Sudan nationals living in Eldoret town display their voter's cards after registering as voters in the coming referendum, which may see the South gain independence from the North. Firms in South Sudan face exposure to losses if the vote sparks violence.
Kenyan companies operating in South Sudan face greater exposure to losses if the forthcoming referendum causes instability because Sudan is not a member of the agency that offers political risk insurance.
A senior official with the Africa Trade Insurance (ATI) Agency said demand for political risk covers related to Sudan was on the rise but could not be met because Africa’s largest country was not eligible.
“We have in the recent past received a number of requests to underwrite political risks in Sudan; which we have had to decline as Sudan is not yet ATI-eligible,” said Humphrey Mwangi a senior underwriter at ATI.
The agency owned by several African nations and the World Bank provide political risk insurance in the continent. It also acts as a ‘mother boat’ for Kenya’s insurance companies that offer political risk insurance.
“Rational investors hate uncertainty, more so those in countries that have witnessed conflict before. It is therefore hardly coincidental that people investing in Sudan want to take political risk insurance ahead of the referendum,” Mr Mwangi said.
Some companies like The Louis Berger Group, a contractor for United States development agency USAid in Sudan is already planning emergency evacuation.
In a notice on Wednesday, the company sought services of air charter companies for emergency evacuation from the Southern capital Juba and other provinces. Company officials Delroy Willis and Peter Staples did not however confirm if the request for evacuation services was directly linked to the referendum by the time of going to press.
Kenya companies operating in South Sudan including UAP Insurance, Bidco Oils Refinery and KCB Bank said in earlier interview they were confident the post-referendum situation will remain calm. Others like Co-operative Bank, Centum, East African Breweries, retail chain Nakumatt have announced plans to move into South Sudan after the vote.
Interest in political insurance for South Sudan extends beyond the region. “On a recent trip to Lloyd’s of London -the world’s largest insurance market - I had some underwriters ask about ATI’s appetite for Sudan risk,” he said.
ATI also offers credit risk insurance, comprehensive non-payment and reinsurance. It is currently able to over services in Burundi, Democratic Republic of Congo, Kenya, Madagascar, Malawi, Rwanda, Tanzania, Uganda and Zambia, according to its website.
South Sudanese will go to polls on January 9, 2011 to vote on whether they want to be a separatist state or remain a unified nation as Sudan.
The vote is a key facet of the 2005 Comprehensive Peace Agreement signed in Nairobi by Juba and Khartoum that ended two decades of war between the South and North. The Southerners were fighting to secure religious and economic freedom; to practice Christian and African religions and benefit from vast oil resources mined from their territory.
Tensions continue to rise as the referendum approaches, with a recent reports by the Small Arms Survey, a small arms monitoring group claiming that both sides are rearming near their borders.
The Intergovernmental Authority for Development (IGAD) meeting that was held in Ethiopia this week secured commitment from the Sudanese President Omar Al Bashir that he will support the holding of a free and fair referendum.
The final communiqué, however, failed to note clear commitments by the leaders of both sides to resolve outstanding issues, like tension along the borders and how the referendum on the oil rich region of Abyei located the mid-southern part of the country will be held.
The communiqué urged North and South to “expeditiously resolve the remaining differences on the issues of border demarcation, the Abyei referendum and post referendum arrangements.
The ongoing registration for referendum across the world to tap into all South Sudanese people that were displaced by the war and assurance by President Bashir have given a bit of confidence on the stability of the vote and the outcome.
However, Khartoum has not always kept its promise in the historical dispute with the South in a conflict that started in the late 50s.
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Note: The results are not exact but very close to the actual.
