Abstract
This study contributes to the emerging literature on the insurance industry in sub-Saharan Africa by investigating both the linear and nonlinear relationship between insurance penetration and inclusive growth. We employ a panel dataset in a system generalised method of moments approach and a dynamic panel threshold to account for endogeneity and turning points in the insurance-inclusive growth nexus. The linear evidence suggests a significant positive impact of insurance penetration (life, nonlife and total) on inclusive growth. Further, there exists a significant threshold level of nonlife and total insurance penetration, which countries must surpass to realise the positive impact of insurance on inclusive growth. The paper argues that below this threshold value, the relationship tends to be negative, suggesting a U-shaped relationship. We found no significant threshold for the life insurance industry. Important policy implications for fine-tuning the insurance industry to deliver the intended effects of managing risk in the wider economy are discussed.
Disclosure Statement
No potential conflict of interest was reported by the author(s).
Notes
1 The study adapted the insurance for growth transmission channels from Chamberlain, Coetzee, and Camargo (Citation2017).
2 The countries include Angola, Botswana, Burkina Faso, Burundi, Cabo Verde, Cameroon, Central African Republic, Chad, Congo Republic, Côte d’Ivoire, Ethiopia, Gabon, Ghana, Kenya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Togo, Uganda and Zambia.
Additional information
Notes on contributors
Sylvester Senyo Horvey
Sylvester Senyo Horvey holds a PhD in Risk Management and Insurance and is currently a Postdoctoral Research Fellow at the Wits Business School, University of the Witwatersrand, Johannesburg, South Africa. His research interests revolve around risk management, macro, and micro-insurance, enterprise risk management, investment, finance, and applied economics.
Dennis Boahene Osei
Dennis Boahene Osei is a Postdoctoral Research Fellow at the DSI/NRF/Newton Fund Trilateral Chair in Transformative Innovation, the Fourth Industrial Revolution and Sustainable Development, University of Johannesburg, South Africa. His areas of research include but are not limited to innovation, infrastructure development, inclusive growth, artificial intelligence, philanthropy, and impact investment. Dennis holds a PhD in Economics from the University of Witwatersrand, South Africa.
Imhotep Paul Alagidede
Imhotep Paul Alagidede is a Metaeconomist at the Nile Valley Multiversity, and Professor of Finance at the Wits Business School at the University of the Witwatersrand, South Africa, and Simon Diedong Dombo University of Business and Integrated Development Studies (SDD-UBIDS) at Wa, Ghana.