AIO president charges reinsurers to find solutions to inherent problems

By Favour Nnabugwu


The President of African Insurance Organisation (AIO)has chaeged reinsurers to examine the  inherent problems facing the African insurance industry and provide lasting solutions.

Smart who is also the Group Managing Director, NEM Insurance Plc, this while giving his address at the 25th African Reinsurers Forum going on in Kigali, Rwanda.

He urged participants to leverage the event and do an objective dissection of the event theme, which is Insurance Integration In The Context Of African Continental Free Trade Area.

According to him, one of the instruments of ensuring a healthy, resilient, and robust economy for Africa no doubts remains the African Continental Free Trade Area (AfCFTA) agreement, adding that after deep reflection, the AIO Secretariat thought it wise that it incorporate insurance integration into the agreement.

“This is why during this 25th African Reinsurance Forum, discussions will centre around the theme: Insurance Integration In The Context Of African Continental Free Trade Area.

“The African Insurance Organisation is happy to return to the birthplace of the African Continental Free Trade Area, Kigali, to examine not only how the insurance sector can best integrate into the AfCFTA, but to also provide a conducive venue for the cream of the African insurance industry to reflect on the way forward,” he posited.
Smart noted that through the event, the AIO further wishes to highlight the contribution of the African insurance industry to the realisation of the lofty idea, whose benefits to the entire African continent cannot be overemphasized.

He submitted that the African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating, adding that the pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion according to the African Union.

He said AfCFTA has the potential to lift 30 million people out of extreme poverty but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.

He noted that in concrete terms, the AfCFTA emphasizes the reduction of tariffs and non-tariff barriers, and the facilitation of free movement of people and labor, capital, right of residence, right of establishment and investment.

“In September this year, the Africa Insurance Pulse, a research publication of the AIO, carried out an extensive study on the African Continental Free Trade Agreement.

“In the findings, insurance executives interviewed hope that in the long term the successful implementation of AfCFTA will benefit all markets. In the short to medium term, however, they expect that the large markets such as South Africa, Morocco, and Kenya will benefit most. When asked which insurance players will be the «winners», the clear answer with 46 per cent is the African regional insurance/reinsurance players such as Africa Re, CICA Re, Sanlam and Santam.

“According to the executives, they have a better starting position than all other players because they already have a well-established and tested distribution network across several countries, which will be reinforced with the single market approach,” he submitted.

He maintained that insurance and reinsurance players that participated in the survey were optimistic about their future in the context of the AfCFTA. “75 per cent do not believe the single market will become a threat to their business. Many reinsurers and global and regional insurers confirmed that they already operate under the logic of a single market. Many believe that the insurance pie will grow with the single market, facilitating the expansion beyond their current reach of active markets.

Reinsurers that are active primarily in one or a few markets see this as a unique opportunity to diversify their risk portfolio. To get prepared, two-thirds of interview partners stated that they already reflected the impact of AfCFTA into their strategic planning, while the remaining group is waiting to gain more information on the impact of the free trade on them,” he said.

Smart said AIO’s goal for setting up the reinsurance forum was to encourage the exchange of business through bilateral contacts and discussions which fall in line with the organisation’s objective of promoting inter-African cooperation and the development of a healthy insurance and reinsurance industry in Africa.

According to him, since the inception of the Reinsurance Forum, there has been a lot of exchange of business among African industry practitioners, but there is still much room for further deepening of the business exchanges.

“One of Africa’s visionary leaders, His Excellency President Paul Kagame of the Republic of Rwanda once said “In Africa today, we recognise that trade and investment, and not aid, are pillars of development.” The AfCFTA agreement, to me, is that golden opportunity to make this a reality,” he posited.

AIO President implores reinsurers to tackle inherent challenges facing African insurance industry

No going back on January 1, deadline for IFRS 17 – NAICOM

By Favour Nnabugwu


The Commissioner, National Insurance Commission, Mr Sunday Thomas, has said there is not going back on January 1, 2023 deadline for enforcement of full compliance with the International Financial Reporting Standards 17 by the National Insurance Commission, Naicom.

Thomas spoke while delivering his speech at the Insurance Director’s Conference in Lagos.

He said, “I want to urge you also to follow up on the implementation of the International Financial Reporting Standards. IFRS 17 in your companies. The implementation dateline of 1st January, 2023 is right before us.

“Sufficient capacity building engagements have been conducted and sub-working groups inaugurated to facilitate the migration. You are therefore required to ensure that your entities are in full compliance and ready for the dateline.”

On the issue of development of insurance in the country, he urged the directors to work closely with their management as a lot was expected from them at the top level.

He said the commission was working assiduously to open up the market particularly the retail end, and conducting engagements with various agencies and state governments on the need to boost insurance culture across the country.

However, he added that the supply side comprising the insurance companies must also be proactive with follow ups in these places.

Eurobond, SDRs raise Nigeria’s external reserves to $41.4bn

By Favour Nnabugwu


Nigeria witnessed a 35 per cent spike in its foreign reserves as Eurobond and Special Drawing Rights (SDRs) shot it up from $32.9 billion recorded last June to $41.4 billion this month.

According to  Governor of the Central Bank of Nigeria(CBN), Mr Godwin Emefiele, who disclosed this at the weekend in his address at the Bankers’ Dinner in Lagos, the accretion was as a result of demand management policy of the apex bank, Eurobond and the International Monetary Fund’s (IMF) Special Drawing Rights( SDRs).

SDRs are supplementary foreign exchange reserveassets defined and maintained by the International Monetary Fund (IMF}.

Giving his scorecard before the gathering of the bankers and other dignitaries at the event, Emefiele said: “Prior to the start of the pandemic in 2019, our economy was making steady progress out of the difficulties from the global oil price vagaries of the previous years. Indeed, our Gross Domestic Product (GDP) growth rate for 2019 stood at 2.3 per cent, on the back of a relatively strong fourth quarter GDP of 2.55 per cent that year. This growth was accompanied by significant foreign capital inflows due to improved fundamentals of the economy.

“As a result of the drop in foreign exchange supply, arising from low earnings from the sale of crude oil, the Naira depreciated by 7.7 per cent from N380/$ to 410/$ at the I & E window. Supply was also affected by massive outflow of foreign portfolio investments from emerging and frontier Markets, including Nigeria in 2020. A combination of these factors led to a marked drop in our foreign reserves from nearly $36.7billion at the beginning of the crises in March 2020, to a low of $32.9billion in June 2021. It is important to state that the volume of activities at the I&E window fell from nearly $250million – $300 million daily to less than $40 million in the first quarter of 2021.

“As a result of these measures, we witnessed robust economic recovery as GDP growth stood at 4.03 per cent in the 3rd quarter of 2021, following the 5.01 per cent growth recorded in the 2nd Quarter of 2021. The economy has remained on a positive growth path for four consecutive quarters after the recession in the 3rd quarter of 2020. 41 out of the 46 sectors assessed in the 3rd quarter by NBS, recorded positive growth, as growth was driven by significant improvements in the non-oil sector, particularly, agriculture manufacturing, trade, ICT, construction, finance and transportation. We have also witnessed a gradual recovery in manufacturing output growth as the Manufacturing PMI index rose to 47.3 points in October 2021 from 44.9 in January 2021.

“Supported by our demand management policy, in addition to support from the successful issuance of the $4 billion Eurobond and the IMF SDR, our external reserves today stands at over $41.4billion, which is enough to support 9 months of imports. This is not just a morale booster for both foreign direct and portfolio investors willing to invest in the economy, but it provides significant fire power to support our domestic industries that need to import critical machines and equipment for domestic production and exports.”

“As a result of our demand management policy, the naira has remained largely stable around N411/$1 at the I&E window, particularly since the discontinuation of FX allocation to Bureau De Change operators along with the convergence between the CBN and NAFEX rates. Banks are now able to meet the demands of their customers seeking forex for SMEs, school fees, medical and PTAs, which has reduced the need of customers to rely on alternative providers of foreign exchange. Average daily FX turnover at the I&E window is now over $250million, up from $40million in April 2020.

“Our current account deficit has narrowed significantly, from a huge deficit of 4.53 percent of GDP in the 4th quarter of 2020 to negative 0.44 per cent of GDP in the 2nd quarter of 2021.”