26 — Vanguard, MONDAY, FEBRUARY 12, 2018 FINANCIAL VANGUARD From Left; Mark Rutten, Finance Director, Nigerian Breweries Plc; Grace Omo-Lamai, Human Resources Director, Nigeria Breweries Plc; Ngozi Onwumere, Akuoma Omeoga, Simidele Adeagbo, Seun Adigun, Members of The Nigerian Olympic Bobsled Skeleton Team, Franco Maria Maggi, Marketing Director, Nigerian Breweries Plc and Kufre Ekanem, Corporate Affairs Adviser, Nigerian Breweries Plc. during the Star Lager Sponsors Nigeria’s Historic Bobsled & Skeleton Team To 2018 Winter Olympics, in Lagos. Photo: Kehinde Gbadamosi NAICOM imposes $4m fine on insurers for non-compliance By Rosemary Onuoha National Insurance Commission, NAICOM, has imposed $4 million on some insurance companies for noncompliance with operational rules and guidelines. Deputy Commissioner, Technical of NAICOM, Mr. Sunday Thomas disclosed this at a seminar organised for insurance reporters in Benin, Edo state. He said that the Commission will no longer treat the issue of default with kid gloves. Thomas said, “As regards breach of operational guidelines, there are some companies that will pay as much as over $4 million dollars in penalties. There are no kid gloves anywhere anymore. If you default, we will give you ample opportunity to come and defend yourself. We will open it up for discussion but eventually if you are found to have defaulted, you will have By Cynthia Alo Nigeria’s insurance penetration of 0.4 percent has been described as one of the lowest in Africa. Editorial Board Member of Nation Newspaper, Mr. Sanya Oni, stated this while speaking on the topic, “The role of media in deepening insurance penetration,” at a Joint industry media retreat for insurance correspondents in Ijebu-Ode. Oni said that the nation’s insurance penetration of 0.4 percent figure makes its insurance sector a non-starter compared with South Africa with to pay a price because adequate warnings have been given.” Thomas also said that the regulatory body has warned operators not to grant insurance covers without adequate information about National Insurance Commission, NAICOM, said it is targeting 15 more companies for the Index-Base Agriculture Insurance, IBAI. This is besides five companies that have so far gotten approval for the initiative. The companies are Nigerian Agricultural Insurance Corporation, NAIC; Royal Exchange Assurance; Leadway Assurance; Industrial & General Insurance, IGI; and AXA Mansard Insurance that have so far gotten approval for the initiative. the insured as such action will also attract sanctions. “It doesn’t happen anywhere in the world where you grant blind cover. We have stepped in and have issued appropriate circulars to underwriters. We have Gambia, Kenya, Ghana adopt IBAI By Favour Nnabugwu Some West African countries under West Africa Insurance Supervisory Association, WAISA, have taken to index-based insurance. Nigeria's Commissioner for Insurance, Alhaji Mohammed Kari who is also Chairman of WAISA said that Gambia, Kenya, as well as Ghana insurance industries have expanded their horizon beyond the conventional insurance products. Speaking at the IBAI workshop held in Abuja, Kari said that Kenya has gone further with the claims settlement of $5.3million to 20,000 herdsmen. Kari said, “WAISA under my chairmanship last year undertook a situation analysis on the member country’s involvement in the development of the index insurance in the region. "Gambia had been involved with the Takaful Insurance and Ghana had started Drought Index warned companies and I am sure they heard us clearly. “If you must insure the military you must have their names, you must have their information, otherwise insurance cannot be granted,” Thomas stated. ...targets 15 other insurance companies for IBAI By Favour Nnabugwu IBAI is a relatively new financial instrument for transferring agriculture risks from individuals or groups of farmers to (international) risk carriers (insurers). Commissioner for Insurance, Alhaji Mohammed Kari at the IBAI workshop held in Abuja, said the Commission is looking forward to approving the initiative for a total of 20 insurance companies by next year. Kari said that the ongoing synergy among the Commission, the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), African Reinsurance Corporation and Nigeria ranks low in insurance penetration in Africa – Oni 16.9 percent and Kenya with 2.9 percent penetration respectively. He said, “Compared with South Africa’s 16.9 percent and Kenya’s 2.9 percent, Nigeria’s insurance penetration, variously put at between 0.3 to 0.4 percent makes the insurance sector a nonstarter. Even worse is that only one percent of the Nigerian population holds any form of insurance policy. Considering that the industry which started in 1921 is actually older than those of China, India and Malaysia, we must worry given the vast advances in insurance practices in those climes, why things have remained in the current sorry state.” According to him, things are not what they ought to be, adding, “First, we see the rules of industry and codes of self regulation increasingly set aside. The most obvious one in this regard is rate cutting. The result is the unhealthy price competition which ensures that less than 50 percent of their expected earning actually comes into the coffers despite the enormous risk borne by the insurance companies. “Before now, we knew of the roles of Offices Committee in setting industry wide premiums. Once upon a time, the offices the International Finance Corporation, IFC will immensely benefit the nation's insurance industry. Kari said, “IBAI pays out benefits on the basis of a predetermined index (e.g. rainfall level, crop yield) for loss of assets and investments, primarily working capital, resulting from weather and catastrophic events, without requiring the traditional insurance services and that the purpose is to compensate farmers in the event of a loss resulting from shared risks (rather than individual risk) associated with weather fluctuations, disease outbreaks or poor yield." committee which every insurance company as members of NIA belong, and its self regulatory mechanism, has been slowly and steadily eroded. In other words, the rules and conventions attenuating has long been jettisoned. Fire for instance which used to be charged at 0.2 percent minimum is currently 0.08 percent. How does the industry survive given that the cost environment is actually spiralling upwards not going down?” Oni noted that the situation of the Nigeria's insurance penetration is worrisome and as such requires urgent attention for a better tomorrow. Insurance while Senegal also conducted its first feasibility study in 2009 and had gone ahead with implementation programs along with some other Francophone countries in the region". Coming back to Nigeria, Kari highlighted the importance of the IBAI to spur innovation, spring rural financial markets, allow the nation's financial institution to be more willing to provide credit, especially for small farmers, among others. Speaking at the workshop, Deputy Managing Director of Africa Reinsurance Corporation, Mr. Ken Aghoghovbia said Nigeria stood out as one of the world’s most promising agricultural producers. "Agriculture in Africa is generally dominated by smallholder farmers and pastoralists who do not appreciate what insurance can do for their business. Even the ones that do, either lack the confidence that insurers will easily settle their claims or can barely afford the insurance premium." Also speaking, Minister of Agriculture and Rural Development, Chief Audu Ogbeh said that Agricultural insurance will continue to capture the attention of policy makers, donors, and a large number of stakeholders in lower income countries around the world. KBL Insurance adds two new products to online portal KBL Insurance said it has added two more products to its online transaction portal. In a statement, the company said the move is in continuation of its focus on retail insurance and effort to further enable consumers’ access to relevant insurance products. The additional insurance products include Red Card, which covers home contents against fire and Motor Safeguard, which is a motor insurance product that offers more benefits than regular third party insurance. Executive Director, Marketing, Charles Ajawihe, said customers can purchase any of the products using any digital device on KBL Insurance portal. Ajawihe also said that the company settled a total of N451 million worth of claims in 2017 for motor insurance, fire, marine, energy and other classes of insurance. He restated the company’s resolve to settle claims within 48 hours, once documentation is completed and urged customers to continually ensure prompt reporting of losses in line with the benefits of the insurance cover they have through the available channels.
FINANCIAL VANGUARD Vanguard, MONDAY, FEBRUARY 12, 2018 — 27 This occasion is timely and according to the plan, the unique point of our four year economic growth plan. It comes with an implementation strategy and a devise which has been described as laboratories.—VP Osinbajo. THE two most active Ministers in Buhari’s administration must be the Ministers of Transportation and the Minister for Budget and National Planning,Messrs Rotimi Amaechi and Udo Udoma suffer the consequences of being in service at the same time with a bunch of dullards. Udoma would understand it better. As an old boy of Kings College, he of the fourth year. That is would recall that some welcome news. On page B3 of secondary schools in Lagos the DAILY INDEPENDENT of [names withheld] were regarded February 8, 2018, the as inferior because most of their ECONOMY SNAPSHOT candidates failed the West revealed how the GDP per capita African School Certificate despite had declined to $2,457.80 in 2016 a few who made Grade 1. But, from $2,563.10 in 2014. The public analysts must sift the result for 2017 is unlikely to wheat from the dust in order to improve on the 2016 level. The be fair to all concerned as the reason is clear. With population Rotarians would admonish us. growing at 3 per cent a nation The Economic Recovery and needs more than four per cent Growth Plan, ERGP, which was growth for the economic welfare launched in April 2017 is finally of its citizens to improve. Nigeria getting off the ground with the has been growing at less than one announcement of a huge price per cent since 2015. We need a tag for it. According to the Federal huge economic stimulus, other Government, FG, it will cost an than the annual budget to get us amazing $245bn with the there. government providing 20 per To that extent, I totally agree cent or $49bn and the private with the aims and objectives of sector $196bn over the next four ERGP. The novel approach to years. It will constitute the boldest developing the economy is also attempt to speed up economic commendable. We are borrowing growth and development in the from a success story – the nation’s history. FG also Malaysian experience. In 1992, promised to create 15 million jobs. one of the authors of Malaysia’s That can be left for the moment. VISION 2020 delivered the Every government, including Keynote address at the National this one, has fed the people with Economic Summit Group, a salad bowl of illusions on the NESG, annual workshop and millions of jobs they would create introduced Nigeria to visioning. only for more jobs to be lost. The Malaysian VISION 2020 is The ERGP promises Gross not just an economic programme, Domestic Product growth of 4 per it is attempt to restructure the cent to seven per cent by the end social, economic, political and FINANCIAL VANGUARD ERGP and the mountains to climb judicial structures of the country in order to create a more egalitarian society. Unfortunately, after the first NESG workshop convened by Chief Ernest Shonekan, charlatans took over. While the Malaysian VISION 2020 was planned for a generation – Anybody who has ever been privileged to work on a strategic plan knows that the place to start is to obtain some credible figures for thirty. Even Yar’Adua and Jonathan were persuaded by economic witchdoctors to buy into the idea that Nigeria could become one of the world’s twenty largest economies without a lot of social transformation accompanying the proposed economic plans. Today, with less than two years to 2020, the purveyors of fake economics no longer disturb our peace. But, ERGP has emerged as the new economic paradigm. It carries with it elements of the VISION 2020 legitimate dreams and aspirations as well as the frightening illusions and nightmares. The mere mention of “10 GW electricity increase and attaining 100 position in the ease of doing business by 2020” reveals our obsession with the year 2020. What on earth is magical or sacrosanct about 2020? Just another year! While the obstacles are almost uncountable, the most pressing and the limiting factor militating against ERGP is TIME. Let us borrow experience from other lands. President Lyndon B Johnson, LBJ, 1908-1973, launched his Great Society programme the first month after winning a landslide victory in 1964. With a majority in MfBs critical to reviving Nigeria’s economy – CEO OSPOLY MfB By Providence Emmanuel Managing Director/Chief Executive Officer, Ospoly Microfinance Bank Limited, Mr. Femi Fapohunda, in this interview spoke on factors affecting confidence in the subsector as well as its role in reviving the nation’s economy. Excerpts. WHAT do you think the subsector is doing differently to add value to its operation? The Bank Verification Number, BVN and Credit Bureau are to add value to the operations of the MfBs. An instance of the credit bureau is this: most people still lack confidence in the microfinance subsector, the only confidence they have for the subsector is that anytime they come around for credit, they are sure that they would be given credit. If the MfB asks them if they owe any other bank, you can trust Nigerian borrowers, they will lie that they do not owe. So the issue of being on the platform of credit bureau has addressed that. In fact, we are not permitted to grant credit to any customer without reference to credit bureau platform. MfBs are mandated to subscribe to two credit bureau companies, at least two of them. So if any MfB grant credit without verifying from the credit bureau and that bank is caught, you are on your own and you would be sanctioned by the regulator, I mean the Central Bank of Nigeria, CBN. I know this would curtail serial borrowing in the sub sector, meaning that the level of default would at least be reduced to the barest minimum except for those default that have occurred before the enactment of the credit bureau law. Look at the issue of BVN, this is also to curtail what I would call money laundering; people launder money for various purposes and if you have enrolled for BVN you would be tracked definitely. Some MfBs even go to the extent of not allowing customers to withdraw if they don’t have BVN. Today, most MfBs have acquired their own BVN machine and I see this as a very good and positive development in the subsector. Everything the regulator and the meaning thirty years – the next NESG meeting ended with the appointment of a VISION 2010 Committee, by the Abacha administration, which sought to accomplish in less than twelve years what the Malays planned government are doing is to impact the subsector and that is the way I understand it. Why is interest rate still high in the sub sector? The cost of operation is also high. If you take a unit MfB for instance, they are just in one location. But the Deposit Money Bank, DMB have several branches, if branch ABC make NPF Microfinance Bank Plc has urged its customers’ to take advantage of the micro housing loan made available by the federal government. Speaking at the bank’s annual customers’ forum in Lagos, Branch Manager, NPF MFB, Mr. Matthew Adejugba, said that the bank has taken a giant step in partnering with the Central Bank of Nigeria, CBN and also a financier from Frankfurt Germany to launch the micro housing loan. He explained that the housing loan scheme is an initiative of the present Congress and a political “honeymoon” he realized that, with a four-year mandate, the only way to establish a major programme is to start early. Get the legislature to pass the necessary bills and start implementing. He succeeded largely; the economy grew at its fastest rate before and since then. If LBJ had waited until 1967 to present the programme, by which time the Viet Nam War had eroded his popularity, it would probably not have sailed through. As it turned out, LBJ voluntarily stepped down in 1968. His successor, Richard Nixon, would certainly not have implemented the programme even if passed into law by Congress. In case the point is lost on anybody, ERGP, with all its merits, might have come at the wrong time. In 2015-2016 it might have had a chance for fair consideration by the National Assembly, NASS. In February 2018, the NASS is still sitting on the 2018 Budget; the ruling party is divided, the President’s popularity has plummeted and election is in the fore front of considerations. How on earth the FG will get the NASS to consider the ERGP is the first mountain to climb. Otherwise, it would have amounted to a waste of precious time… To be continued MICRO-FINANCE losses, branch DEF can pay and in the end, when they bring out their balance sheet of profit and loss, you would see that they still make profit. It is the cost of operation. The world over where microfinance is adopted, I realized that the poor can pay whatever interest rate. Example is Bangladesh and Philippines. It is the MfB that is pivoting the government to ensure every Nigerian who is an active worker, has opportunity of living in a comfortable and decent home. Adejugba said, “The government realized they cannot build house for every Nigerian, but they can help every Nigerian to live in an affordable accommodation, hence they brought out a policy that can make us leave in an affordable and descent house. To access the facility, potential applicants must have an account with an accredited bank that partner with the CBN to channel the micro housing economy of those countries. Microfinance is for the poor, we call them bankers to the poor. How true is the report that another Tsunami is about to hit the subsector? There cannot be any tsunami because an injury to one is an injury to all. The CBN would not allow it because of confidence, the MfB subsector, remains the only subsector that can pivot the ailing economy so CBN would not allow any tsunami in the sub sector. NPF MfB urges customers to take advantage of micro housing loan course; show evidence of current means of livelihood and have an active savings towards the housing project.” He explained that the bank would support in giving loan to acquire land, build the house to completion, stating that housing project is a gradual process and that the bank was ready to assist at every level of the project. “You must have saved up to 30 percent mandatory deposit in the account before we can access this facility. However, the amount the bank will approve for you will also depend on your capacity.”