All Posts in "Month: March 2021"

FG launches Export Expansion Facility Programme for MSMEs growth

By Favour Nnabugwu

The Federal Government has launched an  Export Expansion Facility Programme (EEFP) and Export Development Fund (EDF), Scheme to boost Micro, Small and Medium Enterprises (MSMEs) growth in the country.

The Minister of State Federal Ministry of Industry, Trade and Investment, Amb. Mariam Yalwaji Katagum during the launching in Abuja on Monday, said the EEFP would help in the development of MSMEs sub sector.

Katsgum said, “This is very important in view of the fact that the first component of the Export Expansion Facility that is being implemented, is the Export Development Fund, which focuses on pre-shipment incentives or assistance with the MSMEs as the target group and possible beneficiaries”

“The import of this cannot be overemphasized in view of the significance of MSMEs and the critical role they play in the Nigerian economy, she sddd..

“To say that MSMEs have been affected by the COVID-19 Pandemic is an understatement. Players in the sector have incurred huge losses in revenue and investments, triggering immense job losses for a substantial number of them,” she said.

The Minister stated, “This is the basis for the inclusion of the MSME Survival Fund in the National Economic Sustainability Plan (NESP). This has led to massive impact within the MSME sector”

“As we speak, the Survival Fund has impacted close to a million MSME beneficiaries and still counting”.

“Coincidentally the Export Expansion Facility and the MSME Survival Fund both fall under Chapter 16 -Tracks 2 and 3 of the NESP Document and we are confident the Export Expansion track will go on to impact the export-related small businesses even more”.

“While the Guiding Principle for the Survival Fund is to “save jobs and ensure continued local production”, the Guiding Principle for the Export Expansion Facility is “to retain and create jobs”.

She however said either way, “We must ensure that small businesses within the export-related sector benefit from the scheme in great numbers as this is the core objective of Mr. President’s approval of the scheme”

She expressed confidence in the leadership of the NEPC under the Executive Secretary, Mr. Segun Awolowo, to deliver on this task.

She recalled that the EDF Act came into existence in 1986 with the objective of providing financial assistance to exporting and potentially exporting companies to cover part of their initial expenses with respect to export promotion activities.

“Therefore, the provision of funds for the takeoff of the EDF, as provided in the EEFP, could not have come at a better time”.

`”The Export Development Fund would serve to compliment the other areas that were not covered by the MSME Survival Fund, for export-oriented companies,” she said.

`l”Therefore, transparent and seamless implementation of the EDF and indeed the EEF schemes offers the NEPC in particular, and the ministry in general, the opportunity to improve the performance of the non-oil sector as well as the current strategy and policies to diversify the productive base of the economy,” she said.

She commended the contribution of the Minister, Federal Ministry of Industry, Trade and Investment, Otunba Richard Adeniyi Adebayo, for providing direction and coordination and also the NEPC for implementation and all stakeholders for their tangible efforts thus far.

Patoma Admin by — March 29, 2021 in Industry, Trade & Investment 0
Stranded Suez Ship confounds World uneasy about the long haul

By Timothy Walker

 

The Suez Canal is one of the world’s major shipping routes, or at least it was until the Ever Given ran aground on 23 March. The blustery conditions that caused it to veer off course and bury its bulbous bow into the banks of the canal have whipped up a global storm of consternation and bemusement. Almost a week later it was reportedly dislodged from the banks of the Suez Canal and refloated. The costs of the delay are not yet known but should run into the tens of billions of US Dollars.

Images of the vessel lodged sideways across one of the world’s most important waterways were shared globally, and it appeared too great a challenge for the Suez Canal Authority to resolve quickly.

The Ever Given’s grounding showed why well-functioning shipping and ports are central to economic function, as well as growth and development aspirations. Yet these are vulnerable to seemingly minor disruptions that can result in higher freight rates, oil prices and surcharges, creating global economic ripples that can hit fragile African economies especially hard.
So much of the global economy depends on a functional Suez Canal, and the global economy is becoming increasingly reliant on megaships such as the Ever Given. A Japanese company owns this ultra-large container ship (ULCS), but it flies under a Panama flag. ULCSs are part of a new trend of building bigger and bigger container vessels to achieve greater economies of scale and turn a profit in the often fragile shipping market.

Seemingly minor shipping disruptions hit fragile African economies especially hard

Egypt specifically expanded the canal in 2014 and 2015 to accommodate vessels such as the Ever Given, which is one of the largest globally, declaring that by 2023 it would bring in approximately US$13.2 billion annually. Despite being reopened two years ahead of schedule, revenues in 2020 fell to under US$6 billion, the Suez Canal Authority reports.
So this incident couldn’t come at a worse time for all concerned. The cost of the blockage to the Egyptian economy will be noticeable in the short to medium term. Both ship capacity and equipment-availability issues plague global supply chains that are still struggling with COVID-19-enforced regulations.

Last year almost 19 000 vessels used the Suez Canal – an average of 51 a day, with a net tonnage of over one billion tons of cargo. Usually ships form convoys to traverse the Suez Canal. The average transit time is 14 hours.

The Ever Given was fifth in a northbound convoy when it veered sideways, and its bulbous bow struck the eastern bank with enough force to raise it slightly above the water line. Because of its position, southbound traffic was blocked too
Past experience of high-profile incidents involving other ULCSs suggests that refloating the vessel would take several days. The more optimistic might have hoped for a swift resolution given that the Jupiter only blocked the Port of Antwerp – Europe’s second-biggest port – for 12 hours in August 2017. The more pessimistic (and as it turns out prescient) instead recalled how, in 2016, the container ship Indian Ocean was stuck for six days outside of Hamburg before being refloated.

Four salient issues stand out that will affect Africa, especially if a blockage to a major shipping artery or port were to happen again.

Firstly, vessel operators were confronted with a dilemma most would rather not countenance – whether or not to embark on the 6 000-mile detour around the Cape of Good Hope. When the Suez Canal was completed in 1869 it did more than shorten shipping routes – it transformed Africa into one of the world’s largest islands. The immense African continent was no longer an impediment to shipping, and this became a pillar of global economic activity ever since.

Well-functioning shipping and ports are central to achieving economic growth and development

On this occasion a few decided to take the Cape route, which adds about a week to the journey, burns more costly fuel and requires extra vigilance while sailing through the High Risk Area off Somalia. This area has robust and effective counter-piracy measures in place, but more vessels increase the number of potential victims. Vigilance and adherence to best management practices are fundamental.

Although the route via the Cape of Good Hope beckoned, the distance, time, cost and sea conditions involved make it a prohibitive choice and many operators opted instead to wait and see. There remains an unresolved question about the degree to which African infrastructure along the Cape route can handle this increased traffic volume, especially regarding accidents and emergencies.

Secondly, the trouble associated with determining responsibility for maritime accidents is amply demonstrated by the ongoing controversy surrounding the 2020 grounding of Wakashio and its disastrous fuel leak.

Article 4 of the Suez Canal Authority’s Rules of Navigation provides that the owners of vessels using the canal are ‘responsible for any damage and consequential loss caused either directly or indirectly by a vessel … or to obstruct the navigation in the Canal.’

Can African infrastructure along the Cape route handle increased shipping traffic?

Operators moved quickly to allay fears that the grounding arose from a mistake or negligence. They swiftly stated that initial investigations ruled out any mechanical or engine failure as a cause, instead attributing the accident to a sudden strong wind.

Thirdly, as long as the Suez route remains dominant for international container trade on the Asia-Europe route, the Red Sea region could lie at the centre of intensifying geopolitical competition with multiple potential flashpoints. States will keep building bases and conducting long-range patrols, seemingly to prepare for persistent military engagement. Most European countries’ Indo-Pacific strategies more or less rely on permanent access to the Indian Ocean via Suez rather than sailing around the Cape to reach the Indian Ocean. While the problem at Suez is being resolved, another issue at the southern end of the Red Sea threatens to spell economic and ecological disaster – the abandoned and decrepit fuel tanker, FSO Safer, which lies off Yemen
Finally, an extended blockage of a major port or waterway could severely affect trade, especially for landlocked African states.

There is a risk of congestion at some ports as the delayed cargo may now arrive at the same time as scheduled cargo. This challenge is compounded by both the COVID-19 pandemic and the predominant just-in-time shipping, whereby cargo is typically scheduled to arrive or be replenished precisely when, or shortly before, it’s needed in production.

National contingency plans for maritime accident blockages must be scrutinised and honed to ensure they don’t fall short if similar incidents happen again. We’ve been fortunate for a long time – major disruptions to maritime traffic haven’t occurred until now. Yet there’s very little margin, and taking the safety of shipping for granted is a luxury we cannot afford.

Timothy Walker, Maritime Project Leader and Senior Researcher, ISS Pretoria

Patoma Admin by — March 29, 2021 in Transportation 0
China removes 51% Cap on foreign ownership of insurance companies

By admin

The China Banking and Insurance Regulatory Commission (CBIRC) has removed the 51percent cap on foreign ownership of insurance companies.

The move is part of new rules amending the country’s regulations relating to foreign-funded insurance companies.

The Commission said it had issued the Decision on Amending the Implementation Rules of the Regulations of the People’s Republic of China on the Administration of Foreign-funded Insurance Companies, “in order to implement the decisions and deployments of the Party Central Committee and the State Council on expanding the opening up of the financial industry, and to further improve the regulations”.

The Decision added a requirement that “investment in a foreign-funded insurance company that affects or may affect national security shall conduct a foreign investment security review in accordance with the law”.

The amendments further clarify the entry standards for foreign insurance group companies and foreign financial institutions to invest in foreign insurance companies. “The Decision resolutely implements the requirements of opening to the outside world, follows the principle of consistent domestic and foreign investment, focuses on strengthening risk management and control, and strives to create a market business environment that is conducive to fair competition and common development between China and foreign investment,” said the CBIRC.

It added that the Decision clarified the access conditions for foreign insurance group companies and overseas financial institutions, as well as improving shareholder changes and access requirements. “It is stipulated that if a foreign-funded insurance company changes its shareholders and the proposed transferee or successor is a foreign insurance company or a foreign insurance group company, it shall comply with the relevant requirements of the regulations and the Implementation Rules,” the Commission said.

The Commission said it will continue to optimise the investment and operating environment of the insurance industry, further stimulate market vitality, and improve the quality of insurance services.

Patoma Admin by — March 29, 2021 in Insurance 0
321 vessels jammed at Suez Canal – SCA

By admin

At least 321 vessels are currently jammed around Egypt’s Suez Canal awaiting salvage of the giant container ship Ever Given that has been stuck and blocking the vital waterway since Tuesday, Osama Rabie, chairman of the Suez Canal Authority (SCA), said Saturday.

“The number of ships waiting now, whether in the north, the south or in the Lakes is 321. We provide them with all the logistic services they ask for,” the SCA chief told a press conference in the northeastern province of Suez.

“It’s difficult to tell when the problem will be solved, because, as I said, the ship is huge with a large load and it is stuck in a shallow area,” Rabie said.

He pointed out that 14 tug boats are working to salvage Ever Given from all directions.

“Last night, there were signs of success … to the point that we were very hopeful that the salvage will be completed last night,” The SCA chief said, adding authority is prepared with several scenarios to refloat the mega ship that causes “a big crisis.”

The 224,000-ton Panama-flagged Ever Given was grounded on Tuesday in the canal after losing the ability to steer amid high winds and a sandstorm, which led the SCA to announce on Thursday temporary suspension of navigation in the man-made waterway.

Rabie said there will be investigation into the exact cause of the accident but after the rescue process is done.

Dutch firm Boskalis with its emergency response team Smit Salvage is hired by Ever Given’s owner to assist the SCA in the rescue operations.

Linking the Mediterranean Sea with the Red Sea, the Suez Canal is a major lifeline for global seaborne trade since it allows ships to travel between Europe and South Asia without navigating around Africa, thereby reducing the sea voyage distance between Europe and India by about 7,000 km.

Some 12 percent of the world trade volume passes through the Suez Canal.

Patoma Admin by — March 28, 2021 in Insurance 0
New data science to unlock $20m Agric insurance business in East Africa

By admin

Allianz Africa is eyeing the agriculture insurance sector in Kenya and the East African region which is expected to grow by 200 percent.

Allianz experts estimate that the value of the agriculture insurance segment to stand at $10 million but say it holds the potential to grow to $30 million. They aim at partnering with aggregators such as banks, cooperatives, agro-dealers, and commodity Associations to deploy the solution, said Lovemore Forichi, Senior Underwriter of Agriculture at Allianz Re

“According to our estimates, Agriculture Insurance Premium globally is USD 32 billion. East Africa contributes about USD18 million of which Kenya is about USD10 million. Governments and the Private Sector in East Africa are working together to increase agriculture insurance penetration in the region. Less than 5% of the Kenya farming community is insured,” said Lovemore

Allianz, one of the world’s leading insurers and asset managers, entered the East African market last year after signing an agreement with Jubilee Insurance to establish a strategic partnership in the five African countries where Jubilee Insurance currently operates.

The partnership covers the general insurance business (also known as the property & casualty insurance segment) in Kenya, Tanzania and Uganda as well as the short-term insurance segment in Burundi and Mauritius. JHL retains its ownership of its Life and Pensions operations and its Medical insurance business in Kenya, Uganda and Tanzania.

Lovermore says that Allianz aims at unlocking the potential using parametrics which is a non-traditional insurance product that offers pre-specified payouts based upon trigger events such as wind speed and rainfall measurements.

“Operationally, parametric solutions are less cumbersome as the insurance company does not need to visit the farm and occupy the farmer’s time. Monitoring of the index can be done remotely through satellite imagery and data. The farmer can also have access to the data and they can closely monitor the development of the index throughout the growing season on their mobile phone or tablet. This also makes it very transparent, traceable, efficient, and paperless,” said the official.

Through parametrics, farmers can choose which parameter is of concern to them, as far as affecting their crop yield is concerned. The most common parameter is rainfall. Lack of rainfall during the cropping season (drought) as well as too much rainfall (excessive rainfall) have a huge impact on the farmers’ yield and subsequently the revenue.

So the farmer will choose to insure against drought and/or excessive rainfall to hedge their losses. When the insurance company uses index insurance solutions such as Rainfall Index, Evapotranspiration Index, Soil Moisture Index, and Area Yield Index, these are classified as parametric solutions.

Over the years, more insurance companies are venturing into the agricultural space as farmers are increasingly understanding the value of insurance as they learn from other people’s experiences.

The Kenyan government and private sector are also actively contributing to the insurance penetration through premium subsidies for both crop and livestock farmers as only less than 5% of the Kenya farming community are insured

Patoma Admin by — March 28, 2021 in Insurance 0
8 Lessons Insurance industry learn from pandemic

By Favour Nnabugwu

Almost exactly a year ago, Nigeria and  South Africa closed down as the coronavirus struck. Many thought it would be a quick three-week lockdown, and then business as usual. How wrong we all were. In many ways, the world will never be the same again.

Inspire of all, insurance sector has learned 8 lessons as we look forward to the next normal.

And yet, amidst the mayhem, there were lessons to be learned. The pandemic gave us the opportunity to pause and think about our business, our clients, and their changing demands.

1. Everybody wants to protect themselves from risk

Covid-19 shook us to our core and made us question how prepared we really are for a crisis. As millions of South Africans re-evaluated their finances, their risks and their lives, we’ve seen a growing realisation that insurance, so long seen as a grudge purchase, is critical to cushioning life’s unexpected blows.

2. We need new products for new times

When lockdown started, millions of South Africans stopped driving to work. Many continue to work from home. With car usage down 30%, clients simply don’t want to pay full insurance premiums for assets that are standing idle for most of the time. It sparked a boom in usage-based insurance,  And there are more changes to come.

3. The future belongs to the machines

There’s no doubt that the insurance industry is ripe for some serious disruption, and data-driven tech is providing the impetus. For insurers, the ability to analyse data better provides the ability to determine risk to a point of near-perfection. This essentially results in more accurate and fair premiums,, which means lower-risk clients will pay less for insurance. Clients demand it – and insurers that don’t have the data capabilities will fall behind.

4. Consumers are the real drivers of change

Tech is the enabler, but clients are the real disruptors. They want simple products tailored to their needs, a slick engagement experience, and the ability to interact on the platform of their choice. Probably the single biggest trend that tech has unlocked in the global insurance industry is the fact that insurers can now compete on the basis of a differentiated customer experience. Technologies like tweeter, user-friendly apps and USSD are driving a range of digital-first, human-friendly services that are tailored to the exact needs of the client.

5. We’re seeing a renewed focus on culture

After an initial honeymoon period, businesses and employees alike are struggling to adapt to the new world of WFH (working from home). Right now, it’s critical for insurers to show their clients and staff that they’re more important than ever, and to go the extra mile for them. This can only happen in a business with a strong culture that’s based on purpose and values. We’re seeing a greater focus than ever on company culture that’s empowering and enabling.

6. Organic growth will only take you so far

To call the local short term insurance market ‘highly competitive’ is an understatement. While tech is making it easier for more South Africans to access insurance, the market remains cut-throat, with the same clients often changing their insurer for a few Naira less on their monthly premium. There are certainly ways to stand out in this market, but for insurers to grow, it’s important to be open to acquisitions and alliances that can take the business forward, whether locally or internationally.

7. ‘Digital-first’ drives opportunity

At King Price, one of our founding principles was that a ‘digital-first’ business model would be fundamental to unlocking new value. As we see a greater focus on factors like personalised premiums and usage-based coverage, we’re certain to see more alliances and greater collaboration between traditional insurance and InsureTech firms. The traditional company provides the footprint, the market knowledge and the client base; the InsureTech provides the tech that drives new insurance models and revenue streams, higher profitability, improved customer experience and reduced operational costs.

8. Time to reaffirm our purpose

As insurers, we exist to protect people, businesses, and communities from unexpected risks. In volatile times, it’s more important than ever to remember our purpose. Today’s consumers seek out companies and brands that align with their values. The products and services they purchase are expressions of their moral values as much as financial decisions are.

Patoma Admin by — March 28, 2021 in Insurance 0
UAE removes Rapid Antigen test requirement for travellers from Nigeria airports…..imposes new conditions for resumption of flights between both countries

By admin

 

The United Arab Emirates, UAE, government has said its has decided to remove the Rapid Antigen test requirement for travellers from airports in Nigeria so as to restore normal flights between both countries.

This is just as the country imposes new conditions for Nigeria to meet before normal flights will resume in Abuja yesterday

Recall there has not been flights between both countries as a result of stringent covid-19 test requirements UAE imposed on travellers from Nigeria.

In a letter from the Embassy of the United Arab Emirates in Abuja issued yesterday with reference No.078/A/2021 among other things requested that number of passengers from Nigeria to the UAE must not exceed 200 passengers for inbound flight from Nigeria for two weeks and that only direct flights between both countries are allowed.

The letter read : ” The Embassy of the United Arab Emirates in Abuja presents its compliments to the Ministry of Foreign Affairs (Protocol Department) of the Federal Re[public of Nigeria with reference to the Ministry Verbal Note No. K.521/2021 dated 16th February 2021 and the Embassy’s Note Verbal No. 049/A/2021 dated 23 February 2021.”

“The embassy has the honor to convey the response of the competent authorities in the UAE regarding the ongoing flight halt between the UAE and Nigeria as well as the travel requirements for travelers to the UAE.”

“The UAE Government has decided to remove the requirement for the Rapid Antigen test at the airports in Nigeria while demanding the following requirements:

“Number of passengers on inbound flights to the UAE must not exceed 200 passengers for two weeks. Only direct flights between the UAE and Nigeria are allowed. Passengers need to present a valid negative PCR test conducted within 48 hours before boarding.

Provide the embassy with updated list of the approved PCR test centers by the Government of the Federal Republic of Nigeria and the importance of ensuring the accuracy of the passengers’ information, contact details and place of stay during their visit in UAE.”

The federal government is yet to respond to the new conditions imposed by the UAE authority as at the time of filing this report. Stringent covid-19 test requirements by the UAE government forced the federal government to ban Emirates from operating flights out of the country.

Patoma Admin by — March 27, 2021 in Aviation 0
Suez Canal blockage, heavy traffic – Capt. Rahul Khanna

By admin

The grounding of an ultra large container ship in the Suez Canal brought traffic on the central shipping route between Europe and Asia to a standstill.

Allianz Global Corporate & Specialty (AGCS) Global Head of Marine Risk Consulting, Captain Rahul Khanna looks at some of the potential implications of this incident and highlights some of the risk challenges posed by ever-increasing ship sizes.

How do operators approach the salvage of such a huge ship? What are the challenges?

Container-carrying capacity on ships has increased by 1,500% over the past 50 years and has doubled over the past decade and a 224,000-tonne, 400-metre-long vessel which can carry up to 20,000 containers like the MS Ever Given is in the top 1% in terms of size of vessels on the ocean. Obviously, the size of these vessels make a salvage operation a significant undertaking. For some time now many in the salvage industry have warned that container ships are getting too big for situations like this to be resolved efficiently and economically.

Dislodging a “mega ship” in a confined space like the Suez Canal will be challenging, requiring the expertise of a specialist salvage company – not all have the experience of dealing with such vessels. Their first job is to assess the degree to which the vessel is aground, and what could be the safest and quickest way to refloat the ship.

A best case scenarios would be that a combination of high tide and adequate tugs may free the vessel. However if the vessel is hard aground then lightening the vessel may be the only option and containers may have to be removed from the ship. This will delay the salvage/refloating process and is going to make the operation a lot more expensive.

Assuming that the grounding of the Ever Given will continue, what are the potential claims scenarios in scope from an insurance perspective?

It’s still too early to comment on the causation of this incident as a number of different factors have been cited as contributing to the incident in reports. However, potential claims scenarios could include damage to the vessel’s hull and engine (if there was a machinery breakdown issue – a frequent cause of marine insurance claims); damage to the propeller and its shaft if the stern is aground as well; salvage and vessel removal costs – which can quickly escalate particularly in the event of wreck removal; third party liability claims especially with regards to damage to the canal; loss of any perishable goods in cargo; and business interruption and loss of revenue claims as a result of this blockage.

If ships are unable to go through the Suez Canal, is there any chance they can take the longer route around the African coast?

The option of going around the Cape of Good Hope (COGH) is always available although it adds around 5,000 nautical miles or 9,000 kilometers to a typical journey from the Middle East to Europe. From Singapore to Europe it probably is less, around 3,000 to 3,500 nautical miles

This means a lot more fuel consumption and a much longer journey time (around 10 to 15 days more depending upon the speed of the vessel). Therefore, such a consideration is considerably more expensive but the ship can save on Suez Canal fees. The weather is another consideration as this can deteriorate while going round the Cape. Therefore, it’s not the first route choice for smaller vessels who may not even have the fuel capacity. Much also depends on the price of fuel and prevailing ship charter rates.

Sometimes higher fuel prices and charter rates combined could make the longer journey cost-effective. For a few days blockage it probably doesn’t makes sense for ships to reroute, only if a longer term delays are envisaged.

What is the likely impact on global supply chains? Which goods may be affected?

Such incidents show the immediate impact that the blockage of one of the world’s major shipping routes can have and highlights how dependent global trade has become on mega ships.

Between 10-12 percent of global trade passes through the Suez Canal with more than 50 vessels transiting it a day. Lloyd’s List has estimated that around $10bn of daily marine traffic could be halted by this blockage and it comes at a particularly bad time for global supply lines. Car and computer makers are straining from a global chip shortage, exacerbated by a fire in a big chip making factory in Japan. Car makers have closed plants after a Texas cold snap earlier last month hit plastics production, and California ports have been hit by backlogs and delays.

The canal is an important route to transport oil and liquefied natural gas from the Middle East to Europe and there is also the potential for delayed shipments to technology and automotive companies as well.

What are the challenges of mega ships in general? From a risk management point of view, what lessons can be drawn from this incident?

Insurers have been warning for years that the increasing size of vessels is leading to a higher accumulation of risk. These fears are now being realized, potentially offsetting long-term improvements in safety and risk management.

Such ships generate economies of scale for ship owners but also a disproportionately greater cost when things go wrong. Dealing with incidents involving large ships, such as fires, groundings and collisions, are becoming more complex and expensive.

Fires on board large container vessels are now a regular occurrence and such incidents can easily result in large claims in the hundreds of millions of dollars, if not more.

A hypothetical worse-case loss scenario involving the collision and grounding of two large container vessels, or a container vessel and a cruise ship, could result in a $4bn loss if the costs of a complicated salvage and wreck removal and any environmental claims are included.

The size of a vessel can significantly increase salvage and general average costs. Mega ships require specialist tugs and finding a port of refuge with capacity to handle such a large ship can be difficult, which increases the salvage operation costs.

It is clear that in some shipping segments, loss prevention measures have not kept pace with the upscaling of vessels. This is something that needs to be addressed from the design stage onwards. And with 24,000 TEU vessels on the horizon we are now seeing the implications of what might happen more regularly in the future.

In this case of this particular incident there will no doubt be some valuable lessons to be learned with respect to the pilotage and handling of the ultra large vessels in the Suez Canal, especially during sand storms and other scenarios where visibility is hampered

Patoma Admin by — March 27, 2021 in Insurance 0
Suez Canal expects to cost insurers $100 m

By admin

A mega containership wedged in the Suez Canal is expected to cost $100 million loss to the owner and insurers.

The ship is stuck in the southern section of the canal, travelling northbound to Rotterdam from Yantian in China with about150 ships backed up since Tuesday evening and supply chain issues building every day.

Head of hull and marine liabilities at McGill and Partners, David Smith said the broker has heard figures as high as $100m in insured losses mentioned.

But he said other costs, including compensation for delays, loss of revenue for the Suez Canal Authority, potential damage to cargo and the costs of refloating the ship could be “even more expensive”.

Owned by Japanese firm Shoei Kisen and operated by Taiwanese firm Evergreen, the 220,000-tonne Ever Given ran aground in strong winds on Tuesday evening and blocked the canal from one side to the other. Efforts are underway again today to dislodge the ship, which has the capacity to carry 20,000 containers.

More than 10 percent of global trade passes through the narrow stretch of the Suez Canal at an average 51 ships per day. “The disruption will come with a hefty price tag, a figure of $100m has been mentioned by some in the industry,” Mr Smith said.

Allianz Global Corporate & Specialty (AGCS) said “ships face costly and lengthy deviations if the canal is not opened soon”. It added that it is a “particularly bad time for global supply chains”, with a worldwide shortage in chips for cars and computer manufacturers after last week’s fire at a manufacturer in Japan.

Reuters reported that Ever Given hull is insured in the Japanese market, while UK P&I Club said it covers the ship for protection and indemnity loss.

“For some time now the salvage industry has been warning that container ships are simply getting too big for situations like this to be resolved efficiently and economically. This incident may force shipbuilders, owners and cargo operators to sit up and listen,” Mr Smith said.

Russell Group said Ever Given could be carrying goods worth $89m, including $4m worth of clothing. It valued the goods that flow between Ever Given’s route at more than $40bn per year, adding that it is a key transport for integrated circuit ports to Europe.

Managing director at Russell Group, Suki Basi, said business interruption was the biggest risk posed by the Ever Given grounding, rather than damage to the vessel.

“The disruption highlights that global trade has become dependent on these mega ships, and how any disruption in trade routes can leave many organisations and their (re)insurers significantly exposed to business interruption risks.

Coming on top of the global pandemic and recent disruptions to global auto production caused by other events, this latest blockage shows that insurers and their risk partners increasingly need to follow the money when assessing their underlying connected trade risks,” he said.

Patoma Admin by — March 27, 2021 in Insurance 0
924 workers withdraw N1.01 bn from RSAs in Q4 2020

By Favour Nnabugwu

 

The Contributory Pension Scheme (CPS) witnessed the withdrawal of N1.01 billion by 924 workers from the voluntary contributions in their Retirement Savings Accounts (RSAs) with their Pension Fund Administrators (PFAs) in the Q4 quarter of 2020.

The National Pension Commission (PenCom), disclosed this in its 2020 fourth quarter report.

“During the quarter under review, the Commission granted approval to 924 contributors for the withdrawal of voluntary contributions amounting to N1,011,283,273.66”, the report stated.

An analysis of this quarter’s report revealed a decrease in withdrawal by workers when compared with that of the 2020 third quarter report which saw the sum of N2.18 billion withdrawal from about 1,286 workers under the scheme.

According to the guidelines on voluntary contribution under the CPS, PenCom states that, the main purpose of the Pension Reform Act 2014 is to introduce a pension system that is sustainable and has the capacity to achieve the ultimate goal of providing a stable, predictable and adequate source of retirement income for each employee in Nigeria

“The Pension Reform Act 2014 allows employees to make, voluntary contributions into their Retirement Savings Account, in addition to their mandatory pension contributions, with the sole aim of enhancing their retirement benefits.

“Voluntary contributions under these guidelines shall be non-obligatory contributions made by any employee in the formal sector through the employer.

“Employees of organisations with less than three employees as well as self-employed persons as provided in Section 2 (3) of the Pension Reform Act 2014 (PRA 2014) shall be covered under the guidelines for micro pensions.

“Voluntary contributions shall be remitted into and withdrawn from a duly registered RSA, managed by a licensed PFA”, the guideline says.

Stating the rules of general application, the Commission stated that any eligible contributor under these guidelines must notify his employer in writing of his intention to make voluntary contributions and the amount be deducted from his emoluments and remitted as voluntary contributions.

In addition, PenCom noted that voluntary contributions should be made from employee’s legitimate income, which should not be more than one-third of the month’s salary in line with the Labour Act, 1990.

The guideline further stated that “all voluntary contributions must be remitted through an employer into the RSA.

“Failure to deduct or remit voluntary contributions within the time stipulated in Section 11 (6) of the PRA 2014 on behalf of a contributor by an employer shall attract the same penalty to be stipulated by the Commission.

“The Commission sets out the modalities and broad guidelines under which voluntary contributions can be administered.”

Speaking on the objectives of the guidelines, PenCom said they are to establish a uniform set of rules for the operation of voluntary contributions and eligibility criteria for participation in voluntary contributions.

Further outlining the objectives, the commission said it seeks “to provide the procedure for making voluntary contributions, and necessary safeguards and modalities for its withdrawals.

“To utilise voluntary contributions for the purpose of enhancing future retirement benefits for active or mandatory contributors. To encourage retirees under the CPS to utilise part or all of the voluntary contributions to augment their existing pension.

“The guidelines aim to assist retirees under defunct Defined Benefit, exempted persons and foreigners to save in order to cater for their livelihood during old age. To assist improvident individuals by ensuring that they saved in order to cater for their livelihood during old age.”

It is also important to note that the scheme provides a platform for an RSA holder to make voluntary contributions, in addition to the statutory contributions being made by him and his employer.

The above guidelines apply to any employee in the public service of the federation, the public service of the Federal Capital Territory, the public service of the State Government, the public service of the Local Government Councils and the private sector.

Patoma Admin by — March 27, 2021 in Pension 0