By tf-lawyer.com Ebere Nwoji
In an effort to support the federal government’s ambitious target of reaching a $1 trillion economy by 2030, key stakeholders in the insurance and pension sectors are being encouraged to adopt five critical strategies. This initiative comes in response to rising inflation and the declining value of the naira against the dollar.
During his keynote address at the 9th Annual Conference of the National Association of Insurance and Pension Editors (NAIPE) in Lagos, Dr. Afolabi Olowookere, the Managing Director and Chief Economist at Analysts Data Services and Resources, underscored these strategies. The conference, themed “Towards a $1 Trillion Economy: Roles of Insurance and Pension Sectors,” served as a forum for CEOs of insurance companies and Pension Fund Administrators (PFAs) to evaluate their contributions to the nation’s Gross Domestic Product (GDP) and outline their future initiatives.
Dr. Olowookere referenced data from the National Bureau of Statistics (NBS), highlighting that essential contributors to Nigeria’s GDP include agriculture, ICT, trade, and manufacturing. He pointed out that, despite various challenges, the finance and insurance sector—which accounts for 6.57% of GDP—has emerged as a crucial engine of economic growth and is currently the fastest-growing sector.
Acknowledging the difficulties posed by high inflation rates and currency depreciation, Dr. Olowookere emphasized that the insurance and pension industries possess the potential to leverage these challenges to remain relevant. He strongly advocated for the adoption of technological advancements such as Artificial Intelligence (AI), machine learning, and blockchain. “By enhancing efficiency and lowering costs, these sectors can deliver better returns to contributors and draw in more investments, ultimately fueling economic growth through more intelligent and sustainable investments,” he noted.
On the topic of capitalization, he stressed the importance of encouraging more Nigerians to save for retirement and to embrace higher portfolio risks. “As life expectancy rises and wealth continues to build, these funds will expand, providing increased capital for long-term investments in the economy,” he argued. He also mentioned that the insurance sector should strive to boost its operating capital in order to generate larger premiums and profits.
Citing research from ADSR, Dr. Olowookere expressed concern over a troubling forecast: total assets in the insurance sector are projected to drop from $3.9 billion in 2023 to $2.2 billion in 2024 due to the depreciation of the naira. He provided a baseline projection indicating that Nigeria’s GDP is anticipated to increase from $265.4 billion in 2024 to $681.9 billion by 2030. “Under this baseline scenario, the total assets of the insurance sector could grow to $6.4 billion by 2030. However, if the government meets its goal of a $1 trillion GDP, total assets in the insurance sector could potentially reach as high as $20.5 billion,” he explained.
