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

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Obesity Poses Complex Problem

Professor warns of obesity’s worldwide health impact More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam Wari
X
Katherine Gypson
May 25, 2015 1:32 AM
For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.
Video

Video Scientists Testing Space Propulsion by Light

Can the sun - the heart of our solar system - power a spacecraft to the edge of our solar system? The answer may come from a just-launched small satellite designed to test the efficiency of solar sail propulsion. Once deployed, its large sail will catch the so-called solar wind and slowly reach what scientists hope to be substantial speed. VOA’s George Putic reports.
Video

Video FIFA Trains Somali Referees

As stability returns to the once lawless nation of Somalia, the world football governing body, FIFA, is helping to rebuild the country’s sport sector by training referees as well as its young footballers. Abdulaziz Billow has more from Mogadishu.
Video

Video With US Child Obesity Rates on the Rise, Program Promotes Health Eating

In its fifth year, FoodCorps puts more than 180 young Americans into 500 schools across the United States, where they focus on teaching students about nutrition, engaging them with hands-on activities, and improving their access to healthy foods whether in the cafeteria or the greater community. Aru Pande has more.
Video

Video Virginia Neighborhood Draws People to Nostalgic Main Street

In the U.S., people used to grow up in small towns with a main street lined by family-owned shops and restaurants. Today, however, many main streets are worn down and empty because shoppers have been lured away by shopping malls. But in the Del Ray neighborhood of Alexandria, Virginia, main street is thriving. VOA’s Deborah Block reports it has a nostalgic feel with its small restaurants and unique stores.

VOA Blogs

World Currencies

EUR
USD
0.9109
JPY
USD
121.50
GBP
USD
0.6467
CAD
USD
1.2293
INR
USD
63.559

Rates may not be current.