Kenyan insurance brokers operating in Tanzania will be forced to cede shareholding to locals under a new law which cut by half the ownership quota allowed for foreigners.
Fresh amendments to the Insurance Act sets the mandatory stake that must be held by Tanzanian citizens to be at least two-thirds from the initial one third or 33 per cent.
It is estimated that a significant chunk of Tanzania’s 124 insurance brokers are foreign-owned, with a substantial number being backed by Kenyan investors.
Some of the Nairobi-based firms selling and negotiating insurance products in Dar es Salaam include Aristocrats Insurance Brokers Ltd, Eagle Africa Insurance Brokers Ltd, MIC Global Risks, and Pacific Insurance Brokers.
Others are global insurance brokers such as AoN and JW Seagon, which have operations across the region.
The shareholding structures of these firms was, however, not available immediately to the Business Daily, and as such it is not clear how they will be affected by the new regulations.
“The changes require insurance brokers to be at least two-thirds (66 per cent plus) owned and controlled by Tanzanian citizens.
“This is a 100 per cent increase from the previous local participation requirement (of one third (33 per cent),” said Shamiza Ratansi, managing partner at ATZ Law Chambers, in a research note.
Peter Nyabuti, a Kenyan businessman behind Astra Insurance Brokers Ltd, said his company will not be affected by the new ownership rules as foreign shareholding complies with the new quota.
“Already, Tanzanian nationals own about 70 per cent of the company,” said Mr Nyabuti, the managing director of Astra Insurance Brokers.
“I think the government wants citizens to play a bigger role in the insurance sector,” he said.