growth. The country spends around 32.2% of its budget on capital and infrastructure development, mainly in the energy and agricultural sectors.

“The Botswana government finances most of its own development projects from diamond mining revenue, but declining revenue is compelling the government to seek public-private solutions for infrastructure projects,” says Karl. “The rail network has been identified as the most deficient, as it depends on a single north-south link from South Africa into Zambia via Zimbabwe.”

Large infrastructure development projects in Botswana include:

• The Trans-Kalahari Corridor Project, a road and rail development linking Namibia, Mozambique and South Africa through Botswana
• The Kazungula Bridge Project, an expansion of the Kazungula bridge to handle north-south road and rail traffic into Zambia and relieve pressure on the Beit Bridge border post
• The Mmamabula Project, a new coal field development including the construction of a 600MW power station in south-eastern Botswana
• The CIC/Western Block 300MW Domestic Power Project, using Mmamabula coal
• The CIC/Central and Eastern Blocks Coal to Hydrocarbons Project (CTH) at the Mmamabula coal site.

Specialist insurance opportunities

With the country’s significant industrial potential and infrastructure projects under way, opportunities for specialist insurance in Botswana are plenty, says Karl. “Change of legislation in recent years has disrupted Santam Specialist Business in Botswana, but a new partnership between Sanlam Emerging Markets and the Botswana Insurance Company (BIC) will re-open these opportunities.”

The expertise offered by Santam Specialist Business which is most suited to the Botswana market includes:

• Engineering all risk, construction all risk, project liability insurance – targeting both large infrastructure and smaller, sector-specific commercial construction projects, via Mirabilis Underwriting Managers
• Specialised commercial property insurance targeting large retail, commercial and mining projects, via Emerald Africa
• Marine cargo and transit insurance targeting the movement of imports into Botswana from South Africa and Namibia, via Associated Marine
• Travel insurance targeting commercial clients, on annual policies where possible.

Why insure with Santam Specialist Business?

Karl says some traditional general insurance policies often leave gaps in cover where large commercial risks are concerned. “Santam Specialist Business insurance caters to each risk’s unique capacity and underwriting requirements.

“Santam’s leading gross premium written position in South Africa and across Africa is indicative of unparalleled depth and scope of insurance products, technical expertise and client focus which our Specialist Business underwriting managers and agencies have been practicing in Sub-Saharan Africa for years.”

Karl says the basis of the Seamless insurance solution is that it covers all bases of insurance via a single touch-point – the client, whether the insured or an intermediary, does not have to deal with a number of different insurance parties and risk gaps in cover.

“Santam’s Seamless insurance solution – the first of its kind in Africa – is perfectly suited to the Botswana market. The product caters for both medium and large projects and provides clients and brokers with a single policy and single point of contact throughout the project life cycle,” he concludes.