Finance State minister in charge of Privatisation Aston Kajara has tasked insurance players to develop more inclusive products that can attract government deals.
Speaking at celebrations to mark Uganda Insurers Association’s 50 years, Mr Kajara said products that target Small and Medium Enterprises (SMEs) will boost insurance penetration currently estimated at less than one per cent.
“.make recommendations on a suitable and sustainable service programme including a model where government can partner with the insurance sector. That will enhance growth of the largely informal sector that face many risks. I believe we can work together to spiral the development of SMEs, agriculture and pension sectors in particular,” Mr Kajara said.
He added that government was losing a lot of money, especially in the highly funded projects like roads energy and railway yet insurance would guard against such loses but still the insurance players would get good premiums.
“the highly talked about Katosi Road if it had been insured, may be government would have not lost that money. And may be one of you would have to pay,” Mr Kajara said.
He added: “Indeed, it is a short coming that all, or most of government investments are at higher risk. At one point, we looked for an insurance policy for the airport (Entebbe).”
Mr Allan Mafabi, the vice chairperson of Uganda Insurers Association, said government is not supportive to the growth of the sector given the heavy taxes that has slowed down its growth.
In the 2013/4 financial year, government increased stamp duty from Shs5,000 to Shs35,000 and introduced Value Added Tax of 18 per cent. He asked government to exempt products like life insurance, health and education as it is in Kenya and be the lead in insuring property.
Before the introduction of Value Added Tax and stamp duty three years ago, Mr Mafabi said the sector was growing at 18 to 25 per cent but it’s now between 9 and 12 per cent. About taxes, Mr Kajara said: “We need insurance but we need taxes to run the country.”