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People Need to Insure More During Recession — DG CIIN

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Insurance - Investors King

The Director-General, Chartered Insurance Institute of Nigeria, Mr. Richard Borokini, speaks with NIKE POPOOLA on the need for insurers to invest more in human capital development, among other issues

Why are issuers of fake insurance certificates still thriving in the country despite the efforts of regulators and professional groups?

They are thriving because enforcement is weak. Enforcement of compulsory insurance is weak generally; that is why it is possible for somebody to be walking about with a fake insurance certificate. If you want to import your goods, the law says that you should insure them with a registered insurance company. Instead of going to a registered insurance company to buy a genuine insurance, some people decide to go to buy a fake insurance policy from the port. If Customs officials will ensure that every importer carries a genuine insurance cover, then there won’t be any fake insurance policy. The same is with motor vehicles.  Enforcement is also weak because at the place where these documents are issued, there is usually a racket, and definitely it is at the licensing offices where vehicle particulars are issued that some of the cabal operates, giving face insurance certificates. Rather than pursue genuine insurance, many desperate motorists go for a fake one. Again, the police and other enforcement agencies cannot differentiate between a fake and genuine insurance cover.

Technology would have assisted to check fake insurance and I think the insurance industry is going the way of technology to check that. For example, if you have to purchase your insurance and your certificate is on a portal, if a law enforcement agency is asking somebody on the road for his insurance, he verifies from the Nigerian Insurance Industry Database if it is genuine. If it is not genuine, it will show. The Nigerian Insurers Association is doing a lot of work on this. They are also doing something similar to the marine certificate. That will go a long way to eradicate fake insurance but the enforcement is weak. Until we improve on the enforcement of these laws, we will still have the issue of fake insurance.

Have foreign investors made any significant contribution to the industry?

Every economy wants foreign direct investment but then, the FDI should come to the sectors that are required. The issue is whether we need foreign direct investment in insurance? Some years back, we did a recapitalisation. Although with the current devaluation of the naira, the capital base of many insurance companies has been depleted if you have to convert it to dollar terms. Therefore, there may be a need to actually call for more capital. If that capital is coming from abroad, why not? Probably, they will come in with better corporate governance. In terms of corporate governance, there may be some positive terms to it. Maybe in terms of product innovation, there could be an advantage. But for those ones that have come in, we have not really seen the impact. That is to show you that the Nigerian environment is a peculiar environment, and for you to operate there, you have to be able to understand the peculiarity of the environment. Largely, if you look at it, the first 10 insurance companies are still companies that are locally bred, but that is not to discourage foreign investors from coming in. The insurance penetration in Nigeria is low, and because the penetration is low, there is potential for anyone to come in. So, let them come in if they are able to bring innovation to increase insurance penetration. It will be good. However, in terms of whether those that have come have made any great impact, we are still watching.

What impact is recession having on the insurance industry?

Whatever is happening in the insurance industry is strictly tied to the economy. If there is positive development in the economy, it will affect the growth of insurance. Demand for insurance generally is tied to the purchasing power of the average Nigerian. So, if the purchasing power of the average Nigerian is affected by what is happening, definitely the ability to purchase insurance will also be affected. Therefore, the demand for insurance is tied to the well-being of the average Nigerian. And in this time of recession, people can hardly meet their basic needs. If they cannot meet their basic needs, then of course, it will affect insurance. However, it is the time of recession that people should even insure the more, because you need to protect your assets. As with the value of dollar to naira, it has depreciated drastically and what that means is that if it took you N1m to do a particular project a year ago, with the exchange and inflation rate that has gone up, it will probably take you about N3m to do it now. So, it is now imperative for you to protect that asset. And how do you protect the asset? You have to protect the asset by insuring it against risks that could occur like fire or flood. A time of recession is not a time for people to shy away from insurance; it is the time to insure, in particular, to insure assets that will be costlier to replace if anything happens to them.

What are the recent things the institute has been doing to develop the sector?

One of the first things that we have embarked upon is to engage in corporate visits to insurance institutions. The insurance institutions are our major constituencies and these are the insurance companies, brokers and loss adjusters. We have been meeting with them to solicit their support for the institute’s programmes and to have a feedback on how we can serve them better.

We have also been trying to let them know about what the institute has in store for them as partners in developing the insurance industry. We want to let them know the programmes that the institute has in place to deepen insurance penetration in Nigeria and for the development of our members. We also want to let them know the benefits of being members of the institute.

We have also started some programmes to help in the professional development of our members. One of them is the breakfast seminar that we have instituted.

We also want to let people know about creating awareness for the industry in general and we try to go as much as engaging government services in doing this.

What impact has the annual professional forum by the CIIN had on the sector?

The professional forum is the largest gathering of insurance professionals so far in Nigeria. It started about 25 years ago and has been growing in leaps and bounds. The essence is to bring professionals together to discuss issues that will enable them to perform better as professionals. The main reason for the forum is to discuss issues that will enable them to be better professionals; to equip them with relevant knowledge that will enable them to practise as insurance practitioners, and that usually informs the theme of the forum and the kind of speakers we bring on board.

What are the major contributions of the CIIN to the Insurance Act that is being reviewed?

The insurance decree is being reviewed and we are one of the major stakeholders that made input into the law. It is still a draft so I may not say much on it. Some of the inputs we made are for the betterment of the average professional in the industry and relates to the fact that if you are a professional, you must continue to develop yourself. It is not just being able to acquire the certificate, but you must continue to develop yourself and the new act will address that issue. You have to develop yourself to meet the reality of the present time.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Ecobank Group Appoints Jubril Mobolaji Lawal as Regional Executive and Managing Director Designate for Ecobank Nigeria

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Jubril Mobolaji Lawal

Ecobank Group, the leading pan-African banking group, announces that Jubril Mobolaji Lawal has been appointed as Regional Executive and Managing Director designate of Ecobank Nigeria, subject to the approval of the Central Bank of Nigeria.

The appointment is made ahead of Patrick Akinwuntan’s upcoming retirement, due to him reaching retirement age in January 2022.

Mobolaji Lawal joins Ecobank having been a versatile senior banking executive and digital transformation specialist for over 28 years with Guaranty Trust Bank Plc. He has deep involvement and experience in digital and retail banking, corporate and commercial banking, credit risk management and corporate finance. His previous experience includes being Executive Director at GTBank Plc Nigeria, and Non-Executive Director roles at both GTBank Ghana Limited and Nigeria Interbank Settlement Systems Plc. Mobolaji led the team that envisioned and implemented GTBank Plc’s retail and digital banking strategy to achieve industry-wide leadership over a ten-year period and he introduced new products and solutions that have helped to deepen payments and access to digital financial services in Nigeria.

Mobolaji was selected and appointed as Managing Director designate following a keenly contested selection process, which included both internal and external candidates.

Mobolaji Lawal holds a Bachelor of Law degree from the Obafemi Awolowo University, Nigeria; B.L. from the Nigerian Law School and a Master of Business Administration from Oxford University, United Kingdom. He has also attended several executive management and banking specific developmental programmes at leading educational institutions including Harvard Business School, Stanford Graduate School of Business and Institut Européen d’Administration des Affaires (INSEAD).

Commenting on the appointment, Ade Ayeyemi, CEO, Ecobank Group said: “We welcome Mobolaji Lawal to the Ecobank Group and we stand to benefit from the extensive experience that he has acquired in various fields across banking, which will play a major role in continuing to rebuild our franchise in Nigeria. Nigeria is a key market for us, in which we have seen significant improvement over the past three years as we reposition and leverage upon our pan-African strengths in digital products and services, payments and as the go-to-bank for businesses seeking to grasp the growth opportunities being created by the AfCFTA, across all our markets on the continent. I wish Mobolaji the best and assure him of both my support and that of the entire Ecobank Group.”

Mrs. Bola Adesola, the Chairman of the Board of Ecobank Nigeria said: “We look forward to working with Mobolaji and assure him of the full support of the Board, Management and all the staff of Ecobank Nigeria. The business in Nigeria is on the path of transformation and we are confident that Mobolaji will have significant impact in advancing our positive trajectory.”

Mobolaji Lawal will assume the position of Managing Director, Ecobank Nigeria, upon receiving the approval of the Central Bank of Nigeria and after Patrick Akinwuntan retires.

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South Africa Encourages Nigerian Businesses to Expand to the Country

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In an effort to improve trade relations between Nigeria and South Africa, the South African High Commissioner to Nigeria Thamsanqa Dennis Mseleku has implored more Nigerian businesses (especially financial institutions) to expand their businesses to South Africa.

The South African representative revealed that the South African consulate was currently working on issuing Nigerian business owners (or operators) visas valid for ten years, in order to further bolster business relationship between both countries.

This was mentioned by Mseleku yesterday on ‘The Morning Show’, a programme which is monitored closely by Arise news, on which he also noted that the bilateral agreements being signed by both countries would be fully executed in the coming years.

According to Mseleku, Nigerian businesses are operating in South Africa, with the issue being raised back in 2019 when President Buhari was present in South Africa specifically talking about Access Bank and Air Peace. Mseleku stated that Access Bank has since opened up a branch in South Africa, and Air Peace is now making flights to and from South Africa.

Mseleku then said,”So, the issue is that we must encourage more businesses that want to go to South Africa from Nigeria to do so particularly in the financial sector.”

This prospective deal between both countries is promising, because the encouragement of Nigerian businesses to come into South Africa may eventually lead to more South African businesses coming into Nigeria to operate. The moves will undoubtedly boost the economies of both countries.

It may also encourage other African countries to engage in trades and have bilateral or multilateral agreements with other African countries, boosting economies across the entire continent.

Mseleku also noted that some South African countries were pulling out of Nigeria, which he cited as one of the reasons for the visit of the South African President.

He also addressed the inaccessibility of visa to business personnel, saying that the country is agreeing and would go on implementing longer term visas for them. He then mentioned the 10 years visa which the country is considering.

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All Business Stakeholders Will Benefit from Stronger ESG Policies, Says GlobalData

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The age-old view that addressing environmental, social and governance (ESG) issues will make a dent in profits is a myth, says GlobalData. The leading data and analytics company notes that businesses that embrace all three elements of ESG will actually outperform their peers.

Cyrus Mewawalla, Head of Thematic Research at GlobalData, comments: “The reluctance of many CEOs to fully engage with sustainability can be attributed to the age-old view that it will hurt profits. However, GlobalData’s research suggests the opposite: CEOs that are too slow to improve their company’s approach to ESG will see an exodus of customers and a drop in profits far sooner than they ever imagined.”

GlobalData’s latest thematic report, ‘Thematic Research: ESG – Top Trends by Sector‘, notes that, while saving the planet used to just equate to implementing sustainable practices such as ‘limiting the use of plastics’ and ‘reducing carbon footprint’, ‘sustainability’ has morphed into an umbrella term that includes all aspects of ESG issues. The company proposes an ESG framework that identifies key areas in which companies should invest. One of these is climate change.

Luke Gowland, Analyst in the Thematic team at GlobalData, comments: “With COP26 setting the agenda on climate change, companies are focusing their efforts on tackling carbon emissions by switching to renewable energy and undertaking energy efficiency projets. However, companies must excel across all three aspects of ESG, and not overlook the importance of strong social performance and having the correct governance structures in place to achieve ESG goals.”

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Citizens, governments, regulators, and the media are turning the spotlight on corporations and demanding action. Social inequality, corruption, tax avoidance, and a lack of action on climate change are all issues that companies must now address head-on, in full public view.

Since Q1 2021,GlobalData has been asking respondents to detail their company’s approach to ESG goals In Thematic Sentiment Analysis, Q3 2021, conducted in Q3 2021, nearly a quarter of respondents thought that, for most companies, ESG was just a marketing exercise.

Gowland continues: “Our latest sentiment analysis report shows that more companies have changed their behavior to meet ESG goals (33%) than not (22%). While the attitudes towards ESG are improving, there is a long way to go.”

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