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CIIN sees promising industry outlook in 2018

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President, CIIN, Funmi Babington-Ashaye

The President, Chartered Insurance Institute of Nigeria (CIIN), Funmi Babington-Ashaye, has expressed that the industry outlook for the year is mixed, but promising, judging from the 2018 national budget.

Ashaye, who spoke at this year’s Annual Business Outlook Seminar, organised by the CIIN in Lagos, described the 2018 budget, tagged, ‘Budget of Consolidation’, as largely deficit.

According to her, from its deficit side, since government planned to spend N8.61trillion, while its expected revenue from all sources was estimated at N6.60trillion leaving a funding gap of N2.1trillion, government will need to borrow from local and international institutions to augment the expected shortfall.

She said: “Given that government borrowing is risk free, financial institutions might be more inclined to lend to the government than the organised private sector.”

She said inevitably, the private sector may borrow at a higher interest rate to finance their activities, and argued that if this happens, their cost of doing business will rise, and might affect the prices of goods and services.

In regards to insurance, Ashaye noted that it is evident that higher interest rates imply lower borrowing and investments, and with lower investments and decline in economic activities, the demand for the non-compulsory insurance products may be negatively affected.

On the bright side, Ashaye said: “The 2018 budget is not all about negative impact, if the current price of crude oil, which is Nigeria’s main source of revenue is sustained all year round, the need for borrowing by the government may reduce.

“This is based on the fact that the budget was predicated on $45 per barrel whereas, the price since the beginning of the year has been above $60.00. With higher revenue, Nigerians should expect better implementation of the budgetary provisions.”

On insurers’ benefits, Ashaye noted that considering that the government proposed the allocation of N181.19billion for the payment of pensions and gratuities of public servants, and N15billion set aside to meet MDAs’ life assurance premium obligations, the insurance sector will experience increased business activities.


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