SMEs Gain Momentum as Firms Collaborate to Expand Insurance Reach Beyond 3%

The Challenge of Low Insurance Penetration in East Africa

Insurance penetration in Kenya has remained consistently low, hovering between 2.3% and 2.6% as of mid-2023. This is significantly below the global average of around 7%. Similarly, in other East African countries like Tanzania and Uganda, insurance penetration remains low, ranging from 1% to 3%. These figures highlight a persistent challenge for the region, where factors such as low disposable incomes, limited understanding of insurance products, poor savings culture, and slow growth of alternative distribution channels like mobile phones have contributed to the low uptake.

Despite these obstacles, East Africa presents a promising long-term opportunity for insurers. The region is experiencing rapid economic growth and a young, expanding population, which creates a fertile ground for financial innovation and inclusion.

Mastercard's Strategic Move into Embedded Insurance

Global payment giant Mastercard has entered the insurance space through a strategic collaboration with Hillcroft (mTek), an insurtech company. This partnership aims to provide tailored insurance products directly into Mastercard’s consumer and SME card offerings, making affordable and convenient coverage accessible to millions of people and businesses through the payments ecosystem they already use daily.

This initiative marks Mastercard’s entry into the embedded insurance market in East Africa. It reinforces the company’s commitment to advancing financial inclusion and digital innovation in the region. By integrating insurance into routine transactions, the collaboration seeks to eliminate traditional barriers such as high upfront costs, complex application processes, and limited distribution networks—factors that have historically kept insurance penetration in the region below 3%.

Enhancing Financial Inclusion Through Innovation

Shehryar Ali, Mastercard’s senior vice president and country manager for East Africa and the Indian Ocean Islands, emphasized the importance of this collaboration: “This collaboration reflects Mastercard’s commitment to unlocking financial inclusion. By bringing insurance directly into the payment experience, we are removing friction and making protective cover accessible to millions of people and businesses. From consumers buying daily goods to farmers selling their harvest, this initiative is about building resilience and supporting economic growth across East Africa.”

SMEs play a critical role in East Africa’s economy, accounting for over 90% of businesses and contributing significantly to GDP and job creation. However, they often face challenges in accessing affordable insurance. By offering coverage at the point of transaction, Mastercard and Hillcroft (mTek) aim to meet businesses where they are, leveraging Mastercard’s payment infrastructure and Hillcroft’s insurtech expertise to close this gap.

A Collaborative Ecosystem for Growth

Bente Krogmann, CEO of Hillcroft (mTek), stated: “At Hillcroft (mTek), our mission has always been to reimagine access to insurance in Africa. Collaborating with Mastercard allows us to scale our technology and connect with millions of consumers and SMEs through trusted payment channels. Together, we aim to deliver solutions that are simple, affordable, and life-changing for underserved communities.”

The collaboration also fosters a broader ecosystem by bringing together financial institutions, insurance companies, and major telecommunications providers across Africa. These stakeholders will deliver comprehensive digital and virtual card solutions that bundle payments with insurance, expanding access across the region.

Hillcroft (mTek) will provide direct API integration with underwriters, technical platform support, and co-develop innovative products with insurers. This approach not only scales the reach of insurance but also builds commercially viable models that ensure lasting impact.

Benefits Across the Board

For consumers, this collaboration means access to affordable insurance products embedded into their everyday payment habits. For SMEs and farmers, it offers vital protection to help manage risk and support growth. For financial institutions, telecom partners, and insurers, it creates new opportunities to deepen engagement, strengthen customer loyalty, and expand reach.

With Africa’s insurance penetration among the lowest globally, the new venture sets a new benchmark for how financial services can integrate protection into daily life. Industry players believe this initiative establishes a scalable blueprint for expanding insurance access across East Africa and beyond.