Envoy, experts identify priorities for growth

Investment in a well-prioritised infrastructure remains the most effective approach to achieving rapid growth in both standards of living and diversification of government’s revenue sources, the British Deputy High Commission, Ms Laure Beaufil and experts in financial market have said.Besides, they argued that efforts aimed at attracting the needed Foreign Direct Investment (FDI) to grow the economy may not yield the expected results, unless government and relevant agencies create strong regulatory environment and enhance the ease of doing business.

Although, they admitted that Nigeria has achieved remarkable economic turnaround, as well as the opening up of some sectors in the economy, they regretted that the growth experienced was accompanied by low level of industrialisation, rising unemployment and outright poverty, making the expansion meaningless.According to them, the development of Nigeria’s infrastructure and its positive impact on industrialisation, revenue generation and overall economic empowerment cannot be over-emphasised.

The experts pointed out that investment in infrastructure have important roles to play in Nigeria’s economic transformation, adding that infrastructure development, right regulations and policies are key contributors to conducive business environment and huge investment inflow.
Beaufils in an interview with The Guardian categorically stated that  unless the ease of doing business in Nigeria improves, the country may not witness significant investment inflow from the United Kingdom.

“We are delighted on the progress made in the ease of doing business, as we will be watching closely. Obviously, for international investors, it is a strong signal for all the actors in the financial and capital markets in particular.“Infrastructure is a major constraint to economic development. We talk about the difficulty in cost of doing business and unless this improves significantly, we will not be able to meet the ambitious goals that we have and invest in the way that is absolutely necessary for Nigeria’s growth.

“Investors in UK are looking at Nigeria with such keen interest and government must ensure that rule of law is consistently respected and that regulators make decisions based on evidence and that there are no arbitrary decisions that were made by the government and regulators. It is really going to be a priority even with the elections,” she said.African economist at Bloomberg Economics, Mark Bohlund, said government must create healthy business environment to facilitate industrial growth and promote investment inflows.

“Nigeria needs to use its economic crisis to inspire change and start producing domestically, using revolution in technology to support industrialisation, improve agriculture, manufacturing and power generation.
“Nigeria needs to have institutional framework, improve in competitiveness, develop free trade, as many countries are propagating free trade. Kenya just adopted measures to increase tariffs on import of used cars to promote the domestic vehicle assembly industry.

They have also made efforts to improve infrastructure and overall business environment. 
“Nigeria did produce a lot more back in 1960, when it gained independence than it does now. You have a lot of cocoa as a massive industry; agriculture was very big but now it just became easier to essentially sell the oil and import everything and I think time has come to change all that.

“The private sector need to lead this and government becoming more democratic than it was during military rule, maybe there is a positive development in the long term but in the short it is not very physically sustainable.“We are seeing that now on the struggling to raise non oil revenue and government need to get out of the way to provide infrastructure for the private sector to really blossom,” he said.

The Executive Director, Personal Banking, Access Bank, Victor Etuokwu, said government must support initiatives that would deepen access to finance and drive infrastructure development.
“We need to deepen access to financial market and drive infrastructure development, we need every Nigeria to participate in the formal economy so as to deepen the economy to support growth.

Underwriting companies that refuse to pay genuine claims risk losing substantial part of their contributions to the industry’s cumulative N30 billion worth of statutory deposits, while their managing directors face sack.Industry statistics revealed that the 58 registered insurance companies in the country have a cumulative statutory deposits of about N30 billion kept with the Central Bank of Nigeria (CBN).

Following various complaints from the insuring public that some underwriters are not paying claims, the National Insurance Commission (NAICOM) has now commenced the process of paying those genuine claims from the statutory deposits of the erring insurers.

Statutory deposits represent amounts deposited with the CBN in accordance with section 9(1) and section 10(3) of the Insurance Act 2003, being 10 per cent of the minimum paid-up share capital shall be deposited with the apex bank.Going by the development, any insurance companies that its statutory deposit is used to pay claims also faces negative image, as the regulatory body has concluded plans to publicise the names of the affected underwriting companies soon.

Moreover, sacking the managing directors of affected companies will serve as deterrent to others that are either fond of not honouring genuine claims or contemplating such behaviour.However, The Guardian reliably gathered that aggressive rate-cutting was partly responsible for inability of some underwriters to pay genuine claims, as the charges on policies are below the standards, in a bid to get business from their competitors.Rate cutting arises in the industry as a result of unhealthy competition among insurers in the process of chasing the same line of business.

It was learnt that when premium commensurate with a policy is not charged, claims would become extremely difficult for such insurers to pay, hence, the reason why some of them are not compensating their clients.A sector operator, who spoke on the condition of anonymity, said in some cases, policy rates are cut by 100 per cent, as underwriters compete for the same business and when claims arise, they begin to make excuses.

Meanwhile, the inability to pay claims by these insurance companies is denting the image of the industry, necessitating the punitive action of the regulatory body to rescue the sector from collapse.Confirming the development, the Commissioner for Insurance, Alhaji Mohammed Kari, said the regulatory body is alarmed by the incessant complaints of failure to settle genuine claims and discharge claims to policyholders.

“These sad failure include companies inability or refusal to settle inter-company balances. These claims and balances have risen to an unacceptable level where again we are now required to withdraw the self-regulation option given operators to total enforcement of the law.“Our persistent self-inflicted failure has distracted investment from our industry. It has increased skepticism in our consumers and most tragically it has attracted ‘clever and ingenious people’ into our assumed professional undertaking,” he said.The President of Chartered Insurance Institute of Nigeria (CIIN), Eddie Efekoha, at a forum in Lagos, said “insurance is to ensure indemnity” after the occurrence of the insured incident and the first obligation to our clients..