Business
Naira Depreciation: Local Insurance Coys Transfer More Businesses Offshore
As the naira value continue to depreciate, insurance companies are now transferring more of their oil and gas businesses abroad through offshore reinsurance policies.
The local insurance firms are believed to be hedging against losses or depreciation of their premium income.
Experts in the industry have said the foreign exchange (forex) crisis is also eroding the capital base of local insurers while aiding huge capital flight.
Analysis of activities in the insurance sector has revealed that premium income ceded offshore in the first quarter of 2024 (Q1’24) skyrocketed by 94.5 per cent year-on-year (YoY) to N95.11 billion from N48.9 billion recorded in Q1’23.
This is even as the local content law stipulates that 70 percent of all insurance risks associated with oil and gas businesses must be insured in Nigeria with registered Nigerian insurance companies.
Further breakdown of the figures show that oil and gas premium income stood at N132.01 billion in Q1’24.
However, insurers ceded N95.11 billion offshore while only N36.9 billion was retained, indicating only 28.1% retention.
The oil and gas businesses include prospecting, exploration, drilling, constructions, shipping, distribution, marketing, and transportation.
However, experts have expressed the opinion that the negative trend where insurers cede more businesses offshore is likely to continue as long as the foreign exchange (forex) crisis persists.
Further breakdown of the industry data show that in the full year ended 2023, oil and gas insurance premium was N167.8 billion while N113.1 billion was ceded offshore with only N54.7 billion was retained, indicating 25.2 retention.
In 2022, oil and gas premium income was N125.7 billion while N80.6 billion was ceded with only N45.1 billion retained, indicating 35.9 per cent retention.
According to the National Insurance Commission (NAICOM) the oil and gas portfolio, lamentably, remained a challenging angle in the market owing to its nature of enormous capital and professional requirements.
Speaking on the situation, Managing Director of Universal Insurance Plc, Mr. Ben Ujoatuonu, said the exchange rate crisis has reduced insurers’ capital when valued in dollars and most insurance companies are like post office transferring capital to reinsurers.
He said, “The exchange rate has created a whole lot of issues in the oil and gas business and all dollar denominated businesses. First, it has reduced our capital because when you take N3 billion and do the conversion to dollars at about N1500, you will see the level of capital that is left.
“Underwriters are required to retain risk based on five per cent of shareholders funds denominated in naira. Let’s assume that shareholders funds is N10 billion, five per cent of N10 billion is N500 million as your deductible retention, when you take N500 million and convert it to dollars, it’s next to nothing.
“What it means is that you will now be ceding out more of the businesses to reinsurers than what you will retain. So, insurers have turned almost to post office, and companies also don’t have the required capital because the capital has been eroded in terms of retaining the business.
“So, the exchange rate has really affected the development and growth in the oil and gas business in Nigeria because if the reverse is the case, what will happen is that Nigerian insurers will retain more and less of the premium will go out.
“But with what we have now, what the entire market will retain will be less than even what one insurance company can keep because of the challenge of exchange rate. And we don’t see the situation abating anytime soon”.
Also speaking on the impact of the forex crises on the insurance industry, Chief Client Officer of Axa Mansard Insurance, Mrs. Rashidat Adebisi, said due to the foreign exchange crisis, the cost of repairs have gone up.
According to her, “The harsh economy is affecting every industry in the country with the insurance sector not left out. With the fluctuations in the foreign exchange, the repair cost of vehicles and other things have gone up”.
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Nigeria’s Oil and Gas industry leaders have defended the Nigerian local content policy, rejecting claims that it inflates business costs in the oil and gas sector.
The leaders, who made the defence during the recent Nigerian Oil and Gas (NOG) Energy week held in Abuja, the nation’s capital, cautioned that such criticisms jeopardizes the nation’s industrial progress.
They lauded the Nigerian Content Development and Monitoring Board (NCDMB), for what they described as its pivotal role in building indigenous capacity and fostering innovation.
In a panel session titled “Technology as a Business Strategy”, panellists championed NCDMB’s contributions, emphasizing its success in driving local expertise and technological advancement.
In his remarks, Group Chief Executive Officer of Pana Holdings, Dr. Daere Akobo, dismissed critics of local content, arguing that its benefits to Nigeria’s economy far outweighs any perceived cost increases.
“Claims that local content drives up costs are misguided. How can you prioritize cost over GDP growth? Where will our youth find jobs? Undermining local content for short-term gains is a mistake. Nigeria must stay the course”, he said.
He highlighted his company’s work on Africa’s first digital refinery, a pioneering project showcasing the synergy between technology and local content, and also identified fragmented data in Nigeria’s oil and gas sector as a key barrier to cost efficiency.
Akono said, “Technology drives accountability and curbs cost inflation. But our data remains siloed. Consolidation is critical for industry efficiency.”
Also speaking, Managing-Director of Coleman Cables and Wires, Mr. George Onafowokan, praised NCDMB’s data-driven approach, crediting it for significant strides in local content development.
“Data is the backbone of growth. Effective data collection and accessibility are vital. Thanks to NCDMB, we’ve achieved 52% local content—a remarkable milestone”, he said.
The panellists unanimously agreed that integrating technology, consolidating data, and strengthening institutions like NCDMB are critical to building a resilient and competitive oil and gas sector.
He urged policymakers, operators, and international stakeholders to reject narratives blaming local content for rising costs and rather advocate for robust frameworks and investments to drive inclusive growth and long-term industry stability.
Similarly, speaking at the NOG week, representatives from Ghana, and other African nations have underscored the growing influence of Nigeria’s local content framework and urged stronger cross-border policy alignment.
In his remark, NCDMB’S pioneer Executive Secretary, Ernest Nwapa, highlighted the Nigerian oil and gas sector’s resurgence, saying it is driven by increased production, deregulation, and improved governance, while also emphasizing the need for long-term sustainability to sustain the momentum.
“Africa is a cornerstone of Nigeria’s foreign policy. Initiatives like the West African and African Gas Pipelines, the African Continental Free Trade Area (AfCFTA), and President Bola Ahmed Tinubu’s ‘Nigeria First, Africa Next’ strategy are evidences of Nigeria’s continental commitment.
“When Nigeria enacted its local content law, it faced Western criticism from bodies like the WTO and EU, who labelled it anti-trade. Today, over 16 African nations and even the United States have adopted similar laws. Nigeria must lead again, driving investments that benefit the entire continent”, he said.
In similar vein, Deputy Chief Executive of the Petroleum Commission of Ghana, Nasir Alfa Mohamed, noted that African nations have long looked to Nigeria for energy sector leadership, calling for the dismantling of barriers to regional integration and advocated for standardized regulations.
“A Ghanaian company should be able to compete for contracts in Nigeria based solely on merit. We need joint regulatory bodies, mutual recognition of standards, and robust support for platforms like the African Oil Forum”, he noted.
Mohamed also highlighted Ghana’s growing partnerships with Nigeria and others, including a memorandum of understanding with Uganda, noting that Ghana is currently the only African nation participating in the International Upstream Forum.
In his speech, Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Engr. Farouk Ahmed, represented by Prof. Zainab Gobir, stressed the importance of joint infrastructure, uniform tariffs, and coordinated regulations for true economic integration.
“We must uphold our sustainability commitments and support each other in meeting them.
“The Petroleum Industry Act (PIA) is a model, particularly its Midstream and Downstream Gas Infrastructure Fund, designed to de-risk investments in gas and infrastructure projects. We collaborate closely with NCDMB to strengthen local content, ensuring regulations support fair participation”, he said.
Meanwhile, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, has reaffirmed the nation’s strategic role in regional energy cooperation, noting that the country accounts for nearly 30% of Africa’s oil reserves and 33% of its gas.
“Our host community development model is a success, fostering stability in oil-producing regions and serving as a blueprint for others”, Komolafe said.
He highlighted the NUPRC’s 17 forward-looking regulations and new frameworks for deepwater development, alongside a production optimization programme built on inter-agency and operator collaboration.
The NUPRC boss also praised President Tinubu’s recent Executive Order, which he said enhances local content laws by prioritizing human capacity development and boosting investor confidence.
“International oil companies now recognize Nigeria’s robust local expertise, making it a key investment draw. We’re exporting our local content model to other African nations”, he said.
Ariwera Ibibo-Howells, Yenagoa
A concerned group of stakeholders under the auspices of Khana Coastal Communities has made a passionate appeal to the Federal Ministry of Environment and the Hydrocarbon Remediation Restoration Project (HYPREP) to include the removal of Nipa palms which has taken over the positions of mangroves in the area as part of the ongoing Ogoni Clean Up Exercise.
The group, which decried the invasive and destructive effects of Nypa fructicans, commonly known as Nipa palms, on the ecosystem of the affected communities, made their appeal in a Press Statement issued shortly after the inspection and survey of the creeks and coastlines of affected communities.
The communities are Kwiri, Kereken, Kaa, Gwara, Sii, Kpean, Tehnnama, Bane, Kalaoku, and Opuoku, all in Khana Local Government Area of Ogoni, Rivers State.
Signed on behalf of the affected communities by comrades Emmanuel Goteh Bie, Raymond Nwibani, and Chief Barineka Tonwe, the statement emphasized the need for urgent intervention to clear the Nypa fructicans and replace them with mangroves which provided sustainable habitat for aquatic species in the affected communities.
The group commended the Federal Ministry of Environment and HYPREP for their commitment to the Ogoni cleanup process and urged all stakeholders involved in the process not to renege on their complementary roles.
The statement read in part: “As you have seen, the Nypa fructicans has taken over our creeks, displacing native mangroves and aquatic life. The impact on our communities has been severe, with many of our people struggling to make a living due to the depletion of fish and other aquatic resources.
“We commend the Hydrocarbon Pollution Remediation Project (HYPREP) for its efforts in restoring native mangroves in Ogoni, particularly in the Bomu Community. However, we are alarmed by the unintended consequences of removing invasive Nypa fructicans, which has led to the disappearance of fish and aquatic life, threatening the livelihoods of our coastal communities.
“We believe that the removal of Nypa fructicans and replanting of native mangroves will help revive our aquatic life and sustain the livelihoods of our people.”
The group passed a vote of confidence on the Minister of Environment, Balarabe Abbas, and HYPREP Coordinator, Prof. Nenibarini Zabbey, for what it described as their unwavering efforts in ensuring the success of the Ogoni cleanup exercise.
They called on the Federal Government to release their counterpart funding to HYPREP without delay to sustain the pace of progress recorded in the clean up process.
“The cleanup exercise is commendable, and any delay in funding could stall the progress and undermine the efforts of all stakeholders. We urge the government to prioritize the Ogoni cleanup exercise and provide the necessary support to ensure its success”, they stated.
They also used the opportunity to caution against the antics of self-inflicted activists or bodies that might attempt to hijack the cleanup agenda and create unnecessary agitation, and assured the total support of the affected communities to HYPREP’s activities to enhance the holistic success of the Ogoni clean up exercise.
Bemene Taneh
The Nigerian Content Development and Monitoring Board (NCDMB) has promised full support to ensuring that ‘world-class’ safety boots manufactured by a firm, Yikodeen Company Limited, were utilised in-country.
The Tide learnt that the firm recently inaugurated its expanded safety footwear manufacturing plant in the Ejigbo area of Lagos State, a 120,000-square-foot state-of-the-art facility capable of producing 5,000 pairs of safety boots per day.
In his remarks, Executive Secretary of NCDMB, Engr. Felix Omatsola Ogbe, represented by the Director of Capacity Building, Engr. Abayomi Bamidele, described the inauguration as a landmark event that aligned with the Board’s core mandate to promote local content across Nigeria’s oil and gas value chain and beyond.
“Enterprises like Yikodeen are at the heart of what we stand for at the NCDMB. The ‘D’ in our name stands for Development, and the ‘M’ means Monitoring, which describes our dedicated effort to ensure Nigerian-made products are not just produced, but utilised”, he said.
Ogbe said the NCDMB will continue to support the company, especially as its products meet global standards, and are already being adopted in the oil and gas industry.
“I’ve the mandate to inform you of our full support to ensure that these world-class safety boots are utilised in-country”, he said.
The Board’s Chief Scribe cited the Federal Government’s ‘Nigeria First’ policy, stressing its implications across all sectors.
“The President, through the Bureau of Public Procurement, has directed that all safety footwear procured with public funds must be made in Nigeria. Yikodeen stands to benefit immensely from this directive if strategically positioned”, Ogbe noted.
He commended the founder’s determination, saying from all indications the firm’s boss started from a relatively young age.
“A shoemaker is now a billionaire shoemaker. I urge Nigerian youths to channel their energy into entrepreneurship. The Yikodeen journey is one that inspires national pride”, the NCDMB’S helmsman added.
In his remarks, the Lagos State Governor, Babajide Sanwo-Olu represented by the Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs. Folashade Ambrose-Medebem, lauded the company’s achievement, describing it as symbolic of Lagos’ industrial vision.
“From a modest workshop in 2016, Yikodeen has emerged as the largest footwear manufacturing company in West Africa. This is not just a factory, it is a movement, a demonstration that Lagos can produce, compete, and export globally”, he said.
Sanwo-Olu affirmed that the factory directly aligned with the State’s industrial policy (2025–2030), which seeks to double the manufacturing sector contribution to the state’s Gross Domestic Product from 7.5 per cent to at least 15 per cent by 2030, reduce dependence on imports for basic consumer goods, and foster an ecosystem where local industries can thrive through forward and backward value chain integration.
“Yikodeen is not only producing shoes, it is producing livelihoods, opportunities, and dignity”, the Lagos Governor added.
Recounting his entrepreneurial journey, founder and CEO of Yikodeen, Mr. Atunde Shamsideen, described the venture as a stubborn dream born in 2015.
“This vision started in a room, with just 20 pairs of shoes. Today, we produce over 2,000 pairs daily to ISO, ASTM, and Nigerian industrial standards”, he said.
He commended the NCDMB for its pivotal role in his company’s growth, noting how the Board helped facilitate years of product testing and eventual adoption by oil and gas companies like Saipem and Daewoo.
“Their enforcement ensured our products got through. Today, those same companies are our biggest customers”, the firm’s CEO added.
He stressed on the potential for job creation if local procurement policies were enforced, claiming that only about two percent of safety boots used in Nigeria were locally manufactured.
“If we enforce local purchase in the oil and gas and public sectors, we can create over 35,000 jobs.Yikodeen’s production ecosystem already engages women in raw material recycling and trains over 1,000 people yearly.
“Buying Made-in-Nigeria goes far beyond commerce. it is about creating value chains, livelihoods, and national dignity”, Shamsideen noted.
Also speaking, Director-General of the Standards Organizationnof Nigeria (SON), Dr. Ifeanyi Okeke, represented by the Director for Lagos Operations, Mrs. Teresa Ojomo, praised Yikodeen’s adherence to national and international safety standards.
“This is not just a facility, it’s a declaration that Nigerian manufacturing can lead globally. The Standards Organization of Nigeria will continue to support companies like Yikodeen who take quality seriously”, he said.
Okeke underscored SON’s partnership with the firm since 2006, culminating in the Mandatory Conformity Assessment Programme certification, which assures consumers of quality and safety, citing the company’s certification under critical standards such as NIS ISO 20346:2004 and ISO 20345:2022.
“Standards are not obstacles, they are enablers. They are the bridge between ambition and market access”, he added.
In his remarks, the Olu of Warri, HRM Ogiame Atuwatse(111), represented by the Ogwa-Olusan, Chief Brown Mene, described Yikodeen as a beacon of hope for Nigeria.
The monarch likened the company to a stubborn vision that refused to be beaten by headwinds, proving that Nigeria was on an upward trend, urging the team to remain visionary and expand globally, while also assuring that the name of Yikodeen will blaze bright and proud.
Ariwera Ibibo-Howells, Yenagoa
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