Chairman, Mutual Benefits Assurance, Akin Ogunbiyi, has criticised the on-going recapitalisation exercise in the insurance industry describing it as the greatest de-service to the firms and industry.
What it implies: Ogunbiyi said the exercise has created confidence problem in the industry as it could kill the industry if it is not reversed or given a longer-term period as deadline.
He said, “In fact, something drastic needs to be done to reverse this new capital exercise. It has created a lot of confidence problems.
“Even the people doing insurance don’t know what will happen. If an industry is working with N5bn and they are not able to use it for profitability, and you say increase it to N18bn, what are we insuring?
“Government should hear it from me; it is killing the industry. If nothing is done quickly, either to reverse this or to give a three-year or long-term period for the recapitalisation, the industry is gone. Today, the insured doesn’t even know what to do. I can tell you that only five insurance companies have passed that recapitalisation stage out of 49 companies. Is that the kind of industry that we want.”
On Government`s participation, Ogunbiyi argued that while the government is pushing for recapitalisation, it not patronising the insurance companies like it’s partnering with the commercial banks.
“What is the capacity that five of them will have to absolve the risks that we have currently, where the informal sector is not part of the risk you are taking? It is only the corporate world. And you say people should move from N2billion to N8billion, and from N3billion to N10billion capital base. How much is the capital base of banks? N25billion? The government will pass the budget; everything goes through the commercial banks but we don’t have government patronage in insurance.
“At the current capital base, the industry has the capacity to absolve any risk the government would give. At N3billion, the Nigerian insurance industry is the most capitalised within the African continent. For countries with a higher contribution to Gross Domestic Product in Africa, what are the capital requirements they are operating with? Why is it that the only solution the government has for insurance companies is to increase capital?”
Nigeria’s economy not favourable: With the Nigerian economy growing slowly, Ogunbiyi said the market isn’t favourable for firms operating in Nigeria. Despite a population of about 200 million, insurance penetration is still below 0.5 per cent in Nigeria,” he said.
To bultress his point, Ogunbiyi said insurance companies on the Nigerian Stock Exchange(NSE) have become penny stock in the capital market as their values are as low as 50kobo.
“They will succeed in killing this industry. When you say companies should increase capital, is it in an economy that is not growing? Where are the productive sectors of the economy? Where is trade, where is the government? Everybody is barely surviving; nobody is thinking of insurance and you wake up to say
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go to N18bn. Insurance companies have become penny stock on the stock market. How many insurance companies have paid dividend in the last 10 years? Where are the investors that will bring in the money?”
Foreigners buying firms with peanut: The Mutual Benefit Chair alleged that insurance companies are being acquired with peanuts by foreigners and the owners don’t last more than two years before they exit the market.
Ogunbiyi said his frustration isn’t because of Mutual Benefits, because his company is strong enough to survive any level of capital base demanded by the government, he, however, is more concerned about the market that could lose about 10 companies while only one could recapitalise.
“How do you take people’s sweat because of this issue of recapitalisation and give to the foreigners? I don’t know whether the policymakers have compromised. Foreigners are buying the insurance companies for peanut.
“They are not doing what they call direct foreign investment. They are bringing flight by night. Check all the history of those who have bought into insurance in Nigeria; they operate it for two years, they create the hype, manipulate the prices, move it up, two years they are off. This service is a total de-service, not only to insurance but even to the national economy.
“If you have one insurance company that is able to recapitalise, will that take the place of 10 that will not survive. If they make the capital N200bn, Mutual Benefits will survive. But it is not about Mutual Benefits, it is about the industry that is dying. This policy will kill the industry if the government does not quickly rise up. This is a retrogressive move. Capital base is not the only way to make insurance create value and to make it more relevant to the national economy,” he told Punch.
WorldRemit and The Nest partner to empower entrepreneurs in Nigeria, 3 others
WorldRemit has partnered with The Nest to empower entrepreneurs in Nigeria, Kenya, Ghana, and Zimbabwe.
WorldRemit, a global fintech platform, has partnered Nigeria’s tech innovation hub, The Nest, to empower entrepreneurs in Nigeria, Kenya, Ghana, and Zimbabwe.
This was disclosed by the company via a statement issued on Wednesday, and seen by Nairametrics.
According to the statement, the partnership is to build scalable business models across Africa via the WorldRemit Entrepreneurs Program.
In its quest to go beyond digitalizing payment methods across the globe, strengthen its renewed commitment to creating opportunities, and facilitate development in Africa, WorldRemit will now equip African entrepreneurs with effective skill sets and tools to build, innovate, and scale their businesses.
Country Manager (Nigeria and Ghana), WorldRemit, Gbenga Okejimi, explained that the partnership came right in time for impact, as many small businesses had taken a hit in the course of the tumultuous year.
He lauded the efforts of the team at The Nest Hub for their resolve at ensuring continuous education, and enabling a thriving environment for start-ups and small businesses.
He said, “Much of what Africa is today is due to its entrepreneurship, which is a key driver for socio-economic progress through significant job creation and innovation.
“At WorldRemit, we want to be known for fostering the African entrepreneurship spirit. We want to be a part of Africa’s future prosperity. By helping build entrepreneurs across our African markets, we are enabling growth and development.”
Co-founder, The Nest, Oluwajoba Oloba, explained that the Entrepreneurs Program will serve as a catalyst in building scalable business models across Africa as the continent enters into a new wave of business revolution.
He said, “The entrepreneurs will be equipped with effective skills and tools required to build and scale their businesses. The Nest definitely plays a big role in this important partnership, as the project partner leads the designing of the digital business course, otherwise known as the learning modules, that would be used in training selected entrepreneurs while also mentoring them on innovative ways to manage and scale their businesses.”
He added that beyond training and mentoring, The Nest provides entrepreneurs, creatives, start-ups, and small businesses with dynamic facilities and workspaces.
What you should know
- The WorldRemit Entrepreneurs Program will run simultaneously in Nigeria, Ghana, Kenya, and Zimbabwe, from November 2020 through January 2021.
- It is expected to empower 50 aspiring and budding entrepreneurs.
FG says vehicle owners to pay N250,000 to convert from petrol to autogas
FG says owners in the country will have to pay N250,000 to have their cars converted to autogas from petrol.
The Federal Government has revealed that vehicle owners in the country will have to pay N250,000 to have their cars converted to autogas from petrol.
This disclosure was made on Wednesday, December 2, 2020, by the Technical Adviser on Gas Business and Policy Implementation to Minister of State for Petroleum, Justice Derefaka, while on Channels Television’s Sunrise Daily, which was monitored by Nairametrics.
While stating that the conversion of vehicles from petrol to autogas will take at least 7 hours at the various conversion centres, Derefaka also pointed out that vehicle owners will have different payment plans to perform the conversion.
What they are saying
Derefaka, who is also the Programme Manager, Nigerian Gas Flare Commercialization Project, said:
“The cost varies. So, in terms of cost implication, it depends on the cylinder of the vehicle and of course, for a typical SUV cylinder, it is a bit higher. On the average, it is around N200,000 to N250,000 and this is for a four-cylinder vehicle, but it becomes a little bit higher for a six-cylinder SUV vehicle.”
Nairametrics earlier reported that the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mele Kyari, disclosed that the corporation is going to provide free conversion services in some selected NNPC retail filling stations across the country.
Derefaka further explained that there will be different payment plans for making the conversion, adding that vehicle owners can have agreement with commercial banks to get the conversion done.
He also said, “The owner of the car basically will decide to say I want to run on autogas or CNG or LNG and like the Honourable Minister had mentioned as well, conversion basically has different strands, you can partner with your bank and then the bank will now agree with the conversion centre to say ‘Convert this our customer’s car for free.’
“Not free in its entirety, but you now go and covert your vehicle. What happens is that the installer will put some form of mechanism, that each time you buy the gas; a certain amount will be deducted to pay for the conversion kits.”
While dismissing the notion amongst many Nigerians that the conversion fee is expensive, the ministerial aide noted that payment can be done within 5 to 7 months, in addition to saving up 45-50% cost associated with petrol.
What you should know
- The Federal Government had on Tuesday launched the autogas scheme, called the National Gas Expansion Programme.
- The programme involves the conversion of fuel-powered cars and generators from petrol to gas, and is aimed at deepening domestic usage of natural gas in its various forms.
- The programme is also in line with the Federal Government’s plan to make gas the first choice source of cheaper and cleaner energy. This follows the deregulation of the downstream sector of the oil industry with sharp increases in prices of petrol.
- The Minister of State for Petroleum Resources said that the availability of Autogas as an alternative fuel option will afford Nigerians cheaper, cleaner and additional choice of fuel. Cheaper than the price of petrol and better for automobile and other engines.
Conventional insurance firms can now set up their Microinsurance department – NAICOM
NAICOM has issued a circular allowing conventional insurance companies in Nigeria to exploit the huge opportunities in the Microinsurance window.
The National Insurance Commission (NAICOM) has issued a circular (NAICOM/DPR/CIR/32/2020) allowing conventional insurance companies in Nigeria to exploit the huge opportunities in the Microinsurance window.
The circular was signed by Akah L M, Director (Policy & Regulations), and disclosed that the requirements for the conventional insurance firms to be granted approval for the window operation includes:
- The insurer shall seek and obtain approval of the Commission to transact microinsurance business.
- Board resolution approving the establishment of a microinsurance department.
- Applicant shall apply for window microinsurance national operation licence.
- The department shall be headed by an experienced Insurance Officer, not below the rank of an AGM.
- The Insurance Officer must possess a minimum of 7 years post Associate of Chartered Insurance Institute of Nigeria qualification or a minimum of 10 years working experience in a technical department of an insurance institution.
- Any window operator shall segregate the financial records of its microinsurance business from that of the conventional business.
- Appropriate reinsurance arrangement shall be put in place.
What this means
The microinsurance window presents a gold mine waiting to be tapped by the conventional insurance firms in Nigeria, helping them to achieve critical mass in the market.
This would afford opportunities for those in informal sectors, as well as low-income people and households to enjoy insurance products and services that will protect them against unexpected events, that could threaten their livelihood and businesses.