OIL PRICE DROP; DONT GIVE IN TO FEAR- OKONJO-IWEALA

The Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, has counselled Nigerians against surrendering to fear over the state of the economy, saying “we should avoid the kind of fear that will paralyse us or make us do the wrong things.”

Speaking at the Ministerial Summit on Insurance held in Abuja on Monday, the minister said “the only thing we have to fear is fear itself. Many of us, private companies and households are concerned about how the current economic challenges will affect them. That is natural and legitimate. But we should avoid taking wrong decisions out of fear.”
She said: “Government is open to constructive criticism and ideas because we need to work together as a country to tackle these present challenges. But we should not let the merchants of fear; those who want to politicize and make political capital by distorting facts about the economy in order to sow hopelessness and fear succeed.
“We have challenges but we also have strengths - a diversifying economy, increasing non-oil revenues from tax, a growing private sector and a mix of the right policies to help the economy grow sustainably. We also have a growing number of goods and products produced in this country so we are not 100 per cent import dependent. These are strengths that we can fall back on to help us in this challenging times,” she said.
Earlier she told the insurance chiefs that unleashing the latent energies of the insurance industry to create more jobs and boost economic development “is one of our strategic responses to close the gap created by the economic challenges we are confronting at the moment.”
She said, “Given the great progress which the banking and pension sectors have made in the last decade, insurance can do as well or even better.”
Dr. Okonjo-Iweala also itemized three visions of the Federal Government on the insurance sector namely “to grow our gross written premiums (GWP) of N300 billion today, to N1 trillion in the next three years, and to N5 trillion within the next decade; two, to deliver jobs in this industry and to widen access by growing the number of insurance policyholders in the country.”
The minister said that given the size of the economy, and investor interest in the industry, the insurance sector should be growing fast. She, however, regretted that that was not case.
She said, “When we benchmark ourselves against other emerging markets, we realize that we still have a lot of work to do. The current insurance penetration (i.e. the ratio of premiums to GDP) is only 0.4 per cent in Nigeria, compared with 1.1 per cent in Ghana; 3 per cent in Kenya; and for the BRICS (Brazil 4 per cent; Russia 1.3 per cent; India 4 per cent; China 3 per cent; and South Africa 15 per cent).”
She added, “Moreover, for Nigeria, when you look at assets in our overall financial system, insurance also accounts for only 3 per cent of total assets, compared to 12 per cent from pension assets and 79 per cent from banking assets. This is different from other emerging markets such as Brazil and Mexico, where insurance assets accounts for about 6 percent of total financial assets; and for India where insurance contributes about 14 percent of total financial assets.”
The minister said that after the reforms that took place in the banking and pensions sectors, the insurance industry would be the next, adding “we should imagine a time when our insurance industry players are strong, robust, and even begin international expansion. A time when our domestic insurers will begin to fully underwrite policies for our oil & gas and heavy infrastructure sectors; when this industry will develop skilled actuaries and underwriters who can meet the highest international standards.