The Nation Newspaper

Tag: N15b

  • Insurance firms capital base may rise to N15b

    There are indications that the National Insurance Commission (NAICOM) may soon increase the capital base of insurance firms to about N15 billion, The Nation has learnt.

    At present, the minimum capital requirement of life insurance firms is N2 billion, non-life N3billion and composite N5 billion.

    Sources within the industry revealed that the commission may soon mandate insurance firms to recapitalise or merge to meet the new capital requirement.

    This time, the recapitalisation will be compulsory unlike the optional window introduced by the commission through the Tier-Based Minimum Solvency Capital (TBMSC) policy, which was rejected by the operators and later withdrawn by the commission.

    Although the Commissioner for Insurance, Mohammed Kari has been silent on the issue, sources said the commission was working underground to bring the new recapitalisation to fruition soon.

    Kari had, before the cancellation of the TBMSC, said there was the  need for insurance firms to recapitalise.

    According to him, the industry witnessed the last recapitalisation between 2005  and 2007 and that since then, the operating environment had witnessed series of turbulence and uncertainties.

    He said immediately after the 2005 and 2007 exercises, the 2008 global financial crisis hit the sector with heavy consequences on insurers.

    He stated that this was followed by significant upward increase in risks arising from macro-economic environment, such as inflation rate, interest rate and devaluation of the currency.

    These, he said, led to an increase in the current value of insured assets and operating cost of insurers. Yet, the same regulatory capital continued to rule and no significant increase in shareholders’ funds of many insurers.

    He said: “As insurers continue to take too much risk with their little capital, coupled with the twin risks arising from impairment of certain assets and inappropriate pricing of insured risks, there has been an increasing inability of many insurers to honour contractual commitments to the insured and the shareholders.

    “Guided by the provisions of extant laws and international best practice, the Commission has identified underlying trends, some of which were enumerated above; and has accordingly, considered and hereby prescribed Tier-Based Minimum Solvency Capital for insurers on the basis of their respective risk profiles and their risk management systems.”

    Kari said recapitalisation would bost the soundness and profitability of insurers, support the stability of the financial system and increase insurance contribution to the nation’s Gross Domestic Product (GDP); and limit significant systemic risks and build confidence in the industry, THEREBY ensuring the stability of the insurance sector.

    He stressed that the commission’s goal is to ensure the safety and soundness of insurance institutions.

    “Our goal is also to facilitate the stability of the sector, secure protection of policyholders and public interest; promote optimal development of the insurance market; and engender public trust and confidence in the insurance system,” he added.

  • Fed Govt to clear N15b outsourced personnel debts, says UCH CMD

    UNIVERSITY College Hospital (UCH) Chief Medical Director Prof. Temitope Alonge has said that the Federal Government is making plan to pay N15 billion salary arrears of outsourced personnel.

    According to him, the problem was not restricted to UCH alone.

    Alonge’s reaction followed the petition written by some UCH workers to the Health Minister Prof. Isaac Adewole on the outstanding salary arrears.

    The outsourced personnel are working in teaching hospitals and are being owned about N15 billion.

    The personnel, under the aegis of Concerned Citizens for Human Rights (CCHR), had raised the alarm that the UCH management owed the affected workers 30-month arrears of salaries.

    A three-page petition written to Adewole by the Convener of CCHR, Comrade Mojeed Olalere, decried the treatment being meted to “UCH outsourced personnel when Lagos State Teaching Hospital and Kwara State counterpart in Southwest didn’t owe their contractors in this category”.

    But, the UCH CMD said the Federal Government has promised to pay them and a letter to that effect was released.

    Prof. Alonge said: “In 2007, the Federal Government outsourced services to the affected individuals and it agreed to undertake their payment.

    “The coordinators of the affected people have been asked to leave their account details. As at last meeting in Abuja, we learnt the total money owed the concerned staffers in Ibadan and other teaching hospitals, including Lagos, is over N15 billion and the government was ready to pay one third of it.”

    Alonge, who expressed pain over the dilemma of the concerned personnel, attributed the delay in the payment to the Treasury Single Account (TSA)  policy of the Federal Government.

    “Before the advent of TSA, we didn’t encounter this kind of problem. Anyway, everybody that has been listed will get their pay. They were outsourced and government was supposed to pay them and it was ready to do so; that much I can assure them,” he said.

  • FCTA targets N15b in fees

    FCTA targets N15b in fees

    Many have criticised the introduction of entertainment and event fee by the Federal Capital Territory Administration (FCTA) but the authorities of the administration have explained that the new charges would fetch between N10b and N15b in internally-generated revenue yearly.

    According to the FCTA Director of Economic Planning, Research and Statistics, Mr. Isa Ari, who addressed reporters on the the introduction of the fee, the revenue generated through entertainment fee would be used to improve three critical social services to the FCT residents.

    “This is a task that we want to realize. We are targeting between N10 and N15 billion in the first year and this will grow by 25 per cent in the next five years. So, it is one of the major sources of internally-generated revenue for the FCT. It is a huge task because anything luxury you want to have you are going to pay five per cent of it,” he said.

    He maintained that the fee would only be levied on luxury goods as a way of taking from the rich to benefit the poor members of the city, noting that users of services such as DSTV, internet services and liquor would pay five per cent of the total cost of services they enjoy to government coffers.

    Mr. Ari hinted that the FCT Administration plans to spend the generated revenue to improve health, education and public transportation system in the nation’s capital.

    His words: “Basically, entertainment fee is there to increase the revenue of the FCT Administration. This is a revenue you find everywhere in the world; most cities of the world. And beautiful cities of the world have acknowledged the fact that this type of fee is important to keep the city moving.

    “And then we are really targeting specific areas such as education, health and public transportation to support. We felt that these are critical areas that the FCT needs support at the moment.

    “It is not essentially to stifle residents of the city. We are only saying less than eight per cent of city population controls 80 per cent of the resources and if there is no fee to share, how will those 92 per cent remaining in the city get the benefit? It is only fair that everybody should be encouraged to support entertainment fee in the FCT.

    “Before we began, we visited most cities of the world; we have researched so many cities of the world. In the US, Washington which is equivalent of Abuja, has it, if you go to Dubai or Abu Dhabi, they do the same. If you go to London, you have it. Each city of the world has its own way of collecting this levy. If you come back to Nigeria, Lagos State is collecting its fees even with all issues going to Supreme Court.”

    On whether the tax is backed by law, Mr. Ari quoted Section 11 Entertainment Act Cap. 498 Laws of the FCT Nigeria 207, Section 4 FCT Act Cap. F6 Laws of the Federation, 2004″ as the enabling law behind the five per cent entertainment fee.

    He added that the FCT Administration was only waiting for the presidential accent to the FCT Board of Inland Revenue Bill which has been passed by the National Assembly.

    “I remember our gazette is available. If you turn to Section 11 Entertainment Act Cap. 498 Laws of the FCT Nigeria 207, Section 4 FCT Act Cap. F6 laws of the Federation, 2004. If you look at the statutes of the FCT as if it is a state which is privileged by Section 299 of the Constitution, we are very capable of collecting this tax. Because of the enabling law, I appreciate the fact that some others have failed, like park and pay. Just of recent, the National Assembly, the Board of Inland Revenue Bill and its waiting accent, “ he said.

  • NIBSS to receive N15b capital deposit for DFIs

    NIBSS to receive N15b capital deposit for DFIs

    The new Central Bank of Nigeria (CBN) guidelines for establishing Development Finance Institutions (DFIs) have mandated the Nigeria Interbank Settlement System (NIBSS) to receive N10 billion and N5 billion as minimum capital deposit for Wholesale DFI (WDFI) and Retail DFI (RDFI), respectively.

    The CBN said the policy requires Federal Government’s collaboration with development partners and International Financial Institutions (IFIs) in the establishment of a WDFI and RDFI.

    The DFIs are to bridge the gap and increase the availability of, and access to finance for Micro- Small and Medium Enterprises (MSMEs).

    It said DFIs are specialised financial institutions established with the mandate to develop and promote key sectors of the economy considered to be of strategic importance to the overall socio-economic development objectives of the country.

    Part of the guidelines states that any promoter (s) seeking a licence to operate a DFI in Nigeria shall apply in writing to the Governor of the CBN. The application shall indicate the class of DFI (RDFI or WDFI) and be accompanied by a non-refundable application fee of N100,000 or any other amount as may be determined from time to time and payable to the apex bank.

    There should also be evidence of proposed name reservation with Corporate Affairs Commission (CAC),and a feasibility report specifying objectives and aims of the proposed DFI, including the vision and mission statement and the strategy for achieving the objectives and aims, among others.

    The apex bank said it has decided to develop this Regulatory and Supervisory Guidelines to provide a level playing field for participants in the DFI subsector and to further direct private capital to participating financial institutions (PFIs).

    These guidelines will provide framework for licensing, regulation, supervision and operations of both WDFI and Retail DFI (RDFI).

    It explained that rather than compete directly with RDFI at the retail level, WDFI shall only provide wholesale financial products and facilitate technical assistance to eligible participating financial institutions (PFIs) throughout Nigeria.

    The DFIs are expected to fund MSMEs for economic development and foster growth in sustainable businesses. It is also part of government’s drive to boost job creation, reduce poverty and improve quality of lives.

    It said in a bid to accelerate the pace of development of the  economy and realisation of the key role of some critical sectors in the process, the Federal Government has over the years established development finance institutions (DFIs) to provide financial interventions in the identified sectors, targeting micro, small and medium-size enterprises (MSMEs), to complement the efforts of banks and other financial institutions (OFIs) in that regard.

    However, due to limited access to long-term and low-interest funds, in addition to other factors, the DFIs have recorded limited successes.

    As with all financial institutions regulated by the CBN, DFIs shall be subject to regulation and supervision by the CBN under the Banks and Other Financial Institutions Act, CAP B3, Laws of the Federation of Nigeria, 2004.

    These guidelines are designed to be consistent with CBN’s existing regulations for all licensed financial institutions and to ensure that DFIs operate in a safe and sound manner,’’ he said.