The Nation Newspaper

Tag: growth

  • ‘Nigeria’s high GDP growth rate sustainable’

    ‘Nigeria’s high GDP growth rate sustainable’

    Despite the prevailing insecurity, Nigeria’s high economic growth will be sustained between two and three years, an economist has said.

    Head of Research at Standard Chartered Bank, Razia Khan, said despite the rebasing of the Gross Domestic Product (GDP) growth does not appear to have slowed significantly.

    The Nigerian Bureau of Statistics data suggests that the economy grew by 5.09 per cent, 6.66 per cent and 7.41 per cent in 2011, 2012 and 2013, respectively, on a rebased basis.

    Khan said the authorities expect 6.75 per cent real GDP growth in 2014, and there is a chance that growth will be even stronger than this. “Agriculture is expected to contribute 22 per cent growth to the GDP in 2013; improved power supply should boost manufacturing to seven per cent of GDP), and activity in the trade sector should remain robust. Construction will remain strong, while the share of oil refining in GDP is set to grow,” she said.

    Khan said Nigeria has passed a conservative budget for 2014, but anticipated off-budget spending ahead of the election should help to lift consumption.

    “Longer-term, with a larger GDP base, Nigeria’s GDP growth rate may slow. Initially, however, we expect that the exercise of capturing a wider range of activities in different sectors will offset any large base effects. Sample frames are still being extended ahead of a 2016 rebasing, and will be enhanced by new census data and a new ‘Harmonised Nigeria Living Standards Survey’,” she said.

    Khan however said more meaningful structural reform will be needed to sustain healthy growth rates. “The question for Nigeria post-rebasing is not so much whether it will still have high growth rates as demographics will determine this to some extent; but whether it can truly move beyond being an ‘allocation’ – or rentier – economy, to becoming more of a ‘production’ economy,” she hinted.

    She explained that while the foreign exchange rate has been relatively stable to date, helped by the early June reweighting of the Morgan Stanley Capital International (MSCI) frontier equities index (which increased Nigeria’s weight to 19 per cent), achieving continued forex stability amid easier liquidity and falling foreign exchange reserves will be a challenge.

    “We forecast inflation back in double digits by year-end, suggesting that further policy tightening may be needed,” she said.

    Khan said prior to GDP rebasing, Nigeria had weak revenue mobilisation ratios. Post-rebasing, they are weaker still, with federation oil revenue accounting for nine per cent of GDP, and non-oil revenue for four per cent of GDP, according to our calculations. This, she said, leaves Nigeria with among the weakest revenue mobilisation ratios of Sub-Saharan Africa peers.

    Having identified new economic activity, the authorities are likely to intensify efforts to raise tax revenue from these sectors. Post-rebasing, Nigeria’s debt-to-GDP falls to only 11 per cent, from an already low 19 per cent. “While some commentators have suggested that Nigeria may be able to increase its borrowing as a consequence, we think that debt service capacity will drive any new borrowing decisions. A continued effort towards boosting transparency is important for Nigeria to maintain investor confidence,” she said.

  • Our new growth plan will bring better returns, says Learn Africa

    Learn Africa Plc has devised an aggressive sales and marketing plan that would increase the acceptability of the company’s books across the country and ensure that increased sales trickle down into better returns to shareholders.

    At the annual general meeting of the company in Abeokuta, chairman, Learn Africa Plc, Mr. Emeke Iwerebon, assured shareholders that ongoing initiatives would lead to increased sales and better returns to shareholders.

    According to him, the acceptance of the company’s products by Federal and State governments and other relevant agencies as well as its performance in the open market sales are all adding up to enhance a bright future for the company.

    “The future of Learn Africa is great. We know how central and important customers are to us and to our business. We are developing new ways of managing our relationships with our customers, and ultimately, meeting their peculiar needs. This way, our products will readily sell and bring good returns to our dedicated shareholders,” Iwerebon said.

    He outlined that the company had earlier undertaken critical appraisal of its products and growth and evolved strategies which will ensure that it sells its books on cash and carry basis, in spite of the competition in the publishing industry.

    He however lamented the adverse effect of piracy on the printing and publishing industry noting that piracy has taken international dimension as pirated copies are now being printed abroad.

    “The pirated books are often difficult to distinguish from the legitimate ones; particularly as such pirated books are now printed overseas. This is why we are determined to further work closely with all agencies saddled with anti-piracy operations, as we are determined to seek every means possible to defend our intellectual property rights, and those of our authors,” Iwerebon said.

    He reiterated the commitment to promotion of excellence and mental competitiveness in Nigerian schools pointing out that the company, under its Learn Africa Education Development Foundation, has instituted awards for students and teachers.

    Audited report and accounts of the company for the year ended December 31, 2013 showed that turnover stood at N2.28 billion while pre and post tax profits stood at N125.7 million and N100.13 million.

    The shareholders approved distribution of N92.57 million as dividends for the year, representing a dividend per share of 12 kobo. Total assets rose from N4.61 billion to N4.63 billion.

  • N25b bond necessary for growth, says Fayemi

    The Ekiti State government has described the N25 billion bond it obtained from the capital market in 2012 to fund some capital projects as the best option in view of the economic realities.

    Commissioner for Finance and Economic Development Dapo Kolawole said the government settled for the bond after considering its options, including embarking on an aggressive tax drive to improve its revenue base.

    He said Governor Kayode Fayemi insisted on seeking other ways, “rather than imposing extra-burden” on the people.

    Kolawole said the government settled for the bond because it was the most transparent option.

    He said it had a 14.5 per cent interest rate as against the normal bank lending rate of between 20 and 22 per cent and a longer repayment time of seven years.

    Kolawole said less than two years after taking the bond, the Fayemi administration had judiciously used it to provide world-class infrastructure” and repaid over N11 billion.

    He said the state was virtually comatose before the advent of the Fayemi administration, adding that the agricultural sector had become almost non-existent and the education sector was in a shambles.

    The commissioner said roads were barely passable and civil servants, owing to low morale, were inefficient.

    He said the bond was taken to stimulate the economy and rapidly develop the state.

    Kolawole listed projects executed with the bond to include 11 intra and inter township roads of over 170 kilometers, nine of which have been completed; a 10,000-seater pavilion in Ado-Ekiti, which is nearing completion; a four-storey Liaison Office complex in Ikeja, Lagos State, which is nearing completion; and a Civic Centre, which has a 1500-seater amphitheater, three 150-seater cinema halls, three elevators, a museum and four floors of offices.

    Others are the re-development of the Ikogosi Warm Spring into a tourist destination; resuscitation of the Ire Burnt Bricks factory; construction of a Government House complex; construction of lecture rooms, a multipurpose hall and hostel at the newly approved College of Technical and Commercial Agriculture and the completion of the Oba Adejugbe Hospital in Ado-Ekiti.

  • Infrastructure: A panacea for sustainable growth

    Infrastructure: A panacea for sustainable growth

    Experts at a workshop organised by the Nigerian Institute of Quantity Surveyors (NIQS) identified the role of infrastructure in emerging economies of Africa as the fulcrum for national development and sustainable growth. Assistant Editor MUYIWA LUCAS takes a look at the outcome.

    Infrastructural develo-pment in any country is the fulcrum for its economic advancement.

    So, when the Nigerian Institute of Quantity Surveyors (NIQS) chose to deliberate on the theme: Towards sustained growth of emerging economies in Africa – The Infrastructural imperatives at its workshop in Osogbo, Osun State capital, many agreed that it was apt.

    With sub-themes, such as “Efficient project management of infrastructure in emerging economies of Africa;” “Effective cost management of infrastructure development as a sine-qua-non for growth in emerging economies,” and the “Sources and alternatives of Financing Infrastructure in emerging economies,” the tone was set for the deliberations that have charted a new course, not only for practitioners, but for the country in view of its quest to be among the 20 leading economies in the world soon.

    Principal Partner, Cost Concepts Management & Associates, Tunde Adesiyan, in his paper on “Efficient project management of infrastructure in emerging economies,” stressed the need for efficient project management of infrastructure which he said had become imperative given its importance of physical development and economic growth of a nation.

    “The amount of financial and human resources committed to these projects have made them important for consideration of economies of scale to determine where and when to embark on these projects,” Adesiyan said.

    For him, apart from the basic principles of project management, which revolve around initiating, planning, implementing, controlling and closing, there is the need to further understand the culture of the people to wards the success of project management of infrastructure. He said project management of infrastructure should continue three to five years into the life of the infrastructure before other levels of management take over.

    Vice President (West), African Association of Quantity Surveyors (AAQS) and Managing Partner, CONSOL Associates, a firm of International Construction & Development Consultants, Obafemi Onashile, charged quantity surveyors to devise strategies to continually position themselves for maximum efficiency in infrastructural development and economic growth. This, he believes, will enable professionals to maximise their fortunes.

    From the various presentations, it was clear that economic growth in emerging economies of Africa, including Nigeria, is being hampered by poor infrastructure, such as lack of adequate power supply, inadequate and poor state of transport networks, telecommunication deficits, inadequate water supply and waste disposal problems, short-fall in health and education facilities.

    Besides, the speakers were emphatic that for any African nation striving to belong to the top 20 nations by 2020, efficient cost management culture must be imbibed as a national policy, while effective and efficient management of infrastructural projects should be given prominence and high priority by governments, organisations and individuals.

    They further admonished that there should be massive investment to address the challenges and short-falls, noting that because cost is essential, the services of quantity surveyors have become inevitable and imperative in all aspects of infrastructure projects, including budgeting, financing and management in order to get value for money invested.

    The workshop also noted that governments alone cannot bear the financial burden of providing adequate infrastructure considering the huge capital out-lay required. Consequently, integration of private sector investors into the conception, planning, design, construction and maintenance of infrastructure is imperative in Africa to accelerate infrastructure provision to the citizenry, meaning that the Public-Private Partnership (PPP) procurement models must be encouraged and sustained.

    It was also canvassed that there should be an establishment of African Infrastructure Development Bank (AIDB) or African Construction Development Bank (ACDB) as a new infrastructure funding framework similar to existing models in China, India and Malaysia. This, it is believed, will provide the much-needed long-term finance at low interest rate to contractors, subcontractors and suppliers. The bank is expected to be private-sector driven to minimise bureaucracy while government provides “seed money”.

    To serve as motivation for practitioners, especially quantity surveyors, a systematic review of professional fees charged by these group was also recommended, in the hope that such gesture would galvanise them to play the much-desired roles in efficient and effective delivery of infrastructure projects. Importantly, the forum canvassed for a collaboration among professional bodies, the professionals and even client organisations involved in infrastructure development to enable them eradicate fraudulent practices and eliminating areas of disagreement in the documentation and cost management of infrastructural projects.

    The appointment of quantity surveyors in the departments of finance, budget and or planning of ministries was recommended to ensure probity and accountability of public funds invested in infrastructure as such surveyors would help to carry out the audit of projects. To ensure timely payment to contractors necessary to prevent abandonment of infrastructural projects, enactment of a law to institutionalise Payment Bond was also canvassed.

    For surveyors to play their role, they have been charged to acquire and exercise competency of cost control and exhibit due diligence in the cost management of the nation’s vast infrastructure. This is taking the centre stage of infrastructure development and to take advantage of the emerging opportunities. Besides, surveyors, it was submitted, should be willing to break the jinx of conservatism and embrace the fluidity of best practice and innovation, while the NIQS should also tap into the gains of international best practices as done by the Royal Institution of Chartered Surveyors.

    There should also be a collaboration between quantity surveyors in the Diaspora and the NIQS to tap into the advantage of working across cultures to build local competences.

    That is not all, a quantity surveyors academy was also recommended.

  • Banking growth may hit $168b, says KPMG

    Nigeria’s banking sector is expected to grow to over $168 billion by 2015, a KPMG report on the subsector has said.

    The sector was worth $117 billion as at 2011.

    The international auditing firm said in its Customer Service Survey for 2013, that while Nigeria may be Africa’s most populous country, only about 20 per cent of the population is banked and two-thirds have never banked at all before. It said the banking industry is made up of 20 banks with nearly 6,000 branches, most of which are concentrated in the urban areas.

    It said the sector has recently experienced a number of regulatory changes including a repeal of universal banking licences and the promulgation of more stringent regulations by the Central Bank of Nigeria (CBN) which is aiming to reduce soaring books of non-performing loans and stamp out severe breaches of corporate governance.

    “However, with the establishment of the Asset Management Company of Nigeria (AMCON) to purchase toxic assets of banks and recapitalise troubled banks, some stability has returned to the sector.

    This development made the leading rating agency Standard & Poor’s (S&P), to upgrade the sector in 2012 to a positive outlook due to the country’s improved asset quality, capitalization and corporate governance,” it said.

    The report posted on the firm’s website said with Automated Teller Machines (ATMs) becoming almost ubiquitous in the cities, it is not surprising that it has been the fastest growing channel in recent years. “Almost eight in 10 customers surveyed use the ATM and nearly two thirds of these people visit an ATM on a weekly basis with cash withdrawal and balance enquiry amongst the most common transactions customers perform via the ATM,” it said.

    However, despite the proliferation of new channels in recent years, findings showed that adoption of other alternate channels is still comparatively low with very few respondents saying they use internet banking (seven per cent), Point of Sale (six per cent), telephone banking (five per cent) and mobile payments (two per cent). Of the respondents that had used internet banking, a third were private sector employees and 15 per cent were students.

    However, while customers said they would like to use some of these alternate channels for transactions such as bill payments and getting financial advice, uptake is still low with many consumers oblivious to the value proposition that these channels provide.

    “That being said, the significant and rapid adoption of the ATM suggests that – once internet banking and mobile payments take root – great potential could be realised,” it said.

    According to the firm, Nigeria’s banking industry has experienced an extensive and ongoing shift in confidence which, in turn, has impacted loyalty. “Customer awareness has increased, leading customers to demand higher levels of personalized services. Interestingly, while most customers expressed a willingness to continue with their bank, about half of those who would like to change their bank said they were remaining primarily because of their perception of the bank’s stability.

    This means that, as customer confidence in the banking industry begins to rise, there is likely to be an increase in customer switching rates and the associated costs of acquiring and retaining customers,” it said.

  • How CBN supports SME growth

    How CBN supports SME growth

    In the face of the recent launch of the massive N220 billion empowerment fund for Micro, Small and Medium Scale Enterprises (MSMEs) by the CBN Governor, Bukola Afolabi explores the prospects for a hitherto disadvantaged sector.

    One of the greatest obstacles Micro, Small and Medium Enterprises (MSMEs) have had to grapple with in Nigeria is access to funds. This is further compounded by the fact that even where credit facilities are available, they may not be able to muster the required collateral to access them. This has invariably led to many of them closing shop, resulting in the loss of thousands of unskilled, semi and skilled jobs across the country; a situation that led to the launching of the National Micro-finance Policy by the President Obasanjo government in 2005/2006.

    That policy, to be supervised and implemented by the Central Bank of Nigeria also marked the beginning of the guidelines for setting up and regulating Micro-finance banks. Part of the components of that policy was also the establishment a fund to strengthen the link between entrepreneurship and access to financial services for MSMEs in the country.

    This came to fruition in Abuja, when a N220 billion fund was formally launched at the seventh annual MSMEs Finance Conference and D-8 Workshop on Micro-finance for SMEs by Governor of the Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi. The objectives of the new fund, Sanusi revealed is to enhance the ability of the microfinance institutions to shape themselves into low interest, long-term funding organisations that would provide financing windows to improve the capacity of the PFI to meet the credit needs of the micro, small and medium enterprises. The ultimate goal, according to the CBN governor, is for the financial market to integrate the micro-entrepreneurs, alongside low income earners, farmers and artisans into the financial system to improve the effectiveness of the polity.

    Sanusi also noted the MSMEs Finance Conference is focused on financing SMEs since they are generally acknowledged to contribute meaningfully to the growth, income and employment generation and innovation.

    In line with its plan to boost businesses owned and managed by women, the Central Bank of Nigeria (CBN) has also set aside N100 million intervention fund for women enterprises. The Director General of Nigeria Employers Consultative Association (NECA), Mr. Olusegun Oshinowo, who disclosed this in Lagos last week, said the funds would go a long way in complementing government’s economic transformation agenda. Oshinowo, who spoke at NECA’s Network of Entrepreneurial Women (NNEW) meeting, noted that the fund would assist women entrepreneurs grow their business and create more job opportunities for the youths.

    The NECA boss also stated that the CBN has already set-up a committee to work out modalities of disbursing the fund to beneficiaries.

    He observed that if properly disbursed and utilised, it would create more jobs for the youths and women.

    This was corroborated by Ms. Regina Amadi, Chief Executive Officer of Gracefields Multi-Options Limited, who noted that accessing funds from banks has always being an uphill task.

    Need to enhance a vital sector

    While underscoring the importance of the MSMEs to national economy and growth, Sanusi disclosed that the sector as at 2012 had 8 million businesses, employing 42.4million people and contributing about 46.5 per cent of nominal GDP. He also disclosed that 80 per cent of these MSMEs are excluded from the financial market, a situation that hampers their condition and contribution to the economy, and therefore underscores the importance of the conference.

    Sanusi also lamented that “commercial bank loans to SMEs dropped at an exponential rate” in 2012. He revealed a decline of about 7.5 per cent in the share of commercial bank credit to small scale industries in 2003, which further plummeted to 1 per cent in 2006 and 0.14 per cent in 2012. The reasons identified for this trend, the CBN governor revealed, include lack of managerial capacity, inadequate collateral and poor record keeping among others. He added that other reasons such as high transaction costs and lack of understanding by the banks of the nature and operation of MSMEs as well as other constraints have put the MSMEs at a disadvantage and left them vulnerable.

    He thus called on policy makers in all tiers of government to formulate and implement policies “to strengthen the MSME sub-sector.” He disclosed that the CBN has been working towards improved access to finance for the sub-sector vis-a-vis micro-finance policies, regulatory and supervisory framework, the fortification programme of micro finance banks, designated financial businesses and professionals, consistent framework.

    Other efforts being put in place include the payment system transformation, development of unmovable collateral registry, the financial ombudsman board currently with the National Assembly and the encouragement of lending.

    Sanusi also announced an interest rebate component for women in the fund, so that women entreprenuers who borrow from MFBs can access the funds at a subsidised interest rate of not more than nine per cent.

    In the words of Ms. Regina Amadi, “approaching banks and getting good response from them has been so difficult, but with this fund that would be made available to the women, access to fund by women will be easier.” She added that statistics have shown that women are better at paying back loans than their male counterpart.

    Also speaking at the event, the President of NECA’s Network of Entrepreneurial Women (NNEW), Mrs. Lola Okanlawon, said that the greatest challenges facing many women entrepreneurs are in the areas of financing their businesses. This, she says is because they are either faced with daunting repayment conditions from financial institutions or are unaware of SME friendly schemes that have been put in place to assist them. She therefore demanded an end to the politics played with women entrepreneurs in the country, while stating that employment generation ability of entrepreneurs would be enhanced if the intervention was fully implemented.

     

    Wholesale funds

    The CBN, according to Sanusi Lamido Sanusi will not be lending directly to farmers or businesses. The N220 billion fund is therefore a wholesale funding to the participating financial institutions. “If you are a Micro Finance Bank in Benin (City), you can come to this fund. We assess you, we give you the money at low rate of interest long-term, and then you undertake that you will (equally) lend at low rate of interest. Today commercial banks charge 21 per cent and MFBs charge 30 to 40 per cent interest rate. We are not going to get anywhere near there.”

    He stated that it is a merit-based incentive system where the Micro Finance Bank will earn the right by performing, to get even better credit terms from the fund. “We will start with smaller amounts, and as they lend to their customers and repay and build a track record of performance, they can then access a larger at amount at lower rates of interest and at longer terms.” He concluded.

    In his remarks, President of the Association of Micro Finance Banks of Nigeria, Jethro Akun, said the fund is aimed at transforming the lives of the rural people financially, even as it marks the beginning of unlocking the untapped potentials and opportunities that govern the operations of key players in the micro finance industry.

    Speaking on behalf of the state governors, Ekiti State Governor, Dr. Kayode Fayemi expressed happiness that the conference is focusing on the “rural poor.” He revealed that “the population of the unbanked in our country is wobbling around 70 per cent of our entire population, which is pretty much all of us apart from some of us who are in the urban areas.”

    He also expressed delight that the CBN has initiated the quick release of the N220 billion into the sector, adding that “What is most commendable about this current initiative is the focus on women.”

     

    Women’s enviable track record

    Governor Fayemi noted that women have a track record of micro credit initiative of 100 per cent pay back, adding that this justifies the focus that the central bank has put on them. He concluded that for Nigeria to talk of poverty eradication in the fundamental and not in the corporative sense, “believes focus must be on women, because women are our greatest guarantee in rebuilding our society and eradicating poverty in our various communities.”

    Strict monitoring

    The CBN deputy governor, Economic Policy, Dr. Sarah Alade, admitted that the CBN needs to collaborate with other stakeholders to leverage on what the law permits in terms of regulation, while affirming that it would do whatever is within the bank’s purview to ensure better and tighter regulation.

    On ensuring that the fund gets to intended beneficiaries, she said, “We have done a lot of guidelines and there is a guideline that surrounds that N220 billion. I can assure you that we are going to monitor it. We have done interventions in the past in agriculture that domestic money banks are doing and we are on top of the issues. Once these things starts being disbursed, we will monitor them seriously to make sure that they’re given to the right people and that the money also comes back”.

    Funds guideline

    The fund will be managed by a Special Purpose Vehicle (SPV) or managing agent to be constituted. But before this takes off, the CBN will manage the fund.

     

  • ‘Nigeria’s economic growth is not real’

    ‘Nigeria’s economic growth is not real’

    With the price of oil going down, the times are indeed “tough”, as observed by Mr Valentine Ojumah, Managing Director, FBN Life Assurance Ltd. In this interview with OMOBOLA TOLU-KUSIMO, he dissects the economy, saying: “the bottomline is things are tight”.

    Many insurers have not submitted or got approval for their 2012 International Financial Reporting Standards (IFRS) account as required by the National Insurance Commission (NAICOM) nine months into the year. What is the problem?

    For us at FBN Life, we submitted and got our accounts approved on time. It was approved in July. Insurance companies in the country have some challenges. I am not sure what the problems of those that have not submitted are, but I am just concerned that it’s taking them this long to address whatever those problems may be. We had our own challenges too, but we are able to surmount them very quickly. As you are aware, the introduction of IFRS as a standard for our financials began this year and it is new to us. Under the old guard, things were done differently and I would not like go into the details now, but things have definitely taken a new turn. There were a lot of conferences, seminars and discussions held between the regulator and insurers even before it started. But the information emanating from those occasions were not exactly uniformed. To me, it’s not surprising that it is taking this long. It was later on, that we had to do a lot of changes, meetings, discussions before we eventually got it right. It is a new development for us in the industry and other industries generally, thus the reason for the delay. I am not surprised at the delay in getting approval of the accounts from NAICOM. What is a surprise to me is the fact that several companies out there have not even submitted their accounts for considerations by now. I am really surprised and wondering that if as at this month, they have not submitted, at what point will they get it done.

    The perception of the public about insurers is that they are not sincere in claims payment as they look for excuses not to pay. What is your view on this?

    For us at FBN Life, I can tell you that we do not play games with the insured. It is not possible in our office, especially because life insurance claim is straight forward. It is either the person is dead or he is alive. The only cause of delay is the question mark on whether the person is dead or alive. It is not possible for you to dispute or increase the claim because it is already documented. The only thing that takes time is inability to provide enough information to prove that the person is dead. Life insurance money is very straight forward.

    It may be possible to find excuses in general insurance but no serious insurer will avoid paying genuine claims.

    What does the insured require to get compensated for life insurance?

    The insured will require proof of death. We will also ask for last attending physician certificate just to know the cause of death. Often time, the cause of death is not a critical issue, but proof of death is critical. However, the law requires that you report all deaths to the National Population Commission (NPC) and it will issue a certificate of death. But in cases where we suspect forgery, we will take a closer look at the document submitted to us.

    How long does it take you to verify a claim?

    As I said, in most cases it is straightforward. We will do self-independent investigations in cases that we have doubt. The truth is that there are problematic cases but we try our best to address it as quickly as possible.

    How has the enforcement of ‘No premium, no cover’ policy impacted on business?

    The ‘no premium, no cover’ policy is one of the best policies by NAICOM. Right now, what you see is what you get. Business, on the other hand, has been fantastic. It has never been this easy for us in the industry. Almost every one of us has discovered that it does not make sense writing a trillion naira business and collecting N400 million. Before now, insurance was being taken for granted by the corporate bodies; it was never a priority. The number of debtors that we accumulated in the industry was ridiculous and it affected our profitability. What this regulation has done is to make sure that if you buy insurance; be prepared to pay for it and it has started impacting on the companies positively and improving our bottom line. So, as far as we are concerned, we have one of the best policies to come out in the insurance industry and there is no going back.

    You are an advocate of enforcement of various policies by NAICOM. How do you view enforcements in the industry?

    In terms of enforcement, I believe it has improved from what it used to be. There were a lot of policies and guidelines set up by NAICOM in the past that suffered enforcement. But now board members and management of insurance companies know that enforcement is being taken seriously by NAICOM and it is no longer a case of take it or leave it, but a priority which you must be carried out. I think the new NAICOM, as I like to call it, is far more exciting than what it used to be.

    But are operators fully complying?

    It is hard for practitioners because they are used to the regime of sit back, and suddenly someone is saying you have to agree or you face the consequences. I believe they have recognised that there is no going back and I think it is great.

    Following the recapitalisation in 2007, the industry has only been able to generate a premium income of N300 billion. Some observers believe this is not too good. What is your take on that?

    If they say the figure is small, it is because the economy is small too. Growth opportunity in this country has not encouraged insurance, especially retail business where penetration is low. Going into retail as a business is not a child’s play, it requires a lot of hard work and the benefits don’t come overnight. It takes a while before it starts showing. I know that several insurance companies have recognised that retail is good, but not everyone is ready to put resources in it.

    What about micro insurance?

    Micro insurance is also a way to go because a large proportion of our population is poor and that is why micro insurance should be vital.

    Are you exploring that now?

    Micro insurance is not essentially new; calling it micro insurance does not make it new. If you are paying small money for a small benefit, isn’t that micro? We started selling micro insurance products the day we started business because we have a product of N5,000. We have even reduced it and today we have products as low as N2,000. So micro insurance as a term may sound new, but a lot of people have been doing things in that area in the past. It is just that today, many banks realise that is the way to grow the industry.

    Does this mean that many insurers are not ready to invest in micro insurance?

    I am saying a lot of people are not prepared to put in the investment that is required because such investment means getting the benefit in future and a lot of Nigerians want the benefits now. That is why a lot of people say they can’t give their money to insurance because they are looking for an immediate return. So I think we have a lot of work to do. The good thing is that you can see the insurance industry is actually growing. There are new investors coming into the industry, particularly international investors and they must be seeing what we Nigerians have not been able to see.

    What is your view on the economy?

    The times are tough. The price of oil is going down, Central Bank is tightening its belt on commercial bankers, privatisation of the power sector is on and a lot of other things are going on. But the bottom line is that things are tight. We are going through a period of tightness. Inflation is good, but in my mind, there is no real growth. There are just too many people out of job. What the government is doing, which I admire is that they found that they could do a lot for the Small and Medium Enterprises (SMEs) and they have created funds for this. There are a lot of positive things I must say, but these are things that are probably going to have effect in the future and not today.

    What is the ripple effect on the industry?

    If there is growth in the economy, the insurance sector will be one of the direct beneficiaries. A lot of people take insurance more seriously than they used to in the past. So, I am certain in my mind that the future is bright for the business.

    FBN Life got its fresh licence just before the ban on issuance of new ones by the Federal Government. What is your opinion on the ban?

    The government gave reasons for its action and I think they make good sense. Would you not be happy to see large companies in the industry that can compete fairly well in the world insurance market? Are you happy to see the retention capacity of the industry at the low level it is today with the majority of risks in the oil and gas, aviation and other high technology and high value risks reinsured abroad?. I totally agree with the ban.

    With the ban, the Federal Government has encouraged mergers and acquisition. What would be the impact of this action on the industry?

    Mergers and acquisitions are better than forced closures and cancellation of licences, among others. It helps build capacity, size and strength. I would expect most investors and companies to take advantage of this new policy posture of the government. Ultimately, this should lead to the reduction in the number of players but will increase local capacity, lead to higher retention per risk and enhance the size and strength of the surviving players. This will be a welcome development for the industry in Nigeria.

    How have you been coping in the market considering that you are the youngest?

    We have been able to penetrate the market through hard work. I have a very strong team that knows the right thing to do.

    Do you think that the FirstBank brand contributed to your rapid acceptance in the market?

    FBN Life Assurance is a limited liability company licensed to transact life assurance businesses in Nigeria. The company is jointly owned by FBN Holdings Plc which holds 65 per cent and the Sanlam Group, one of the largest financial institutions in South Africa, which also holds 35 per cent. It officially commenced operations on the September 1, 2010. Drawing from the knowledge and experience of our owners, we intend to play a significant role in the development of the insurance industry in Nigeria. To achieve this, we are anchoring our operations on product innovation, efficient service delivery and prompt claim settlement. So, you are right to say the brand contributed to our success. We are working under a brand that is very acceptable across the whole of Nigeria and this must have contributed to our success in a short time. So, there is no question about it. I can tell you that leveraging or using the name to underwrite insurance was intended.

    How would you rate your company on solvency margin, administration,computer based, capital base and human development?

    If solvency margin is rated one to 10, we will be rated 10 and that is because we are very solvent. Sometimes last year, we asked our shareholders to pump in additional capital and this has made us to be very liquid. Our shareholders fund is currently above N5 billion, so we are very liquid for claims settlement. This is one of our cardinal selling points; we meet the customers at the customer’s time of needs in an efficient and timely manner. We are making our claims, completing our claim price, closing our claim price and making sure money meets the customers within 48 hours. The customers are not very used to the situation where they get their money very quickly but we have consistently shown them that we can do it. We take it very seriously because it’s been a good selling point for us. We also take the training of our staff very seriously, remember that when we started, we started with very young people, people whom we can easily convert to be FBN Life people and not work for other people because we know we are going to do things differently. As such, it was important for us that we keep the people who have the ability to change and not people who are stocked with the way they have been doing things. We will do a lot more to enhance our growth because the level of knowledge, exposure and experience is critical to the future of any business.

    You informed the public sometimes ago that FBN Life will begin general insurance and was looking at acquiring an insurance company. At what stage is the deal now?

    We are in the process of acquiring the company and at the appropriate time, announcement will be made by the owners of the business.

    What is your future outlook?

    We have seen a lot of opportunities in the retail market and we want to develop it. We want to deal a lot more in distribution channels because we see a lot of opportunities in that area as well. We think that alternative distribution models are the way to go because they offer low cost insurance policies to majority of the population. These are the two main thrust of the company going forward and obviously very challenging because they are new areas, but they are future growth areas of the company. It is important not to ignore the insurance brokers because they have been the traditional partners of insurance companies and also remain the main distributors of at least 90 per cent of corporate insurance programmes nationwide. So, they are important and we are partnering with them, making them our friends and using them as models to change things that can be changed as far as the insurance industry is concerned.

  • Why human capital growth is vital, by minister

    Why human capital growth is vital, by minister

    For two hours, the audience especially, the 217 graduating students of National Institute for Cultural Orientation (NICO) were full of joy and fulfilment. The students dressed in academic gowns, filed into the Cinema Hall One of the National Theatre, Iganmu Lagos and sat in the centre rows facing the top table. To their left was Pa Alimi Amodu, who sat quietly, watching the proceedings of the first convocation of the 2008 to 2012 sets. “I will be one of you in the next ceremony,” he told himself quietly.

    Few minutes to the close of the ceremony, his dream was backed by the Tourism, Culture and National Orientation Minister, Chief Edem Duke who awarded him scholarship to study at NICO training School, Ibadan study centre.

    “Pa Alimi Amodu, I am truly glad that you are a truly fascinated Nigerian. I will pick the bill of your post graduate programme in Nigerian languages at NICO Ibadan study centre,” the minister said. The occasion was the maiden convocation of the institute which turns 20 years this year.

    The minister said human capital development is strategic to the socio-economic development of the nation, adding that investing in it is critical, such investment is targeted at ensuring that the human resource endowment is knowledgeable, skilled, productive and healthy to ensure optimal exploitation and utilisation of other resources to engender growth and development. He said his ministry places high premium on training and retraining of officers because “we appreciate that policy formulation and implementation are likely to suffer setbacks if the human capital is deficient or ill-equipped for the task.”

    According to him, the creative sector has been identified as one of the major growth drivers for achieving the nation’s vision and the transformation agenda. “It is one of the reasons that informed our recent launch of the nation’s tourism brand, Fascinating Nigeria. If the target of diversifying the nation’s economic base is to be met, cultural officers who are strategic stakeholders, should be adequately trained and informed in line with the goals and vision of government,” he noted.

    Duke urged chief executives of the various cultural agencies to take advantage of the platforms created by NICO to enhance manpower development in the sector. He pledged that he would ensure that government would consider that every Nigerian mission anywhere in the world must have a trained cultural administrator.

    Chairman, House Committee on Culture and Tourism, Mr. Ben Nwankwo wished there was a Constitutional provision that every council have cultural officers who will promote values, peace and unity at the local level. Nwankwo urged the ministry to design a truly Nigerian culture-based curriculum as a course of study in Nigerian universities.

    He described the 1914 amalgamation of the Southern and Northern protectorates by Britain as a deliberate effort to create the greatest nation that will sustain British interest. He identified challenges and opportunities as key issues the amalgamation bequeathed the Nigerian people.

    Executive Secretary of NICO, Dr. Barclays Ayakoroma disclosed that the institute has signed a Memorandum of Understanding (MoU) with Nasarawa State University, Keffi for an affiliation of the Training School with the Department of Theatre and Cultural Studies. He described the intensive cultural training offered by NICO as a panacea to most of the problems faced by the nation. He noted that challenges such as insecurity of lives and property, mass unemployment, infrastructural decay, lack of trust for one another, could be adequately tackled through better understanding and appreciation of the potentials inherent in the nation’s culture. Of the 217 students, twelve won the best students awards. Best overall student award went to John Titilayo Anastasia, while best overall diploma student award went to Oluwole Kingsley.

    Earlier on Saturday at the Nigerian Institute for International Affairs, NICO held its fourth annual public lecture delivered by Prof. Ayo Akinwale, dean, faculty of Arts, University of Ilorin.

    His paper, Nollywood as a medium for the promotion of Nigeria’s cultural diplomacy: reflections of a cultural administrator, torched on the low and high points of Nigerian movies.

  • Why human capital growth is vital, by minister

    Why human capital growth is vital, by minister

    For two hours, the audience especially, the 217 graduating students of National Institute for Cultural Orientation (NICO) were full of joy and fulfilment. The students dressed in academic gowns, filed into the Cinema Hall One of the National Theatre, Iganmu Lagos and sat in the centre rows facing the top table. To their left was Pa Alimi Amodu, who sat quietly, watching the proceedings of the first convocation of the 2008 to 2012 sets. “I will be one of you in the next ceremony,” he told himself quietly.

    Few minutes to the close of the ceremony, his dream was backed by the Tourism, Culture and National Orientation Minister, Chief Edem Duke who awarded him scholarship to study at NICO training School, Ibadan study centre.

    “Pa Alimi Amodu, I am truly glad that you are a truly fascinated Nigerian. I will pick the bill of your post graduate programme in Nigerian languages at NICO Ibadan study centre,” the minister said. The occasion was the maiden convocation of the institute which turns 20 years this year.

    The minister said human capital development is strategic to the socio-economic development of the nation, adding that investing in it is critical, such investment is targeted at ensuring that the human resource endowment is knowledgeable, skilled, productive and healthy to ensure optimal exploitation and utilisation of other resources to engender growth and development. He said his ministry places high premium on training and retraining of officers because “we appreciate that policy formulation and implementation are likely to suffer setbacks if the human capital is deficient or ill-equipped for the task.”

    According to him, the creative sector has been identified as one of the major growth drivers for achieving the nation’s vision and the transformation agenda. “It is one of the reasons that informed our recent launch of the nation’s tourism brand, Fascinating Nigeria. If the target of diversifying the nation’s economic base is to be met, cultural officers who are strategic stakeholders, should be adequately trained and informed in line with the goals and vision of government,” he noted.

    Duke urged chief executives of the various cultural agencies to take advantage of the platforms created by NICO to enhance manpower development in the sector. He pledged that he would ensure that government would consider that every Nigerian mission anywhere in the world must have a trained cultural administrator.

    Chairman, House Committee on Culture and Tourism, Mr. Ben Nwankwo wished there was a Constitutional provision that every council have cultural officers who will promote values, peace and unity at the local level. Nwankwo urged the ministry to design a truly Nigerian culture-based curriculum as a course of study in Nigerian universities.

    He described the 1914 amalgamation of the Southern and Northern protectorates by Britain as a deliberate effort to create the greatest nation that will sustain British interest. He identified challenges and opportunities as key issues the amalgamation bequeathed the Nigerian people.

    Executive Secretary of NICO, Dr. Barclays Ayakoroma disclosed that the institute has signed a Memorandum of Understanding (MoU) with Nasarawa State University, Keffi for an affiliation of the Training School with the Department of Theatre and Cultural Studies. He described the intensive cultural training offered by NICO as a panacea to most of the problems faced by the nation. He noted that challenges such as insecurity of lives and property, mass unemployment, infrastructural decay, lack of trust for one another, could be adequately tackled through better understanding and appreciation of the potentials inherent in the nation’s culture. Of the 217 students, twelve won the best students awards. Best overall student award went to John Titilayo Anastasia, while best overall diploma student award went to Oluwole Kingsley.

    Earlier on Saturday at the Nigerian Institute for International Affairs, NICO held its fourth annual public lecture delivered by Prof. Ayo Akinwale, dean, faculty of Arts, University of Ilorin.

    His paper, Nollywood as a medium for the promotion of Nigeria’s cultural diplomacy: reflections of a cultural administrator, torched on the low and high points of Nigerian movies.

  • IMF, NIA partner on growth

    The International Monetary Fund (IMF) and the Nigerian Insurers Association (NIA) are exploring how to harness the potentials of the industry to boost the economic growth of the country.

    The Director-General of NIA, Sunday Thomas, who made this known in Lagos, said the representatives of the association’s Governing Board led by Prof Joe Irukwu, has met with the representative of the IMF, Dr Rodoyo Wenrhan, to discuss how operators of the industry can maximise value from the enormous insurance potentials in the country.

    Thomas said the parties hope to work out on how to sustain stability on insurance contributions to the economy.

    He said: “The representatives of our Governing Council led by Professor Joe Irukwu, has met with the representative of the IMF, Dr Rodoyo Wenrhan, to explore the potentials of the insurance industry as an economic growth driver in Nigeria.

    “Among the objectives of the mission was to ensure stability is sustained within the system. The representative of the IMF stated that the outcome of the meeting is expected to be published with recommendations made on how to move the insurance industry forward.”

    Th industry is also said to have within the last three years, recorded growth of one million subscribers.

    Commissioner for Insurance Fola Daniel, who made this known, said the number of insured in Nigeria was 500,000 about three years ago, but at present stands at about 1.5 million, out of a population of over 165 million.

    Daniel noted that the Gross Premium Income (GPI) has also increased from N157 million in 2010 to N250 million in 2012, adding that as a result of that, increase in the ratio of premium to Gross Domestic Product (GDP) moved from below 0.5 per cent to nearly one per cent.

    He said increase in local capacity has moved from less than 10 per cent to 48 per cent, adding that the commencement of implementation of Section 50 of the insurance Act 2003 has improved financial assets of operators.