Monday, October 14, 2019 / 01:07 PM / By Ekerete Ola
Gam-Ikon* / Header Image Credit: nex.ca
Not a few Nigerians,
including the strongest critics of this administration, have given reasonable
consideration to the way the Federal Government seeks to deploy its revenue and
manage its expenses to "sustain growth and create more job
opportunities", as elucidated in the 2020 Appropriation Bill. So far,
every Nigerian and economic sector seems to be represented in it.
If you have not found your
sector with ease, like me, you may be tempted to think, the Budget has nothing
different and special until you can ask the right questions and, hopefully, get
the right answers.
In the season that
President Muhammadu Buhari is speaking confidently about fiscal discipline,
timely passage of the Appropriation Bill and commitment of N2.14 trillion to
Capital Expenditure, I am careful to inquire:
1. Is Nigeria
conscious of PROTECTING HER WEALTH? Not the oil wells and pipelines or
farmlands and livestock but the PEOPLE THAT LIVE AND WORK to ensure set targets
are met; are they protected?
2. Does the
massive infrastructure projects that the Federal Government intends to carry
out as enumerated in the Budget have any remedial action that will not cause
her more spending in the event of any unforseen and unexpected
occurrences?
3. What should
happen if the 2020 Budget fails to meet and fulfil the goals and objectives of
our Vision 2020-20 Agenda that had been set years ago and still actively
considered by this administration?
4. What if
Nigeria experiences a cyber attack that jeopardizes the work of persons both in
the public and private sectors resulting in losses in man hours, revenue and
contracts?
5.
Does this
administration remember that INSURANCE is probably the most potent risk
management tool that can address the issues raised in the above questions?
So, I dare to ask: What is
the budget for the protection of our current wealth while we are trying to
create additional ones?
Taking
INSURANCE for Granted
If our personal insurance
experiences, which border largely on "tales of the past" and the
"horrifying actions of a few weak insurers today" have been allowed
to permeate the thinking of this administration (like others before it), thus
leaving out insurance in the discussions on sustaining growth and job creation,
then we are taking insurance for granted.
The insurance industry in
Nigeria today may seem too weak to respond to the needs of global giants in
manufacturing, extractive, processing and supplies but it is the responsibility
of government to create the environment for the improvement that must happen
accompanied by the gains for the country. Foreign insurers operating in Nigeria
are yet to deploy one third of their capabilities because they merely followed
their clients here to earn and take back the premiums to their home countries.
Nigeria's 2020 Budget
needs to clearly state what the Federal Government is proposing to spend on
INSURANCE as the way of hedging against unseen risks and I hope the National
Assembly will address this issue.
Have we forgotten that,
notwithstanding any reasons, for the second year running, the Group Life Insurance
for federal civil servants has not been paid for though provided for in the
budgets for 2018 and 2019? It is necessary to state that this is in violation
of the Pension Reforms Act 2014!
Sometimes, it is argued
that insurance operators should depend less on government and focus on the
underserved and uninsured population for huge income that could be generated
from them, but it should be noted that the Federal Government would not be
doing the insurance industry any favours rather she inadvertently denies
herself the opportunity of making greater revenue from and through insurance.
More Revenue
through Insurance
Besides serving as the
wealth protection mechanism, insurance can indeed claw in more revenue for
government both as taxes and levies. Remember, insurance is also a LAW!
However, and sadly so,
this law, unlike tax, has not been effectively communicated to Nigerians who
continue to miss its benefits, which have even more direct impact on them than
tax.
Last year, the entire
revenue of the insurance industry in Nigeria amounted to N480b which is less
than the Profit After Tax of the 5 leading banks in Nigeria! Is this
administration satisfied with this level of performance when it is well known
that the industry could have achieved more than 3 times that amount with better
price discipline and higher level of compliance with the law?
Other African countries
namely South Africa, Egypt, Kenya and Morocco where insurance has performed
better in terms of contribution to the Gross Domestic Product (GDP) do not have
some of the good indicators we have in Nigeria.
On a related note, does
this administration know that Nigeria's insurance industry is hosting the
annual conference of the African Insurance Organization in May 2020 and we will
be receiving participants from over 50 countries of the world? A Nigerian who
is currently Vice President will then step up as President of the organisation.
Does this not count for something in the annals of this administration?
There are streams of
revenue attached to this event and other such activities of the insurance
sub-sector but the Federal Government just needs to intervene to reposition it
for better results.
Indeed, with better
attention to the insurance industry, this administration can achieve one of its
primary goal of bringing more Nigerians out of poverty in a few years. Further
investment in the poor and vulnerable people without appropriate insurance for
their lives, health and movements from place to place will most likely erode
the benefits gained thus far.
Bringing the
Ease of Doing Business to the Insurance Industry
While it was heartwarming
to note the tax relief the Federal Government had announced for businesses with
turnover of less than N25m, it would be necessary to educate and enlighten them
on the value of insurance in line with the financial inclusion strategy.
Currently, only 1% of Micro, Small and Medium Enterprises are estimated to have
adequate insurance cover largely due to the mistrust of the insurance industry
as presently managed and regulated.
If the Presidential
Enabling Business Environment Committee (PEBEC) can give more time to the
insurance industry coupled with what the Federal Competition and Consumer
Protection Commission (FCCPC) is doing to assist insurance policyholders have
better experience, much of the TRUST issues of Nigerians could be addressed.
We cannot afford not to
consider some areas that hold the hidden treasure Nigeria needs to stay ahead;
one of them is INSURANCE.
Let us protect our wealth
(our people) and ensure our environment can produce more sustainably.
The worth of insurance in
the Budget defines our readiness to retain what we have.
Insurance is the next big
game!
* About The Author
Ekerete Olawoye Gam-Ikon, MNIM,
CPP is a management consultant with specialization in Strategy and
Insurance. He can be reached vide telephone on +234-806-648-1111 and
+234-802-585-0344 or by e-mail via olagamola@gmail.com
Recent Articles by Author
1.
Making Claims
Payment the Basis Of Performance Measurement In The Insurance Sector
2.
5 to 9
Insurance Questions for Nigeria at 59
3.
Insurance Broking:
Is Diminishing Returns Setting In? - Sept 16, 2018
4.
An External
Memo To The President: How The Insurance Sub-Sector Can Help
5.
Where Are The
Insurance Amendment Bills Of 2008 And 2018?
6.
Kidnapping
Insurance: Is It Hot In Nigeria?
7.
The Insurance
Sub-Sector: Its Challenges As Opportunities For All
8.
Funeral Insurance
- Bridging The Divide Between Culture and Financial Planning
9.
Insurance
Recapitalization in Nigeria: What Policyholders Should Do Now!
10.
Nigeria: New
Minimum Paid-Up Share Capital Policy For Insurance And Reinsurance Firms
11.
The Benefits
of Standardizing the Insurance Industry
12.
Microinsurance
And The New National Minimum Wage
13.
Insurance In
Nigeria: Approaching 2020 Without Digital Solutions?
14.
PMB's Second
Term and Buharinsurance
15.
Meeting the
Insurance Needs Of Digital Natives
Related News On Budgets
1.
2020 Budget
Proposal: Key Takeaways
2.
President
Buhari's 2020 Budget Speech
3.
2020 Federal
Government of Nigeria Budget Proposal - Highlights
4.
Nigeria:
Agelong Budget Cycle Conundrum
5.
Budget 2019:
Pulling a Gun We Know We Can't Shoot
6.
President
Muhammadu Buhari Signs 2019 Appropriation Bill Into Law
Related News