Insurance and Nigeria's Budget of Sustaining Growth and Job Creation

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Monday, October 14, 2019   /  01:07 PM  / By Ekerete Ola Gam-Ikon* / Header Image Credit: 


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!



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* 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



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