Congo Suspends Insurance Regulator Head, Stymying Industry Plans

KINSHASA (Capital Markets in Africa) – The Democratic Republic of Congo suspended the head of the newly established insurance regulator for financial mismanagement, dealing a setback to the long-awaited liberalization of the industry.

Finance Minister Henri Yav Mulang wrote to Insurance Regulatory Authority Managing Director Eric Mboma on Oct. 7 informing him that an audit had found him “guilty of several acts characteristic of bad management.” The findings were likely to result in disciplinary action, according to a copy of the letter seen by Bloomberg and confirmed by ministry spokesman Oscar Mbal Kayij.

Mboma was removed to avoid further delaying the “operationalization” of the regulator, according to the letter. Mboma declined to comment on the allegations and said in a text message that he wanted to first respond to Yav Mulang.

ARCA, as the regulator is known, has been tasked with opening up Congo’s insurance industry, in which state-owned Societe National d’Assurances has been the only company allowed to operate for the past 50 years. A March 2015 insurance law, which came into effect 12 months later, provided for the liberalization of the industry, but implementation has been slow and regulations delayed.

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In July, Mboma said ARCA received interest from at least 16 companies about operating in Congo and would seek formal applications for permits in August before awarding licenses in the fourth quarter. ARCA has yet to start receiving formal bids.

Audit Findings
The audit’s findings included that Mboma failed to respect specifications for how funds released by the government should be allocated, according to the letter. It listed disbursed sums used “for other ends” than those intended, including $55,000 for “the urgent recruitment of people with profile and expertise in the insurance sector” and $100,000 for “finalization of the legal texts.” It said Mboma also withdrew $40,000 in February 2017 from ProCredit Bank, which wasn’t reflected in ARCA’s books.

Mboma’s management of ARCA resulted in “a flagrant imbalance between the allocation of financial resources put at the disposal of ARCA” and “the level of operationality” at the regulator, according to the letter. This caused operations at the regulator to be “far from expectations and almost non-existent,” it said.

Mboma has been replaced on an interim basis by his deputy, Alain Kaninda, according to finance ministry spokesman Kayij.

Source: Bloomberg Business News