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Business News

Again, Mutual Benefits Assurance boss picks holes in NAICOM’s recapitalisation process 

The Chairman of Mutual Benefits Assurance Plc, Akin Ogunbiyi, has taken another swipe at the recapitalisation plan of NAICOM.

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Mutual Benefits Assurance Chairman takes another jab at NAICOM’s recapitalisation plan 

The Chairman of Mutual Benefits Assurance Plc, Akin Ogunbiyi, has taken another swipe at the recapitalisation plan of the National Insurance Commission (NAICOM), stating that it’s a retrogressive move and the Federal Government must wake up from its slumber.

Ogunbiyi is a known critic of the recapitalisation plan. He doesn’t agree with the purpose of the NAICOM initiative, stating there’s no reason for the requirement of the new capital base. According to him, the current capital base of the insurance sector is the biggest in Africa despite not having the same level of penetration with some African countries.

NAICOM, Recapitalisation: 44 firms get NAICOM’s nod , NAICOM boss makes case for recapitalisation, insists the exercise will solidify insurance sector , NAICOM extends recapitalisation deadline for insurance companies to meet new capital base

The new capital structure for Life, Non-Life and Composite insurance companies, including reinsurance companies, were increased from N2 billion, N3 billion, N5 billion and N10 billion to N8 billion, N10 billion, N18 billion and N20 billion.

FG needs to wake up from slumber: Nairametrics had previous reported that Ogunbiyi was against the recapitalisation plan of NAICOM, and had spoken against it at every opportunity he had.

 “The insurance industry currently employs about three million people. If you have one insurance company that is able to recapitalise, will that take the place of the 10 that will go out of operation? No.

[READ MORE: Again, NAICOM shifts insurance recapitalisation deadline]

“Many of the companies have not focused on fintech and retail business. All they focus on is corporate insurance and their balance sheet.

“This recapitalisation policy will kill the industry if the policymakers, the Federal Government, ministry of finance don’t quickly wake up and see that this is a retrogressive move.

“Capital base is not the only way to make insurance create value and be more relevant in the national economy.”

Recapitalisation is not the solution: According to him, the insurance companies have other problems that needed to be addressed. Ogunbiyi said if insurance companies were unable to use their capital for profitability, increasing the capital base would have no impact.

[READ MORE: Again, NAICOM shifts insurance recapitalisation deadline]

“Why will I bring N18bn to get an insurance licence and go through all these malpractices of operating in the industry when I know by putting N1bn in Federal Government bond, I am guaranteed 13%.

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“We have quoted insurance companies that have not been able to pay dividend in the last 10 years.”

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He added that“There is problem of confidence for renewal of business for this January. The brokers that control 95% of the market are in dilemma today.

“They know the capacity of the companies. Only about five companies are in the threshold. Can they absolve the entire risk of the whole country?”

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Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

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Economy & Politics

CBN extends Covid-19 forbearance for intervention loans by another 12 months

CBN will continue to charge an interest rate of 5% for its intervention loans for another 1 year.

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New CBN guidelines ban MMOs, PSPs, Operators from receiving diaspora remittances

The Central Bank of Nigeria has announced an extension of its regulatory forbearance for the restructuring of its intervention facilities by another 12 months.

In a circular signed by Dr. Kevin Amugo, the Director of Financial Policy and Regulatory. the apex bank said it will continue to charge its borrowers an interest rate of 5% per annum as against the 9% originally offered. The CBN had on March 20th reduced the interest rates on its intervention loans from 9% to 5% as part of its response to the economic crunch brought on by Covid-19 induced lockdowns.

The CBN also offered to rollover moratorium granted on all principal payments on a case by case basis. All credit facilities had been granted a one-year moratorium starting from march 1, 2020 when the pandemic first gripped Nigeria.

See excerpt from Circular

“The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from 9% to 5% per annum for one-year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 Pandemic on the Nigerian economy.”

Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

Following the expiration of the above timelines, the CBN hereby approves as follows:
1) The extension by another twelve (12) months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities;

2) The roll-over of the moratorium on the above facilities shall be considered on a case by case basis.

What this means

Companies who secured intervention funds from the CBN or through any of its on-lending banks will continue to service the loans at an interest rate of 5% per annum instead of 9%.

  • They can also get another year of not needing to pay back the principal sum collection. However, they will need to apply.
  • Whilst this move helps the small businesses continue to manage their cash flow, it means the CBN will record a reduction in its income extended under such facility.
  • Regulatory forbearance is a widely adopted concept during an economic crunch and it is meant to help stimulate businesses. These pronouncements if implemented will only affect those who borrow from the CBN or BOI but those who do not will miss out.
  • Download the circular here.

 

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Energy

LNG boss tasks FG to begin the monetization of Nigeria’s gas

Mr Attah has urged the FG to take the gas sector more seriously as the future of Nigeria’s energy lies with it.

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The MD and CEO of Nigeria LNG Limited Mr. Tony Attah has tasked the Federal Government to begin the revamping and monetization of the Gas sector in Nigeria.

He made this statement while making his presentation at the 2nd virtual Nigerian Gas Association (NGA) Industry Multilogues, with the theme: “Powering Forward, Enabling Nigeria’s Industrialization via Gas.”

Mr. Tony Attah drew the attention of the audience to the hidden treasure in the Nigerian Gas industry which he believes is not getting enough attention from the government.

On the future of gas as an alternative energy source, Mr. Attah stated that the developed world is already keying into gas as an alternative to crude oil. Gas has proven to be a cleaner and more sustainable alternative.

He exclaimed that Nigeria is very rich in gas and yet poor in energy. Nigeria is the 9th country with the largest gas reserves in the world but makes very little use of it.

Mr. Attah went further to paint a clear picture of the promise of investing in gas using the success achieved by Qatar. Qatar is currently the largest LNG exporter in the world.

We just touched on a quick case study of Qatar. Someone mentioned Qatar already from a poor fishing country to a gas giant and it took just 10 years, which is why we, as Nigeria LNG, firmly believe in the conversation and the narrative about the declaration of the decade of gas.

“We believe it is possible. If you look at Qatar from 1995, when they really went into gas development, we were just two years behind Qatar. So, Qatar’s first LNG was in 1997.

Nigeria’s first LNG was in 1999, just two years behind. But then, within 10 years, because of the deliberateness of the government and focus on gas, they have gone to 77 million tonnes and we are at best, 22 million tonnes,” Attah said.

Mr. Attah stressed further the importance of the gas sector in Nigeria’s future. He recalled that the Nigerian Government declared 2021-2030 as the decade of gas. He pleaded with the government to take the sector more seriously as the future of Nigeria’s energy lies with it.

Gas is the future. That future is now, and just as the Minister of State has made us to realize, gas is food in fertilizer. Gas is transport as you saw in the Auto gas project that was declared.

Gas is life, as a matter of fact, for cooking, for heating, for existence. Gas is development in manufacturing, gas is power. Gas is everything. “We think it’s time for gas. It’s time for Nigeria to diversify and that is why we fully support the decade of gas,” he said.

What you should know

  • Early last year, the director of the Department of Petroleum Resources (DPR) Mr Sarki Auwalu confirmed that Nigeria’s proven gas reserve stood at 203.16 trillion cubic feet.
  • Nigeria has the 9th largest gas reserves in the world. It is also the 6th largest exporter of gas.
  • The Federal Government declared the year 2021–2030 as the “Year of the Gas“. It pledged to finally kick start the development and commercialization of Nigeria’s huge gas reserves.

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