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ZEP-RE (PTA Reinsurance Company) has underscored the critical role of insurance in de-risking the African Continental Free Trade Area (AfCFTA) Single Bond Guarantee Scheme, highlighting pooled resources across national insurers as the most sustainable way to secure goods in transit and cut costs for traders.
Speaking during a session on the impact of the AfCFTA Single Bond Guarantee Scheme for transit in Algiers, ZEP-RE Executive Director, Dr. Benjamin Kamanga, said insurance provides a more affordable alternative to traditional bank guarantees and costly cash deposits demanded by revenue authorities.
“In the past, companies had to either put down cash at the border or secure a bank guarantee to move goods across countries. Both options are extremely expensive. Insurance, in our view, is the most meaningful and cheaper way of enabling trade while assuring revenue authorities that they will not lose revenue,” he explained.
Kamanga explained that ZEP-RE manages the regional insurance pool behind the scheme, where national insurers participate by carrying part of the risk through mechanisms such as the COMESA Yellow Card.
This arrangement allows vehicles to move across multiple countries under a single insurance policy.
“Essentially, we bring insurers together to share the risk. That way, if there is a major loss, there is money ready to compensate the revenue authority. This gives customs officials confidence to accept guarantees issued by regulated insurance companies rather than insisting on cash deposits,” he said.
He further noted that Afreximbank had extended a facility of about US$300 million to support the pool, ensuring sufficient capacity to cover high-value consignments.
“The pool is structured so that when a loss occurs, the money is immediately available to pay,” Dr. Kamanga added.
He stressed that this insurance-led model not only strengthens local insurers but also enhances efficiency across AfCFTA’s transit system.
Meanwhile, Afreximbank has called for stronger collaboration among governments, the private sector, and regional bodies to accelerate the scheme’s roll-out.
Afreximbank Director of Trade Facilitation, and Promotion, Dr. Gainmore Zanamwe, said inefficient transit systems currently cost African businesses hundreds of millions of dollars annually.
He pointed out that pilot projects in East Africa have already shown the benefits of streamlined transit guarantees in cutting costs, reducing delays, and boosting competitiveness.
“We have seen cases where companies lose up to 60 cents of every dollar because of high transit costs and poor road networks. This is unsustainable if Africa wants to compete globally,” he said.
The Single Bond Guarantee Scheme, developed with COMESA and other regional organisations, replaces multiple costly national guarantees with a single bond valid across borders.
Afreximbank has already provided US$300 million for the East African Community, fully disbursed to support local operators.
“What we are building is not meant to displace local banks or guarantee companies but to strengthen their ability to issue bonds affordably and at scale,” Zanamwe said.
He emphasised the need for governments to harmonise customs systems and provide regulatory support, while regional blocs ensure interoperability and the private sector adopts digital solutions such as electronic cargo tracking.
According to Afreximbank, a continent-wide roll-out could save Africa at least US$300 million annually, potentially cutting up to US$1 billion in losses from inefficient transit.
“Our founding fathers envisaged efficient transit systems more than 60 years ago. We cannot wait any longer. The Single Bond Guarantee Scheme is the instrument that will make the AfCFTA real on the ground,” Zanamwe stated.
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