Economist lauds insurance performance in 2024

The Director and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the insurance industry is among the top performers in the 2024 financial year despite the macroeconomic headwinds.

The economist said in an analysis tagged ‘Nigeria 2024 Economic Review and 2025 Outlook Gross Domestic Product Performance’ that insurance grew by 19.8 per cent while road transport grew by 17.9 per cent and rail transportation (19.7 per cent). The service sector dominated sectoral growth performance for the period.

According to Yusuf, the Nigerian economy exhibited resilience on account of gross domestic product (GDP) performance which grew at 2.98 per cent in the first quarter, 3.19 per cent in the second quarter and 3.46 per cent in the third quarter.

He projected last year to close at about 3.6 per cent, which is at par with International Monetary Fund (IMF) forecasts for GDP growth for sub-Sahara Africa and better than the global forecast of 3.2 per cent. Yusuf also noted that in Q3, the financial services sector outperformed other sectors with a growth performance of 32 per cent.

“However, real sector growth remained subdued during the year with agriculture posting GDP growth of 1.14 per cent and manufacturing, 0.92 per cent, in the third quarter of 2024,” he said.

Yusuf observed that the air transport, quarry and minerals, petroleum refining and textile sectors remained in recession as of the third quarter of 2024.

“The implication is that sectors with high job creation potentials and prospects for economic inclusion are still struggling. This situation needs to be reversed to fix the current high unemployment and reduce poverty.

“The huge disparities in the growth of financial services and the rest of the economy are a reflection of the growing decoupling of the financial services sector from the real economy,” he said.

Yusuf said the situation exemplifies the failure of the financial intermediation role of the financial services sector in the Nigerian economy.

“It is a significant dysfunctionality in the economy which deserves the urgent attention of policymakers. The current reality is that investing in financial instruments has become much more profitable than investing in the real economy.

“The risk is also very low. This is not consistent with our economic aspirations as it is a major disincentive to real sector investment. There is a need for appropriate policy measures to correct the huge disparity in the profitability between the real economy and the financial economy. There is also a progressive crowding out of the real economy in the financial markets.” he said.

From a structural perspective, the CPPE Director said the non-oil sector continues to dominate the economic space with the sector contributing 94.43 per cent of the country’s GDP in Q3, while the oil sector contributed 5.57 per cent.