Insurance market development and economic growth in Africa: Contingencies and thresholds of structural transformation

Despite insurance contributions to economic growth, the intervening role of structural transformation on the insurance-growth nexus remains scarce, leaving a gap in the literature. Motivated by the 2030 Sustainable Development Agenda, which envisages higher structural transformation, financial development and economic progress, this study examines the threshold effects and the joint impact of insurance and structural transformation on economic growth in Africa. The study employed the generalised method of moments and dynamic panel threshold estimations on 38 countries covering 2008 to 2020. The following findings emerge: First, insurance and structural transformation promote economic growth. Second, the results indicate that structural transformation enhances the impact of insurance on economic growth. This suggests that structural transformation matters in driving insurance market development, ultimately promoting economic growth. Third, the empirical evidence further reveals nonlinearities in the relationship and presents that a high level of insurance penetration stimulates growth and vice versa. More so, the synergistic effect of insurance and structural transformation on economic growth is more substantial at higher threshold levels. This implies that though insurance spurs economic growth, its impact is more effective through the intervening role of a strong structural transformation. Therefore, this study calls for government intervention and policies to improve structural transformations and form insurance synergies to promote growth.