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Nigeria’s fiscal funding still under pressure –Analysts

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images 59 Nigeria’s fiscal funding still under pressure –Analysts

…As less optimism greets Fitch’s outlook

With debt service to revenue at 72.2 per cent between January and May 2020, the Federal Government’s fiscal position remains under enormous pressure with this likely to impact on its recent projected revenue target of N7.9 trillion.

According to analysts, this would be a more prominent debt sustainability risk than Nigeria’s low debt to GDP ratio of around 20.4 per cent, since revenue collection has been underwhelming and below peers at less than 10 per cent of Gross Domestic Product (GDP).

This is coming after the Federal Executive Council (FEC) presided over by President Muhammadu Buhari, recently approved the N13.08 trillion budget proposal for the 2021 fiscal year, representing a 24.6 per cent increase on the 2020 revised budget.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had earlier said the budget estimate was made up of N2.08 trillion for capital expenditure, representing about 29 per cent of the total budget.

She noted that the budget proposal was predicated on the N379 exchange rate to the dollar, at oil benchmark of $40 per barrel, oil production volume of 1.86 million per day, including 400,000 barrels of condensate, GDP growth of 3 per cent and 11.95 per cent inflation rate.

The minister also said the budget would run on a N4.48 trillion deficit, while putting the revenue target in the fiscal year at N7.9 trillion.

Meanwhile in a related development, Fitch Ratings has revised Nigeria’s economic outlook to stable following reduced uncertainties, stable oil prices and the reopening of the economy. The rating agency had in April downgraded Nigeria’s long-term Foreign-Currency Issuer Default Rating (IDR) to ‘B’ from ‘B+’ with a negative outlook due to COVID-19 pressures.

However, its recent rating stance was largely influenced by Central Bank of Nigeria (CBN’s) management of external liquidity pressures through partial exchange rate adjustment, capital controls, FX restrictions and the rise in external reserves following the disbursement of IMF’s $3.4billion Rapid Financing Instrument (RFI), while citing the persistence of external vulnerabilities due to an overvaluation of the naira and a large FX demand backlog.

Speaking in an emailed note to Daily Sun, Cordros Capital, an investment and research-based firm, said, although the proposed revenue was greater than the N6.15 trillion stated in the Medium Term Expenditure Framework (MTEF), it suspects that the variance stems from the upward adjustment in the exchange rate assumption (MTEF: N360/$) which translates to higher estimated naira receipts from oil sales.

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Customer service week: Underwriter harps on quality service

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images 2020 10 29T090023.270 Customer service week: Underwriter harps on quality service

AXA Mansard Insurance Plc has marked this year’s Customer Service Week by celebrating its staff and customers who have demonstrated outstanding commitment to the company’s legacy of superior service.

The company has also reiterated its commitment to providing quality service delivery to its customers.

In line with this year’s theme, ‘The Dream Team’, which reflects on the importance of teamwork in providing outstanding service to all customers, the company seized the opportunity to recognise some of its exceptional staff for the outstanding work they have done within their teams and their exemplary service.

According to the firm, these staff distinguished themselves during the year in qualities that create good service experience, qualities such as empathy, adaptability, patience, self-control, consistency, hard work, relentlessness etc.

Its Head of Customer Engagement , Emeka Muonaka, said that “the efforts of these staff and their teams is a symbol of the kind of company we are.

“For us, customer satisfaction is everything. It is something we value greatly and the only way to achieve it is through excellent service. AXA Mansard is grateful to these staff members for their hard work and for placing that a great level of importance on their jobs and on giving service to their team.

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Operators brace up for multi-billion claims settlement

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Ganiyu Musa 330x220 1 Operators brace up for multi-billion claims settlement


Following
 the mass looting and destruction of many government offices, banks, shopping malls, media houses, toll plazas, and private offices by suspected hoodlums during the #EndSARS protests across Nigeria, the insurance industry has indeed incurred huge claims.

In fact, industry analysts are of the view that the claims arising from these massive destructions of both private and public properties will certainly and immediately shake the balance sheets of underwriters this year.

These experts have also expressed concerns on the ability of the sector to meet up with payment of claims which is expected to run into hundreds ofbillions. They opined that the claims may overwhelm operators if the government fails to extend any form of assistance especially, now that the sector is in the middle of a recapitalisation exercise.

Though the value of properties looted and vandalised has not been disclosed by the industry, financial analysts who spoke on various media platforms stated that insurers should be prepared to pay claims in billions to policyholders especially those who have the Riots, Strikes and Civil Commotion (RSCC) in their policies.

According to the National Insurance Commission (NAICOM), insurance companies paid a total non-life insurance claims of N64 billion in 2018 compared to N56.4 billion in 2017. Out of this total, claims on fire insurance were about N9.1 billion while Motor Vehicle was N17.3 billion

Deducing from this massive vandalism of properties across the country, it is obvious that the sector will indeed be paying out huge claims.

Notwithstanding, insurers under the umbrella body of the Nigeria Insurers Association (NIA) have assured policyholders of claims settlement arising from the #EndSARS riots.

The Chairman of NIA, Ganiyu Musa, who said this in an interview stated that Loss Adjusters are currently on sites of the affected companies and business evaluating the extent of damages done.

He also noted that assessment of claims is currently ongoing across the various insurance companies as some of them have started getting notification of claims from policyholders.

Musa, however, noted that claims from these damages will have an immediate negative impact in companies’ liquidity, balance sheet and cash flow but essentially, insurance was built for times as these and this is why people take up policies.

He assured that all policyholders both individuals and businesses with valid insurance policies that have been paid for, will be duly compensated as all members of the NIA will indemnify and provide them the necessary payout in line with the terms of their policies.

He said, “policyholders with valid claims have nothing to fear. This is why you took insurance, for times as these. If you are in doubt on how to start processing your claims, you can get in touch with your insurance company or brokers. They will put you through the claims process.

“For those that have not taken or do not have any form of insurance policy, this is the best time to do so because this is the essence of insurance. Times like these reveal the importance of having insurance policies,” Musa said.

On its part, AIICO Insurance Plc has stated its readiness to meet its obligations to customers who have covers for incidents that occurred from the riots.

In a chat with Daily Sun, the Managing Director/CEO, Babatunde Fajemirokun, said the losses incurred from the riots in terms of human lives and assets are enormous and have had tremendous effect on individuals and businesses, both small and large.

“Our thoughts and prayers are with those who have been affected in one way or another. I assure you that as a company, we are doing all that is necessary to see our customers through this phase. We are asking our customers with covered cases to contact us for immediate assistance with claims.”

He added, “the year 2020 and all we have experienced as a nation are tailwinds, propelling us forward and helping us to evolve. Indeed, the injection of new imagination, energy and innovative thinking into our national discourse will take us there.

“The company’s claims profile over the years provides insights into its unwavering commitment to claims settlement and benefits payment. In 2019, over N30 billion was paid out to its customers. This followed N29.1 billion paid in 2018 and N23.3 billion in 2017,” Fajemirokun said.

Also, Consolidated Hallmark Insurance (CHI) Plc, announced that it is set to settle claims of policyholders whose policies cover Strike, Riot and Civil Commotion extension.

The company stated this in a mail sent to all its policyholders and stakeholders across the country, noting that such claims, like all others, would be promptly handled to ensure that customers are back in business as quickly as possible.

While calling on the victims of the #EndSARS protests to file their claims through the company’s website and customer care centre, the firm assured the aggrieved policyholders that they would be attended to passionately.

Similarly, the Managing Director/Chief Executive Officer, Universal Insurance Plc, Ben Ujoatuonu, said insurance companies would pay for every cover that extends to riot and commotion, but will not pay for covers that exclude riots and commotion.

He said: “it depends on the cover the company or individual has bought. If the policy excludes riot and civil commotion, then the insured will not receive any indemnity from his insurance company.”

He, however, stated that some policies might have been extended to cover riot and civil commotion, in such situation liability will attach.

He noted that for most of the companies that got their insurance policies through brokers, there is every likelihood that they would have bought such extension.

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Nigerian Government Moves To Reduce Data Cost From N1 , 000 To N390 Per Gigabyte

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images 2020 10 28T153533.267 Nigerian Government Moves To Reduce Data Cost From N1 , 000 To N390 Per Gigabyte

The Executive Vice Chairman, EVC, of the Nigeria Communication Commission, Umar Danbatta, has revealed that the Ministry of Communication and Digital Economy is planning to reduce the cost of data from N1,000 to N390 per gigabyte.
Speaking to journalists in Kano on Saturday, Mr Danbatta disclosed that part of the plan was the new national broadband plan for the year 2020-2025, which says Nigeria must provide broadband connectivity, cover virtually all parts of the country and deploy 4G infrastructure also across the country.
According to him, the ministry was tasked to come up with a digital economy policy and strategies, adding that all the efforts put in place are intended to bring the cost of data down to N390 as against the N1,000 that Mobile Network Operators, MNOs, are charging.
“Actually the cost has come down to N1,000/gigabyte of data, but the government is saying that we should be targeting N390 in the next 3 to 5 years.
To achieve subsidized data cost, according to Mr Dambatta, the country must provide pervasive broadband data infrastructure.
“We need pervasive broadband data infrastructure because at the landing point in Lagos, where we have all the submarine cables. You know, that is why we have them. There is the main cable, 133, West African Sea Cable (WASC). And there is the other one which Glo company is trying to deploy.
“This, combined, have data capacity of 40 terabyte. This data capacity is at the landing point in Lagos. That is from the coast, where there is ocean. Until and unless you move this massive 40 terabyte data capacity into the hinterland because the undersea cables are terminating in Lagos.
“Hinterland consists virtually all the major cities of the country and the 774 Local Governments of Nigeria. Through this way you will be meeting demands for data with appropriate or commensurate supply of data. This is how it will enable Nigerians to pay less data tariff.
“But this massive capacity of data at landing cost can’t move itself. There is the need to build fibre cables that can carry this capacity to the hinterland.
“We are indeed pursuing the plan. There is infrastructure and company licensing framework that could give the companies the ability to afford to sell the data to the retail agents, who will sell the data to the citizens,” he explained.
At the moment, he added, the plan is not happening but is what the country intends to do to bring the cost of data down from N1,000 /gig to N390/gig, adding that the plan is an important policy of the government of President Muhammadu Buhari.
The EVC however said Nigeria is among the countries with lowest data cost in the whole Africa.
“Following observation of the ranking, which was carried out by reputable global organizations, the commission had found out that Nigeria stands in 4th position among the countries with lowest data tariff on the continent,” Mr Danbatta said.
He said Nigeria’s data cost is more than $2, adding that South Africa, despite her economic development, sells data higher than Nigeria and the country is not even among the lowest.
“It is true that Nigerians are yearning for low data prices. Nigeria has one of the lowest data tariff in Africa. When we observed the rankings by global reputable organizations, we discovered that in the rankings of data services and cost, we are like number 4.
“Virtually all the African countries were listed in the ranking. Our data price is $2 and a few cents.
“In South Africa, despite their economic development, they sell data higher than Nigeria. To be honest with you, South Africa is not even among the lowest. Cost of data services doesn’t need to come down,” he said.

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