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2011: Mixed Feelings Trail Insurance Sector

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Insurance experts last Thursday expressed mixed feelings on their expectations for the industry in 2011.

Some of them said that the industry would experience a boom if the 2011 elections were peaceful and there was a smooth transition of power.

Others were of the view that if the elections were characterised by massive rigging, violence and court cases, uncertainty would envelope every sector of the economy.

Mr. Sikiru Oyefeso, the managing director, Staco Insurance Plc, said that stability in the political terrain, economy and oil prices would boost activities in the insurance sector.

“The stability will mean more money and people will be willing to pay their premiums and take up new insurance policies without coercion.

“Also, if the electricity supply improves in 2011 and manufacturing companies resume production more companies will take insurance policies,” he said.

Oyefeso added that the industry was ready to take advantage of the Nigeria Content Development Act 2010 by surmounting the challenges of underwriting oil and gas risks.

In his view, Mr Olusola Oladipo-Ajayi, chairman, Nigerian Insurers Association (NIA) said that 2011 would be better than 2010.

According to him, structures had already been laid to ensure this.

“In 2011, all compulsory insurance products will be fully enforced while operators will be encouraged to take advantage of the Nigeria Content Development Act, either as individual companies or consortiums.

“In 2011, NIA will introduce Electronic Motor and Marine Insurance Policy and this is aimed at stamping out fake insurance in the country,” he said.

Also speaking, Mr Sunny Adeda, the president, Chartered Insurance Institute of Nigeria (CIIN), said that in 2011 being an election year, more money would be in the circulation.

According to him, this would translate to more people and organisations acquiring more assets and taking up insurance policies.

“There is the likelihood that in 2011, more money will be in circulation and people will buy more vehicles while the Independent National Electoral Commission (INEC) will acquire more Data Capture Machines.

“We hope that if these vehicles and Data Capture Machines are insured it will translate to increase premium for the industry in 2011,” Adeda said.

The CIIN president said that the operators were looking forward to improvement in the power sector while many more manufacturing firms would go into full production.

He added that the industry expected to reap also from the Federal Government’s $500 million (N7.5 billion) intervention funds for the small- and medium-scale enterprises ((SMEs), textile and movie industries.

“Naturally, we expect that the economy will grow in 2011,” he said.

In his comment, Dr. Ausbeth Ajagu, the managing director, Goldfish Insurance Ltd., said that insurance industry would receive a boom in 2011 if the compulsory insurance products were enforced.

There is a law encouraging insurance of all public buildings and insurance of workers and employers. If this is enforced and carried out religiously, it means a boom for insurance industry in 2011,” he said.

According to Ajagu, this expected boom in the insurance industry would depend largely on the conduct and outcome of the 2011 elections.

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Nigeria’s Revenue-To-GDP Ratio Lowest, Private Sector Choking – World Bank

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Nigeria’s revenue-to-Gross Domestic Product ratio, which fell to between five and six per cent last year, is the lowest in the world, the World Bank said on Monday.
The Country Director for Nigeria, World Bank, Dr Shubham Chaudhuri, said this during a panel session at a virtual public sector seminar with the theme ‘Nigeria in challenging times: imperatives for a cohesive national development agenda’ organised by the Lagos Business School.
Chaudhuri, who stressed the need for private investment for the country to realise its potential, said the private sector in the country ‘is struggling to breathe’.
“In Nigeria, I think the basic economic agenda is about diversification away from oil because oil has really been like resource curse for Nigeria on multiple dimensions,” he said.
He noted the aspiration of the President, Major General Muhammadu Buhari (retd.), to lift 100 million Nigerians out of poverty by the end of the decade.
He said, “Nigeria is a country with tremendous potential. If you look at the synopsis for this panel, it suggests that Nigeria is at a critical juncture – almost at the moment of crisis.
“Despite all of that, Nigeria is still the largest economy in Africa. So, just think about the potential that Nigeria has because of its natural resources, but more than that, because of its dynamism and all of its population. Nigerians are more entrepreneurial by nature.
“No country has become prosperous and realised its potential, eliminated poverty without doing two simple things: investing in its people, and unleashing the power of the private sector in creating jobs by investing and growing business. And then, of course, the basic function of the state is to provide security and law and order.”
According to Chaudhuri, to invest in people entails basic services, basic education, primary healthcare and nutrition, among others.
He said, “On this, Nigeria at the moment ranks sixth from the bottom in terms of the human capital index that we produce every year.
“So, obviously, there is a huge agenda in terms of investing in human capital. Nigeria spends more on PMS (premium motor spirit) subsidy than it does on primary healthcare in a year, and we know who the PMS subsidy is benefitting.”
He indicated that despite the country’s huge potential to attract private capital, the non-oil part of the economy ‘is not growing that robustly and certainly not generating revenues that the government needs’.
Chaudhuri said, “So, we see as priorities investments in human capital. But for that, one needs revenues. And there again, Nigeria unfortunately has the distinction of having about the lowest revenue-to-GDP ratio in the world.
 ”The standard rule of thumb is that for government to provide the basic services and law and order, it needs between 15 to 20 per cent of GDP as being revenue, and this will be both at the federal and state levels combined.
“In Nigeria, it was eight per cent in 2019. In 2020, in the middle of the Covid-19 crisis and with the fall in oil prices, that went down to about between five and six per cent.
“So, domestic revenue mobilisation is huge. And then the third is enabling the space for private investment. You have to fix the power problem. Power is like the oxygen of an economy. In Nigeria, the private sector is struggling to breathe.”

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CBN Stops Sale Of Forex To BDCs

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The Central Bank of Nigeria (CBN) as announced immediate discontinuation of sale of Foreign Exchange (forex) to Bureau de Change (BDC) operators in the country.
Mr Godwin Emefiele, the CBN Governor , made this announcement yesterday, while presenting a communique from the apex bank’s Monetary Policy Committee (MPC) meeting in Abuja.
Emefiele said that the decision was informed by the unwholesome business practices of the BDCs, which he said had continued to put enormous pressure on the Naira.
He  said ,  henceforth,  the apex bank would sell forex to deserving Nigerians through the commercial banks.
“ The BDCs were regulated to sell a maximum of 5000  dollars per day,  but CBN observed that they have since been flouting that regulation and selling millions of dollars per day.
“The CBN also observed that the BDCs aid illicit financial flows and other financial  crimes.  The bank has thus, decided to discontinue the sale of forex to the BDCs with immediate effect.
“We shall, henceforth,  channel all forex allocation through the commercial banks,” he said.
He urged the commercial banks to ensure that every deserving customer got their forex demand,  adding that any bank found circumventing  the new system would be sanctioned.
“Once a customer presents all required documentation to purchase forex, the commercial banks should ensure they get the forex.
“Any customer that is denied should contact the CBN on 0700385526 or through the email- cbd@cbn.gov.ng “ he said.
The Tide source reports that stakeholders have been calling on the CBN and its MPC to take urgent steps to halt unending depreciation of the Naira.
Recently,  a past President of the Chartered Institute of Bankers of Nigeria (CIBN),  Mr Okechukwu Unegbu,  urged the MPC to focus on policy decisions that would curb rising inflation and stabilise the Naira.

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RSG To Privatise Songhai, Fish Farms

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There are strong indications that the Rivers State Government has concluded plans to privatise the moribund Songhai Farm in Tai and Fish Farm in Buguma.
The State Chairman of the Peoples Democratic Party (PDP), Amb. Desmond Akawor, gave this indication while appearing in a phone-in radio programme organised by Silverbird Communications in Port Harcourt at the weekend.
He explained that the previous administration in the state failed to put in place a sustainability programme for these farms, hence they went moribund.
In order to reverse the situation, he said that the present administration was now contemplating a rehabilitation scheme to be driven by a privatisation policy to enable those investments come on stream.
He said the scheme had reached an advanced stage and is to executed by the State Ministry of Agriculture.
On the issue of job creation, Akawor said the administration of Chief Nyesom Wike was using the various construction projects around the state to empower the youths.
He explained that the government had floated a special scholarship scheme in Law and Medical Sciences to create opportunities for young people in various professions.
He called on the opposition to desist from de-marketing the state through propaganda as it’s capable of scaring investors away from the state.
Akawor insisted that the Wike led administration has provided an enabling environment for businesses to thrive through infrastructure and improved security.

By: Kevin Nengia

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