- Insurance Sector Growth Rate Dwindles in Third Quarter 2017
Despite efforts by insurance sector operators and regulators to deepen insurance penetration in Nigeria and boost the sector’s contributions to the Gross Domestic Product (GDP), the sector merely recorded 0.32 percent growth in third quarter 2017 .
This depicts an abysmal performance that is -24.53 percent lower than its growth performance in the corresponding period in 2016 and -21.56 percent lower than the growth rate achieved by the sector in the preceding quarter.
According to the third quarter 2017 GDP report released recently by the National Bureau of Statistics (NBS), the Finance and Insurance Sector consist of the two sub sectors, Financial Institutions and Insurance, which account for 87.09percent and 12.91 percent of the sector respectively in real terms.
According to the report, as a whole, the sector grew at -3.88 percent in nominal terms (year on year), with the growth rate of Financial Institutions as -4.47 percent and 0.32 percent growth rate by the Insurance sector.
The report said the overall growth rate was lower than that in third quarter of 2016 by -24.53 percent points, and lower by -21.56 percent points than the preceding quarter. The sector’s contribution to the overall nominal GDP was 3.04 percent in third quarter of 2017, lower than the 3.51 percent it represented a year previous, and yet lower from the contribution of 3.75 percent it made in the preceding quarter.
Again driven by the financial institutions activity, growth of the sector in real terms totalled -5.96 percent , lower by -8.61 percent points from the rate recorded in 2016 third quarter and down by -16.42 percent points from the rate recorded in the preceding quarter.
“Quarter on quarter growth in real terms stood at -11.67 percent .The contribution of Finance and Insurance to real GDP totaled 2.69 , lower than the contribution of 2.90 percent recorded in the third quarter of 2016, yet lower than 3.32 percent recorded in the preceding quarter.
This by interpretation means that despite efforts to ensure that the insurance sector contributes meaningfully to the GDP of the economy, it has maintained its hitherto position as the poor cousin of the banking sector which obviously is the leader of the finance sector of the economy.
This is despite the projection by the insurance sector regulator the National Insurance Commission that come the year 2017, the insurance sector would achieve its target of growing its overall premium from the current level of N400 billion to N1.1 trillion riding on the van of its much talked about Market Development and Restructuring Initiative (MDRI) , a medium term plan for the industry launched in 2009 by the regulator.
The initiative, targeted the creation of 50,000 jobs for the industry through the agency system, improve insurance contribution to the GDP to 3 percent, grow premium income generation to over a trillion Naira through the enforcement of compulsory insurances and fight against activities of fake insurance operators.
Irked by the obvious lackadaisical performance of the sector, the operators vowed not to rest on their oars in their efforts to improve on the sector’s performance going forward.
According to the Director General of the Chartered Insurance Institute of Nigeria, Richard Borokini who was former Group Managing Director Royal Exchange Assurance Plc, the sector’s major problem has remained lack of awareness of its value in Nigerians’ day to day living.He also said poor purchasing power of the masses in the face of the dwindled economy directly affects insurance products sales as consumers always strike out insurance from their budget once there is lack of funds to meet their needs.
The institute’s president Mrs Funmi Babington-Ashaye, said poor perception of insurance by Nigerians and religious and cultural beliefs also constitute big problem to the industry.
She however said the sector operators will not give up but would intensify efforts at awareness creation especially among youths through the industry’s catch them young programme.
She also said the industry’s rebranding project expected to kick off in January 2018 will go a long way to solve the problem.
Oil Rises to $43.76 Despite Falling Oil Demand
Brent Crude Rises to $43.76 Per Barrel on Friday
Oil price extended its gain on Friday despite OPEC and other experts predicting a further decline in demand for the commodity.
The Brent crude oil, against which Nigerian oil is priced, rose from $39.44 per barrel on Tuesday to $43.76 per barrel on Friday before pulling back to $43.42 per barrel.
The oil surged after reports showed that US oil producers were shutting down due to hurricanes and also that crude oil inventories dropped by over 9 million barrels in the week ended September 11, 2020.
The commodity started its bullish run a day after OPEC lowered its demand outlook for the year through the first half of 2021, saying recovery without COVID-19 remained slow.
“Once again, OPEC+ meets against a worrying backdrop of soft global oil prices and an uncertain demand outlook,” Cailin Birch from The Economist Intelligence Unit told CNBC via email on Thursday.
“We maintain our view that Brent crude prices will average just over $42 a barrel in 2020, assuming that OPEC+ partners reconfirm their commitment to output cuts at their September meeting,” Birch said.
Another expert, Tim Bray, a senior portfolio manager at GuideStone Capital Management, through an email said “I do not believe we should expect any material change of course out of the OPEC meeting this week when they review market fundamentals, in part because compliance with previously agreed production cuts has been high,” Tim Bray, senior portfolio manager at GuideStone Capital Management, told CNBC via email.
“It might set the stage for action at future meetings, however,” Bray said.
Coronavirus: European Investment Bank (EIB) Approves € 12.6bn Financing for Transport, Clean Energy, Urban Development and COVID-19 Resilience
€ 3.1 billion for COVID-19 public health and business financing; € 3.5 billion for private sector investment and working capital schemes; € 3 billon for clean energy and energy efficiency investment around the world; € 2 billion for Naples-Bari high speed train link largest loan in EIB history.
The European Investment Bank (EIB) today approved € 12.6 billion of new financing for projects across Europe and around the world.
New financing agreed today includes more than € 3.1 billion of COVID-19-related investment to improve public health, strengthen public services and back investment by companies in sectors hit by the pandemic.
Since the start of the COVID-19 crisis, the EIB has approved € 20.1 billion to enable public and private partners around the world to better tackle health, social and economic challenges.
The EIB Board, meeting by video conference, also backed investment in agriculture, water, housing, telecommunications and urban development across Europe, as well as in Africa, Asia and Latin America.
“Fighting climate change and tackling the COVID-19 pandemic must go hand in hand to achieve a green recovery. The EU Bank is working around the world to help mitigate the impact of the pandemic on lives, jobs and businesses; and to ensure that investment focuses on sustainability, innovation, and on reducing the devastating impact of climate change. The 12.6 billion Euros of new EIB financing approved today show how we are working with thousands of local partners to make a long-term difference to people’s lives during these challenging times”, said Werner Hoyer, President of the European Investment Bank.
Largest ever EIB loan to transform travel in southern Italy
Passengers travelling between Rome, Naples and Bari will from 2027 benefit from reduced journey times, a quicker and environmentally friendly alternative to car transport, and improved connections thanks to the largest loan the EIB ever approved.
The EIB board gave the green light for a EUR 2 billion loan to support the construction of the new high-speed train link that will cut journey times by 1 hour and forty minutes between Naples and Bari. More than 2000 jobs will be created during construction and 200 once construction of the high speed line across a European cohesion region is complete.
The new green transport link, part of the Italian government’s “Unlock Italy” decree, will increase the competitiveness of raid transport, reduce carbon emissions and support social and economic development in southern Italy. It is part of the Scandinavia-Mediterranean Trans-European Network (TEN).
€ 3.6 billion to help businesses to better withstand COVID-19 challenges
Ensuring that entrepreneurs and employers can continue to invest and adapt to new challenges posed by COVID-19 is crucial.
Companies in the Baltics, Benelux, Cyprus, France, Italy, Spain, Ukraine, Moldova and Georgia as well as East Africa, Morocco, the Middle East and the Pacific will benefit from new targeted COVID-19 financing initiatives approved by the EIB today.
The new schemes, managed by local financial partners and banking intermediaries, will help reduce economic shocks, unlock new investment and enable targeted financing for sectors most vulnerable to COVID-19 uncertainties.
€ 3 billion for renewable energy and energy transition
Today’s board meeting agreed to support energy investment that will reduce energy use and increase generation of clean energy across Europe and around the world.
€ 1.6 billion will be used to finance small-scale local climate action projects in France, Italy and across the EU, managed by experienced financing partners.
Financing to support construction of new windfarms off the Dutch coast and in Bosnia, improve energy efficiency in Austria and Ukraine, renovate hydropower in Georgia, roll out smart meters in Lithuania and modernise electricity networks in Madeira and Hungary was also approved.
Millions of people across Africa and Latin America will be able to access reliable clean energy for the first time following EIB support for new off-grid solar schemes and energy transition.
€ 2.9 billion to improve urban and national sustainable transport
Rail transport in Italy is set to be transformed by EIB backed investment to upgrade rolling stock on the national network, alongside today’s approval of EUR 2 billion financing for the new high-speed line between Naples and Bari.
The EIB Board also agreed to support new investment to upgrade public transport in Sarajevo and Krakow, and to help improve a key motorway link in Bosnia and Herzegovina.
Improving urban development and social housing
Thousands of families will benefit from new large-scale social housing investment across France and in Germany under new financing programs approved today.
The EIB Board also agreed to support the New Slussen urban development project that will transform of the heart of the Swedish capital Stockholm.
Hospital patients will benefit from EIB support for construction of a new regional hospital in Tournai and approval of a national scheme to improve mental health facilities across Belgium.
A new scheme to support long-term healthcare investment in French regions underserved by medical services was also agreed.
Crude Oil Rises Despite Demand Concerns as Hurricane Sally Disrupts Further Production
Oil Prices Surge as Hurricane Sally Disrupts Oil Production
Oil prices rose on Wednesday despite weak demand after strong hurricane sally threatens to disrupted operations of US oil producers amid a big drop in oil inventories.
Brent crude oil, against which Nigerian crude oil is measured, rose from $39.34 barrel on Tuesday to $41.58 per barrel on Wednesday.
Accordingly, the US West Texas Intermediate crude oil gained 1.8 percent to $38.96 per barrel.
American Petroleum Institute (API), a weekly oil projection report, on Tuesday reported that US crude oil inventories declined by 9.5 million barrels in the week ended September 11, 2020. This, experts at ING Research said if close to the real number due later today, could provide support for global oil prices.
The experts said, “If we see a number similar to the drawdown the API reported overnight, it would likely provide some immediate support to the market.”
This coupled with the fact that with reports that 25 percent of US offshore oil and gas output was halted and export ports were shut as the storm crawled offshore along the US Gulf Coast bolstered oil prices on Wednesday.
Oil prices gained despite OPEC lowering demand for the year, saying weak global recovery amid rising cases of COVID-19 will impact demand for the commodity through the first half of 2021.
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