News / Economy

    Insurers Eye Africa's Booming Funeral Business

    • A carpenter puts the finishing touches to a wooden coffin at a roadside workshop in Nairobi, Kenya, May 20, 2013.
    • The owner of a funeral services shop stands in front of his shop near the mortuary of Yopougon in Abidjan, May 22, 2013.
    • Pallbearers carry a coffin through a cemetery during a funeral ceremony in Lagos, Nigeria, May 31, 2013.
    • Family members of a deceased person walk along a road near a cemetery during a funeral ceremony in Lagos, Nigeria, May 31, 2013.
    • A street vendor passes a coffin made in the shape of a fish at the workshop of Kane Kwei in the Teshi area of Accra, Ghana, May 16, 2013.
    • Coffins are displayed as a worker is reflected in a window at the Sizo funeral parlor in Soweto, South Africa, May 6, 2013.
    • An employee works on a coffin in the shape of a film projector in the workshop of Kane Kwei in the Teshi area of Accra, Ghana, May 16, 2013.
    • Bereaved relatives wait to pick newly built coffins from a roadside showroom in Nairobi, Kenya, May 20, 2013.
    Reuters
    From fish-shaped coffins to slaughtered bulls, funerals in Africa are lavish affairs, providing a lucrative opportunity for insurance companies looking for business in some of the world's fastest growing economies.
     
    Many of the insurance industry's big money-spinners in developed markets, like motor insurance and cover for household goods, are irrelevant to the majority of Africans who cannot afford a range of expensive personal possessions.
     
    But high death rates and low savings levels mean funeral insurance is proving an easier sell among people daunted by the cost of ceremonies that can stretch to several months of income.
     
    “That's the whole problem with it. People think that if you want a small intimate funeral, you don't have money,” said Emily Chauke, a 43-year-old cosmetics consultant from Johannesburg who pays 570 rand ($64) a month for family funeral cover.
     
    “They have that thing of proving people wrong, that 'I can afford to give my father or mother a big funeral',” she said.
     
    Africans are by no means alone in spending heavily on honoring their dead. But funerals on the continent are more frequent per head of population than elsewhere in the world.
     
    In South Africa, the continent's biggest economy, the death rate is more than 17 per 1,000 people a year, nearly double the global average. And six of the 10 countries with the highest death rate are in Africa, according to the CIA World Factbook.
     
    While mortality rates are high, though, they are also falling - an attractive combination for insurers which raises the prospect of customers paying into their policies for longer.
     
    High unemployment and above-average birth rates across much of Africa also mean employees can have many dependents, making it more likely they will seek funeral insurance.
     
    “There's a big demand for it because of the cultural behavior that we need to have these big dignified funerals,” said Jacky Huma, head of micro-insurance at the South Africa's Financial Services Board (FSB), which estimates funeral premiums in the country totaled 4.9 billion rand ($494 million) in 2011.
     
    While that's just under two percent of all long-term insurance in the comparatively developed South African market, she said demand was growing rapidly, a point echoed by global bank Standard Chartered, which said burial cover was also a crucial way of winning new customers in less developed markets.
     
    “Funeral insurance cover, specifically, remains a leading product in most of our markets, and currently contributes to more than 60 percent of the bank's individual life insurance sales [in Africa],” said Gautam Duggal, the bank's head of bancassurance for Africa, the Middle East and South Asia.
     
    Standard Chartered's bancassurance business is seeing double-digit percentage growth in annual insurance premiums in five African markets and believes personal insurance on the continent, excluding South Africa, is less than five percent of its market potential.
     
    After Tears

     
    While global financial services firms see funeral cover as a way of gaining a foothold in many African markets, they will find plenty of local competition.
     
    For example, Uganda's A-Plus Funeral, a funeral director that offers insurance, has grown from just one director 10 years ago to 13 now, and reckons the 5 billion shilling ($2 million) local funeral insurance industry is growing 25 percent a year.
     
    Meanwhile, Sizo Funeral Directors in Soweto, South Africa's biggest township, offers funeral cover for 14 people under one principal member for as little as 120 rand a month buying the cheapest funeral package of 5,000 rand.
     
    In most cases, though, the costs will be far higher, given the cultural and social pressure for lavish ceremonies and an “after tears” party that continues long after the burial.
     
    “We Africans will tell you to slaughter a cow to feed people. And a proper cow is 6,000-8,000 rand. Food can cost you an average of 3,000-5,000 excluding the cow. So you need insurance,” Sizo managing director Brian Mazibuko told Reuters in a shop lined with about a dozen shiny brown caskets.
     
    An average funeral will set a family back 30,000 rand ($3,300), according to South African insurer Hollard, compared with a non-farm worker's monthly salary of 14,000 rand.
     
    The sums involved have also attracted interest from outside the traditional financial services sector.
     
    South Africa's FSB has licensed 39 insurers to offer funeral products, including mobile phone operator Vodacom.
     
    Its bigger rival MTN is working with Hollard to sell funeral products by phone in Ghana, where burial ceremonies can last for three days and the deceased is often laid to rest in a custom-made coffin matching his or her profession - a fisherman in a fish, a market trader in a banana.
     
    Hollard is also in partnership with South African soccer club Kaizer Chiefs to sell funeral insurance to its 14-million-strong fan base, with payouts of up to 50,000 rand.
     
    Entrepreneurs are finding other ways of turning the cost of African funerals into business opportunities too.
     
    Kyai Mullei, a 36-year-old whizz-kid in Kenya's mobile technology industry, has taken the local tradition of the “harambee” - in which communities and families come together to raise money for funerals - and given it a 21st century twist.
     
    The cost of holding a harambee can eat up as much as a third of the money raised, particularly when many families are spread across the east African country. So Mullei has created a virtual harambee platform called M-Changa, from the Swahili word for contribution, where fundraisers can meet in a mobile community in exchange for a commission of 1.5 percent on all funds raised.
     
    “Many people still live in rural areas so the chances that the committee all live in the same place are unlikely,” he told Reuters, adding the number of M-Changa harambees being set up is doubling every month.
     
    ($1 = 9.9138 South African rand)
    ($1 = 2570.0000 Ugandan shillings)

    You May Like

    Native Americans Ask: What About Our Water Supply?

    They say they have been facing a dangerous water contaminant for decades - uranium – but the problem has received far less attention than water contamination by lead in Flint, Michigan

    Pakistan's President Urges Nation Not to Celebrate Valentine's Day

    Mamnoon Hussain criticizes Valentine's Day, which falls on Sunday this year, as a Western import that threatens to undermine the Islamic values of Pakistan

    Mother of IS Supporter: Son Was Peaceful, 'Role Model'

    Somali-American Abdirizak Mohamed Warsame pleaded guilty Thursday to charges of conspiring to provide material support to Islamic State militants

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Two-thirds of World Faces Water Shortagei
    X
    February 12, 2016 7:31 PM
    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Two-thirds of World Faces Water Shortage

    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Gateway to Mecca: Historical Old Jeddah

    Local leader Sami Nawar's family has been in the Old City of Jeddah for hundreds of years and takes us on a tour of this ancient route to Mecca, also believed to be the final resting place of Adam's wife, Eve.
    Video

    Video New Technology Aims to Bring Election Transparency to Uganda

    A team of recent graduates from Uganda’s Makerere University has created a mobile application designed to help monitor elections and expose possible rigging. The developers say the app, called E-Poll, will make Uganda's democratic process fairer. From Kampala, VOA's Serginho Roosblad reports.
    Video

    Video As Refugees Perish, Greek Graveyards Fill

    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video Russia Bristles at NATO Expansion in E. Europe

    Russian Foreign Minister Sergei Lavrov is meeting Friday with the head of NATO after the Western military alliance and the United States announced plans for the biggest military build-up in Europe since the Cold War. Russia has called NATO's moves a threat to stability in Europe. But NATO says the troop rotations and equipment are aimed at reassuring allies concerned about Russia as VOA's Daniel Schearf reports from Moscow.
    Video

    Video To Fight Zika, Scientists Target Mosquitoes

    Mosquitoes strike again. The Zika virus outbreak is just the latest headline-grabbing epidemic carried by these biting pests, but researchers are fighting back with new ways to control them. VOA's Steve Baragona takes a look.
    Video

    Video Mosul Refugees Talk About Life Under IS

    A top U.S. intelligence official told Congress this week that a planned Iraqi-led operation to re-take the city of Mosul from Islamic State militants is unlikely to take place this year. IS took over the city in June 2014, and for the past year and a half, Mosul residents have been held captive under its rule. VOA's Zana Omar talked to some families who managed to escape. Bronwyn Benito narrates his report.
    Video

    Video Scientists Make Progress Toward Better Diabetes Treatment, Cure

    Scientists at two of the top U.S. universities say they have made significant advances in their quest to find a more efficient treatment for diabetes and eventually a cure. According to the International Diabetes Federation, the disease affects more than 370 million people worldwide. VOA’s George Putic reports.
    Video

    Video NATO to Target Migrant Smugglers

    NATO has announced plans to send warships to the Aegean Sea to target migrant smugglers in the alliance's most direct intervention so far since a wave of people began trying to reach European shores.
    Video

    Video Russia's Catholics, Orthodox Hopeful on Historic Pope-Patriarch Meeting

    Russia's Catholic minority has welcomed an historic first meeting Friday in Cuba between the Pope and the Patriarch of Russia's dominant Orthodox Church. The Orthodox Church split with Rome in 1054 and analysts say politics, both church and state, have been driving the relationship in the centuries since. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Used Books Get a New Life on the Streets of Lagos

    Used booksellers are importing books from abroad and selling them on the streets of Africa's largest city. What‘s popular with readers may surprise you. Chris Stein reports from Lagos.
    Video

    Video After NH Primaries All Eyes on South Carolina

    After Tuesday's primary in New Hampshire, US presidential candidates swiftly turned to the next election coming up in South Carolina. The so-called “first-in-the-South” poll may help further narrow down the field of candidates. Zlatica Hoke reports.
    Video

    Video Smartphone Helps Grow Vegetables

    One day, you may be using your smartphone to grow your vegetables. A Taipei-based company has developed a farm cube — a small, enclosed ecosystem designed to grow plants indoors. The environment inside is automatically adjusted by the cube, but it can also be controlled through an app. VOA's Deborah Block has more on the gardening system.
    Video

    Video Exhibit Turns da Vinci’s Drawings Into Real Objects

    In addition to being a successful artist, Renaissance genius Leonardo da Vinci designed many practical machines, some of which are still in use today, although in different forms. But a number of his projects were never realized — until today. VOA’s George Putic reports.

    World Currencies

    EUR
    USD
    0.8869
    JPY
    USD
    112.70
    GBP
    USD
    0.6894
    CAD
    USD
    1.3922
    INR
    USD
    68.241

    Rates may not be current.