The banking, finance and insurance sector in Senegal is becoming increasingly well developed and is growing in spite of the still challenging global economic environment – supporting the vital role of Dakar as a regional trade hub. However, like many other sectors in this young and dynamic economy, Senegal’s financial sector still has plenty of room for growth – which is especially true now that the advent of new oil and gas production is firmly on the horizon for Senegal over the course of 2023-2024.
The Senegalese insurance industry still accounts for a relatively small part of the country’s financial system. Overall insurance penetration rates still remain low in comparison to typical insurance markets in Europe, North America or Asia. Nevertheless, the sector is enjoying a gradual post-COVID-19 pandemic resurgence and various types of insurance products are becoming increasingly wide-spread among the population, thanks to changes in the tax treatment over the past few decades.
One of the sectors in which insurance companies are seeing some of the best prospects for growth over the medium term is the emerging oil and gas industry. There is strong potential for growth in premiums in specific sub-sectors that are set to boom once Senegal’s large offshore oil and gas projects like Sangomar and the Grand Tortue Ahmeyim come on stream such as maritime insurance, warehousing, bunkering, transportation and distribution, energy logistics, green logistics, fire or all-risk coverage.
The need to be adequately insured applies especially to small and medium sized national companies that aim to capture new energy sector business development opportunities in the context of meeting local content requirements. The global oil and gas industry understandably has particularly stringent requirements in the realm of quality, health, and safety and in order to even be eligible to bid for oil and gas tenders, local companies have to be adequately insured.
Oil and gas is not the only segment of Senegal’s energy value chain that insurance companies are increasingly eager to tap. Today, the country is already producing 32% of the energy fed into the national electrical grid from renewable energy projects such as solar, hydropower or wind farms like Taiba N’Diaye. Companies like MERIDIAM, Lekela Power, SENELEC, Engie, Senergy, BONERGIE, and numerous others are all currently either members or partners of the Business Council Renewable Energies of Senegal. Because Senegal wants to pursue a balanced energy transition with both fossil-fuels and alternative sources, the renewable energy sector in Senegal is poised to continue its strong performance. These complex and highly capital-intensive projects also require various kinds of insurance and if Senegals local insurance companies can capture even a fraction of this business, they can expect to achieve strong growth in premiums.
Many insurance industry institutions operating in Senegal and the sub-region will be attending MSGBC, Oil, Gas, & Power 2021 taking place on December 16-17th in Dakar in order to explore opportunities in energy financing and insurance related to the energy sector in the MSGBC Basin countries: Senegal, Mauritania, The Gambia, Guinea-Bissau, and Guinea-Conakry.