Insurance, banking can look beyond traditional channels to increase penetration – CFI

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The Commissioner for Insurance, National Insurance Commission (NAICOM), Mr Sunday Thomas said the insurance and banking sectors can deepen their penetration in Nigeria by looking beyond the traditional distribution channels.

Thomas spoke at a virtual growth for Banks and Insurers”, organised by Ernst and Young Nigeria (EY) on Thursday in Lagos.

Bancassurance is a relationship between a bank and an insurance company that is aimed at offering insurance products or benefits to the bank’s customers.

In such partnership, all the bank’s sales channels become a point of sale and contact for the customer.
According to Thomas, insurance penetration in Nigeria currently stands at .5 per cent.

“We believe that we should begin to look beyond the traditional distribution channels for the purpose of reaching out to the unreached, insurance wise.

“Not just people in the sense of national population, but an organised set of people who have the capability of meeting the requirements for insurance purposes
As at December 2020, about 111.5 million active bank accounts exist in Nigeria; when you look at these numbers, compare to the number of people that have one form of insurance or the other

By my record, it is less than 10 million; it’s a far cry! It portends a great opportunity for the insurance sector to be able to reach out to deliver insurance benefits to the people,” he said.

The insurance commissioner said that with Bancassurance, he believed that working together with the banking sector, stakeholders could reach out to more people.

He also advised operators to adopt the referral models of Bancassurance for the purpose of distribution, saying that other models would require issuance of special licenses and certificates.

Thomas said it would allow them make contact and leverage the data base of the banking sector for the purpose of distribution.

He said that it was a model which the present structure and relationship within the financial services sector and principally between NAICOM and the Central Bank of Nigeria allowed.

The insurance commissioner supported deepened retail market, noting that it was the future of insurance sector.
He said that the corporate account was good to build portfolio, but in terms of sustainability, operators needed retail business.

Buhari removes Hadiza Usman as NPA MD replaces with Mohammed Kuku

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President Muhammadu Buhari had suspended Hadiza Bala Usman as the managing director of the Nigerian Ports Authority, sources told Peoples Gazette.

Ms Usman was replaced by Mohammed Koko, the director of finance.

Ms Usman told The Gazette that she was aware of her suspension from office, but has yet to receive any formal communication to that effect from the Ministry of Transport.

A spokesperson for the ministry did not immediately return a request seeking comments.

Ms Usman was appointed as NPA chief in 2016 and has repeatedly propagated her reform policies that sought to redirect the organisation, which is one of the top revenue-generating entities of the Nigerian government.

PenOp partners AVCA to develop private equity

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Pension Fund Operators Association of Nigeria (PenOp) has partnered the African Private Equity and Venture Capital Association (AVCA) to empower local investors and develop private equity (PE) as an asset class in Nigeria.

Speaking about the partnership, PenOp Chief Executive, Mr. Oguche Agudah to Inspenonline said,  “Pension funds realise that they need to diversify into alternative investments and private equity presents one of such opportunities.

“However, we haven’t seen that much uptake of this locally. In addition to other initiatives we are pursuing, we are hoping that this partnership with AVCA will help to further open up this space.”

He maintained that domestic capital plays a vital role in accelerating economic growth in Nigeria and across the continent in general. Over the past 5-10 years, the value of Nigerian pension funds has grown markedly to peak at over US$25bn in December 2020, of which 0.03% has been allocated to private equity.

This partnership between PenOp and AVCA, Oguche said will focus on training and networking, including an introduction to Development Finance Institutions (DFIs), fund managers and other stakeholders within the global private equity ecosystem, to ensure the growth of private equity in Nigeria, especially for pension operators.

He submitted that as part of this collaboration, PenOp will also support AVCA’s research and advocacy by providing insight into pension fund investments in PE and their impact.

During the African Institutional Investor Roundtable hosted at AVCA’s annual conference in April, there was a discussion about ways to encourage pension funds on the continent to increase their allocations to private equity.

The roundtable event was a partnership between PenOp, AVCA, Southern African Venture Capital and Private Equity Association (SAVCA) and East Africa Venture Capital Association (EAVCA). The event was attended by several Nigerian pension funds and international DFIs. It was enlightening and engaging, and the outcomes from the event will be reviewed by all associations involved, with a view to working on removing the identified roadblocks.

Abi Mustapha-Maduakor – CEO of the African Private Equity and Venture Capital Association (AVCA) said: “Our mission at AVCA is to facilitate more private investment into Africa, and part of this work involves unlocking domestic capital by demystifying the asset class. We know that African institutional investors are increasingly looking at PE to diversify their portfolios, so this collaboration with PenOp will enable us to equip Nigerian pension funds with the tools and resources they need to achieve superior returns by investing in the continent’s growing businesses.”

About AVCA

The African Private Equity and Venture Capital Association is the pan-African industry body which promotes and enables private investment in Africa.