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7th February 2008 Financial Services Revolution in Nigeria by Gareth CadwalladerThe Financial Services Sector in Nigeria is going through a quiet, but profound revolution. As the economy grows and, with it, disposable income among a broader base of the population, so the scale and sophistication of financial markets is growing apace. The first decade of the century has seen strong stock market growth, reform and recapitalization of the Banking sector and subsequently the insurance sector. The Federal Government announced the recapitalization of Insurance and Reinsurance companies in September, 2005, requiring new minimum paid-up share capital of N2 billion, a huge increase from the N150 million required previously. In January 2008, Mr. Mike Umeh, Head of the national Insurance Commission's Corporate Affairs Department, reported on the “the successful completion of the recent re-capitalisation exercise in the nation's insurance industry in which 49 companies were re-certified.” This represents a massive consolidation in the sector from over 100 insurers at the time of the re-capitalisation announcement. At the time of the reform announcement, insurance industry annual premiums represented about 0.35% of Nigeria’s GDP. The strategic objective of the reforms is to drive the business to contribute 1% of GDP, an increase in premiums of 3 – 4 times, according to Olurotimi Okpaise, a partner at H R Nigeria, a Milliman Global company. Mr Okpaise said, “ This target is not unrealistic since life business
accounts for much higher percentages in other territories – 3%
in Kenya, 4% in Emerging Markets as a whole, and 9% in Developed
Economies. Thus our low base presents growth potential and opportunity.” For more information contact:
Airas Intersoft www.airasintersoft.com |
