According to a publication by The Nation print media, there are indications that the National Insurance Commission (NAICOM) will extend the deadline for the recapitalisation of insurance and reinsurance companies for the second time.
The publication cited that the Commission is concerned about the negative impact of COVID-19 pandemic on the exercise. Prior to this, NAICOM had announced an extension of the deadline to 31 December 2020 from 30 June 2020 previously.
We recall that in May 2019, NAICOM re-introduced the previously suspended recapitalisation exercise albeit with more stringent capital requirements. Under the revised capitalisation requirements, life insurance firms are required to have a minimum paid-up capital of N8.0 billion from N2.0 billion previously while general insurance companies are required to raise their minimum paid-up capital to N10.0 billion from N3.0 billion previously.
The regulatory capital for composite insurance was raised to N18.0 billion from N5.0 billion previously while reinsurance businesses are now required to have a minimum capital of N20.0 billion from N10.0 billion previously.
[READ MORE: Riding the pandemic wave: Time to stock up)
Although we think the recapitalization of the industry is long overdue considering the substantial increase in the value of insured assets as well as the adverse impact of fragile macro conditions since the last recapitalisation exercise in February 2007, we believe the decision to extend the deadline may be imperative in light of the weak investor sentiment, brought about by the dual shock of COVID-19 and the downturn in oil prices.
Accordingly, we think the issuance of debts instruments may come at a very high cost to the players at this time considering the risk premium that will be demanded by investors. On the other hand, raising equity capital does not appear feasible. Some of the under- capitalised players currently have negative book value of equity and are trading below their par values. Weak macro conditions would further deter investors as they remain sceptical on the ability of the players to unlock the potentials in the industry.
Nonetheless, we expect to see a flurry of mergers and acquisitions in the industry once conditions become more favourable.
FG grants three-year tax holiday to 25 companies: The Federal Government has granted a three-year tax incentive to 25 companies under the Industrial Development Income Tax Act. Pioneer status is an incentive from the Federal Government, which exempts companies from basic income tax. The incentive is also known as tax holiday and it is generally regarded as an industrial measure aimed at stimulating investments into the economy.
This means companies with a pioneer status do not have to pay tax for a certain period of time, thus allowing the firms to get established. This can be a full or partial tax exemption. Source: punchng.com.
CSL STOCKBROKERS LIMITED CSL Stockbrokers,
Member of the Nigerian Stock Exchange,
First City Plaza, 44 Marina,
PO Box 9117,
NNPC opens bid for repairs of pipelines and depots on a finance and operate basis
The project is expected to be operated on a public-private partnership basis.
The Nigerian National Petroleum Corporation (NNPC) declared open on Tuesday, August 11, bids by interested private investors to repair the pipelines and depots that are serving the refineries.
These pipelines, built almost 4 decades ago, are very critical in the successful movement of crude oil to the country’s 3 refinery complexes located in Port Harcourt, Kaduna and Warri, and the subsequent movement of the finished petroleum products to the consumers.
The pipelines, which according to NNPC are in dire need of comprehensive repairs, have experienced years of incessant theft and vandalism as well as ageing.
This project is expected to be operated on a public-private partnership basis as the bidders are expected to finance and execute the project, then operate for an agreed number of years before transferring back to the NNPC. In other words, the bidders for the extensive repairs of these pipelines would have to finance them independently and operate for a defined period in order to recover their investment costs with throughput tariffs.
It must be noted that this model is similar to the one that had been in place by the state oil giant for the refineries. The NNPC had also announced plans to get private investors to invest in the repair of the 3 refineries on a repair and operate basis, as they do not want to be involved in the management of these refineries.
The NNPC Group Managing Director, Mele Kyari, had said that the ultimate plan for these refineries was to allow it to run on the LNG model, where the shareholders would be free to decide on the fate of these refineries going forward.
The refineries, which have only run sporadically, were shut down by NNPC earlier this year while awaiting repairs and upgrade. These 2 projects are expected to be handled separately according to information made available on Tuesday.
In addition, the new pipelines would need intrusion detection systems, as well as deep burial, to stop theft or vandalism. The deadline for the submission of these bids is due by September 18.
WTO Job: Okonjo-Iweala reveals how to resolve the rift between US and China
Mrs Iweala revealed how she hopes to resolve the rift between the United States of America and China.
As the jostle for the top job at the World Trade Organization (WTO) becomes more intense, the Nigerian candidate, Ngozi Okonjo-Iweala, has disclosed some of her plans for the institution. The former Nigerian Finance Minister recently had an exclusive interview with CNBC Africa.
Speaking during the interview, Mrs Iweala revealed how she hopes to resolve the rift between the United States of America and China, the 2 biggest economies in the world, especially as regards trade issues. She also noted that part of her vision is to build a trade institution where there is greater trust among its members. She also stressed that the WTO, at this critical time, is needed to ensure that trade and global markets remain open.
On healing the rift between the US and China, Okonjo-Iweala admitted that it is going to be challenging and not be easy. She said:
“Well this is not going to be easy, if it was easy, it could have been done a long time since. So it would be very challenging but it is not an impossible job. It is very clear that both the US and China have been helped and benefitted from the multilateral trading system in the past. Hundreds of millions have been lifted out of poverty. They have experienced shared prosperity in the economies and their countries.’’
The Nigerian candidate pointed out that it is important to remind the US and China of this shared prosperity. She then disclosed that she would listen to both countries to find out what really are the issues causing distrust among them. She said that she will not want to be involved in the larger political problems, but will rather separate the trade issues and focus on them and build this trust.
Going further on how to settle their rift, Okonjo-Iweala said, “You need to begin to find areas where there can be confidence-building and trade. Building trust is not talking about it, you have to have areas where both can work together and agree and we have a golden opportunity in the fisheries subsidies negotiations that are going on now because the US is a party to it, China is a party, the EU, all other members.’’
“It is a multilateral negotiation, so if they can sit around the table with others to negotiate this and have a successful outcome, that is one thing that will be shared in common between the 2. So that will begin to build confidence. Then reaching out both in the US and in China to talk to the policymakers, go where the decisions are made, talk to congress also in the US and begin to show the benefits of the system again.’’
She also said they will look at reasons why they need to work together because their rift may be causing negative externalities for other members. She is of the opinion that exposing all of these, working with them, and listening carefully will begin to build confidence.
She believes that while achieving this will be difficult, focusing seriously on trade issues can create room for a breakthrough.
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US hands over 200 ventilators to Nigeria
The US Ambassador to Nigeria said USAID and Nigeria will work very closely over the next couple of weeks.
The United States of America, on Tuesday, August 11th, handed over some 200 ventilators to the Federal Government of Nigeria. This was disclosed by the Federal Ministry of Health via its Twitter handle, following the handover ceremony in Abuja.
The US Ambassador to Nigeria, Ambassador Mary Beth Leonard, at the handover event, explained that the ventilators are compact & portable & can be easily mobilized to reach those patients with the most severe symptoms of COVID-19.
The US Ambassador to #Nigeria Her Excellency Ambassador Mary Beth Leonard at the handover event stated that "the 200 ventilators being transferred today are compact & portable & can be easily mobilized to reach those patients with the most severe symptoms of #COVID19". pic.twitter.com/4nSgYVoEHk
— Federal Ministry of Health, NIGERIA (@Fmohnigeria) August 11, 2020
Speaking during the handover ceremony, the Ambassador said, “Their arrival fulfills the commitment discussed between US and President Muhammadu Buhari earlier this year. Our support includes; training on the use & maintenance of this equipment, ensuring that the ventilators can address other respiratory illnesses in the years beyond.”
According to her, the United States Agency for International Development (USAID) and Nigeria will work very closely and energetically over the next couple of weeks, with the Presidential Taskforce on COVID-19, to bring these ventilators across each of Nigeria’s states & the Federal Capital Territory.
“The United States has been pivotal in supporting Nigeria’s membership in the ‘Every Breath Counts’ Coalition. Nigeria is now one of 2 countries in Africa to have an “oxygen roadmap” that seeks to fight against pneumonia, hypoxemia, & now COVID-19,” she stated. She then added that as the U.S. Ambassador to Nigeria, she remains proud of the strong friendship between the two countries.
The Backstory: Last April, Nairametrics had reported when the Minister of Information, Lai Mohammed, said that “President Donald Trump assured that the United States stands in solidarity with Nigeria in this difficult time and promised to send ventilators to support the country in its fight against the pandemic.”