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

    Video Rubio Looks to Surge in New Hampshire

    Republican presidential candidate has moved into second place in several recent surveys and appears to be gaining ground on longtime frontrunner Donald Trump

    UN Calls for Global Ban on Female Genital Mutilation

    Recent UNICEF report finds at least 200 million girls and women alive today have undergone female genital mutilation in 30 countries

    UN Pilots New Peace Approach in CAR

    Approach launched in northern town of Kaga Bandoro, where former combatants of mainly Muslim Seleka armed group and Christian and animist anti-Balaka movement are being paid to do community work

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    German Artists to Memorialize Refugees With Life Jacket Exhibiti
    X
    Hamada Elsaram
    February 05, 2016 4:30 PM
    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.
    Video

    Video Genius Lets World Share Its Knowledge

    Inspired by crowdsourcing companies like Wikipedia, Genius allows anyone to edit anything on the web, using its web annotation tool
    Video

    Video Former Drug CEO Martin Shkreli Angers US Lawmakers

    A former U.S. pharmaceutical business executive has angered lawmakers by refusing to explain why he raised the price of a life-saving pill by 5,000 percent. Martin Shkreli was removed from a congressional hearing on Thursday after citing his Fifth Amendment right to stay silent. Zlatica Hoke has more.
    Video

    Video Super Bowl TV Commercials are Super Business for Advertisers

    The Super Bowl, the championship clash between the two top teams in American Football, is the most-watched sporting event of the year, and advertisers are lining up and paying big bucks to get their commercials on the air. In fact, the TV commercials during the Super Bowl have become one of the most anticipated and popular features of the event. VOA's Brian Allen has a sneak peek of what you can expect to see when the big game goes to commercial break, and the real entertainment begins.
    Video

    Video In Philippines, Mixed Feelings About Greater US Military Presence

    In the Philippines, some who will be directly affected by a recent Supreme Court decision clearing the way for more United States troop visits are having mixed reactions.  The increased rotations come at a time when the Philippines is trying to build up its military in the face of growing maritime assertiveness from China.  From Bahile, Palawan on the coast of the South China Sea, Simone Orendain has this story.
    Video

    Video Microcephaly's Connection to Zika: Guilty Until Proven Innocent

    The Zika virus rarely causes problems for the people who get it, but it seems to be having a devastating impact on babies whose mothers are infected with Zika. VOA's Carol Pearson has more.
    Video

    Video Solar Innovation Provides Cheap, Clean Energy to Kenya Residents

    In Kenya, a company called M-Kopa Solar is providing clean energy to more than 300,000 homes across East Africa by allowing customers to "pay-as-you-go" via their cell phones. As Lenny Ruvaga reports from Kangemi, customers pay a small deposit for a solar unit and then pay less than a dollar a day to get clean energy to light up their homes or businesses.
    Video

    Video Stunning Artworks Attract Record Crowds, Thanks to Social Media

    A new exhibit at the oldest art museum in America is shattering attendance records. Thousands of visitors are lining up to see nine giant works of art that have gotten a much-deserved shot of viral marketing. The 150-year-old Smithsonian American Art Museum has never had a response quite like this. VOA's Julie Taboh reports.
    Video

    Video Apprenticeships Put Americans on Path Back to Work

    Trying to get more people into the U.S. workforce, the Obama administration last year announced $175 million in grants towards apprenticeship programs. VOA White House correspondent Aru Pande went inside one training center outside of Washington that has gained national recognition for helping put people on the path to employment.
    Video

    Video New Material May Reduce Concussion Effects

    As the 2016 National Football League season reaches its summit at the Super Bowl this coming Sunday (2/7), scientists are trying to learn how to more effectively protect football players from dangerous and damaging concussions. Researchers at Cardiff and Cambridge Universities say their origami-based material may solve the problem. VOA’s George Putic reports.
    Video

    Video Saudi Arabian Women's Sports Chip Away at Stereotypes

    Saudi Arabian female athletes say that sports are on the front line of busting traditions that quash women’s voices, both locally and internationally. In their hometown of Jeddah, a group of basketball players say that by connecting sports to health issues, they are encouraging women and girls to get out of their homes and participate in public life. VOA’s Heather Murdock reports.
    Video

    Video A Year Later, Fortunes Mixed for Syrians Forging New Lives in Berlin

    In April of last year, VOA followed the progress of six young Syrian refugees -- four brothers and their two friends -- as they made their way from Libya to Italy by boat, and eventually to Germany. Reporter Henry Ridgwell caught up with the refugees again in Berlin, as they struggle to forge new lives amid the turmoil of Europe's refugee crisis.
    Video

    Video Zika Virus May be Hard to Stop

    With the Zika virus spreading rapidly, the World Health Organization Monday declared Zika a global health emergency. As Alberto Pimienta reports, for many governments and experts, the worst is yet to come.

    World Currencies

    EUR
    USD
    0.8926
    JPY
    USD
    116.68
    GBP
    USD
    0.6871
    CAD
    USD
    1.3751
    INR
    USD
    67.653

    Rates may not be current.