Low income earners most vulnerable to economic volatilities – Mwanakatwe
By Staff Reporter
FINANCE minister Margaret Mwanakatwe says low income earners are vulnerable to economic volatilities.
In a speech read on her behalf by Ministry of Finance permanent secretary – budget and economic affairs Dr Emmanuel Pamu at the 14th micro-insurance conference at Taj Pamodzi Hotel in Lusaka this morning, Mwanakatwe said the reality was that when low income households were faced with difficulties, harsh choices were made to endure such ordeals.
“While the risks faced by low income earners are no different from those encountered by others, this group of people are more vulnerable to such risks due to their very limited resource base. Therefore, they face a greater financial burden when hit by an unexpected event such as the untimely death of a family member, or injury or loss of assets from natural disasters,” Mwanakatwe noted. “Their subsequent actions may deplete their quality of life; thus, their standard of living declines and more people fall deeper into the poverty trap.”
She said this year’s theme inclusive insurance for emerging markets, came at a time when the insurance industry was targeting the emerging small and medium businesses who were the economic pushers, especially on the African business landscape.
Mwanakatwe added that insurance could be a powerful tool for effective risk management as risk did not only come with a loss but also financial demands to recover from the loss.
“Indeed, insurance is an intangible financial service that is characterised with a promise that the insurer will pay for covered losses at the occurrence of the insured event. In most developed markets, insurance penetration is high and millions of people rely on insurance for risk management purposes,” said Mwanakatwe, adding that at national level, high insurance penetration translated into economic growth through the contribution of insurance to the Gross Domestic Product (GDP).