The Nigerian Stock Exchange (NSE) has said that one major reason for low retail investment appetite in the market is inadequate knowledge of investment products and benefits for retail investors.
The Chief Executive Officer, NSE, Oscar Onyema, who stated this at the fourth edition of the NSE market data workshop, said despite the evolving needs of consumers demanding for financial information globally, Nigeria still had low inclination towards investments.
He recalled a research by FSDH, which reported the savings ratio in Nigeria as one of the lowest among selected countries including China, India, Kenya, Malaysia, South Africa, United Kingdom, and USA.
“The ratio of mutual fund assets to Nigeria’s GDP is also very low at less than one per cent, despite the growth of mutual funds in the country in recent times.
“This underscores the importance of creating product offerings that promote diversity in investment, manage risk and make the information readily available to consumers. Exchanges and data vendors are already responding to this increasing demand using new tools for market data products,” he said.
Onyema noted that there had been a global increase in the general consumption and spending on financial market data and market data analytics, stretching beyond the market data typically provided by stock exchanges for equity trading.
He said: “Market commentators have estimated the value of total spending on all financial market data, analysis and news at about $28.5 billion; while the potential market size of financial information is valued at $50 billion, according to McKinsey estimates.
“At the Nigerian Stock Exchange we believe in customer centricity and we continue to foster partnerships with local stakeholders across the market, incorporating new technologies and expertise to drive market data by-products like derivatives and other structured products such as the Exchange Traded Funds.
“These structured products which are based on the accuracy of the underlying stock prices are being used by a broader set of professional users than those who participate on the stock exchange directly – to advise, monitor and/or validate transactions after they are executed.
“Today’s market data workshop underpins the need for the analysis of data to make it available in a format that is as disaggregated as possible in order to be easily consumed for investment purposes.
“The Nigerian Stock Exchange is in a privileged position to benefit from its broad relationships with market participants to drive the delivery of our strategy. Our focus on innovative and disruptive solutions is built around our market data. We are innovating with “smart channels” that can deliver on-demand data to investors – including USSD, mobile apps, SMS and IVR.
Awobodu: Political interference fuels fraud in procurement process
Mr. Kunle Awobodu is the new President of the Nigerian Institute of Building (NIOB) and founding president, Building Collapse Prevention Guild (BCPG). In this interview with Dayo Ayeyemi, he speaks on various issues affecting the housing and construction sectors in Nigeria and what should be done to resolve them
Many people believe there is corruption in the construction sector, especially in the procurement process. What’s your take on this?
Construction over the years has been seen as an outlet for siphoning funds. The cost of construction is huge. Are you talking of roads and construction running into billions of naira? There is always temptation to pad the estimate and tendency to introduce variations to be able to make extra profits from such a project. Some might not be legitimate; it is an indirect way of generating income for certain use politically. Engineers in road construction in Nigeria do not permit quantity surveyors to interfere in the estimates; rather they use Bill of Engineers. That is the difference.
How can corruption be checked in the building industry?
Building construction is guarded by standards. When money devoted to construction works cannot be juxtaposed with the quality expectation, then that project will fail. Procurement process is useful at promoting due process, but don’t forget that the system that brought most of the public office holders to power is compromised. When you expend so much on electioneering, you are bound to recoup your investment and one of the things to do to recoup the money is the idea of getting contracts for project execution. As a result, the procurement process could be influenced because if you are a procurement officer, you may have problem not dancing to the tune of your boss. Our electoral system is very expensive, the system of government is very expensive, so, if huge resources are expected from party members, those who sponsored public officers must have got the money from somewhere and want to recoup their investment by getting contract. And if some of the contracts are tight, there is no way they can get further remunerations. If it is competitive and is given to the lowest bidder that has political interest, the only way he can have extra income in such a project is to compromise quality. Can you see the difficult situation we find ourselves? You cannot have your cake and eat it. Invariably, the due process that is supposed to checkmate overloading of contract sum is the procurement system, but you discover that those who bid for project innocently might end up not getting the contract because of certain hiding interests.
Yet, it is a known fact that President Buhari is fighting corruption, but his experience as a military Head of State is at conflict as a civilian president. As a military head of state, he used fiat to get things done without much hindrance, but as a civilian president, there are so many obstacles that he needs to maneuver. He is surrounded by businessmen and political jobbers.
If you are to set agenda for the president and ministers, what would be your priorities?
I credit the government over its empowerment programme. N-Power programme is to train Nigerian youths from age 18 to 35 in trademanship so that they would have handwork instead of having ambition towards white collar jobs. So, Council of Registered Builders of Nigeria (CORBON) and NIOB have been training artisans across the country so that they would be able to generate income on their own rather than waiting for government to give them salary. The area government should look at, which is very critical is how it will increase the value of naira. When we went to Builders’ show in the United States, one of the objectives is to bring investors to Nigeria on building materials, but by the time we compared prices of building materials and converted them to naira, it was huge. So, the best thing is to start manufacturing most of these things in Nigeria so that we will not be importing them, which was what China did to raise the value of their currency. This government has been given second chance but in the next two years if people don’t see significant improvement in the economy, they would become despair; they would lose interest in the government. The greatest challenge before this government is economy because in a country where you have huge number of youths that are untrained and unemployed, then crime can never be far-fetched. There is no way you can control crime. One of the sectors that generates jobs for youths is the construction industry. For this reason government must deliberately checkmate the influx of foreign artisans so that those within the country can also get jobs.
The issue of Ministry of Work and Housing getting involved in construction of housing scheme might not really solve the big challenge of inadequate housing provision. Private sector is still better to handle the crisis. I think the ministry should be an umpire – a magnetic pole that would attract developers from private sector and coordinate them appropriately for provision of houses. We have seen the ministry getting involved in construction of houses during Shagari regime, but one of the hidden reasons is because of political patronage. It is when they have such projects that they use to compensate those who have contributed to the campaign. It is also a way of taking care of them and we can’t rule them out. It is give and take system, but the ministry should ensure that those who are working for the political contractors have professional experience/qualifications
Dangote group recently said its refineries project was delayed due to lack of quality steel. Are you not worried that Nigeria has not been able to revamp Ajaokuta Steel Company to fill the gap?
Steel companies are very germane for rejuvenation of the nation’s economy. We are worried about the moribund nature of Ajaokuta steel milling over the years; and for many long time, that has always been going back and front, moving round the circle. For a project that is very crucial for the development of a nation’s steel sector to be moving round the circle without progress is very worrisome.
We are just lucky that the Indian and Chinese came with rolling mills, which are majorly concentrated around Ikorodu, Lagos. These are the rolling mills that have been helping the steel sector in the country. Without them, the sector would have been in shambles. Everybody knows that Ajaokuta is very pertinent to the growth of Nigerian economy, but somehow, it has been moribund. I don’t know how this government will handle it. It requires a lot of discipline and action; it requires a lot of reengineering; it requires rumination about where the expertise would come in to deliver.
What are the benefits if the major steel company is rejuvenated?
It would aid the manufacturing industry. Also, rather than importing billets from abroad, we will get them right here and also get the iron right here. Even those who are manufacturing steel-based vehicles and other things will find it cheaper to operate. Bringing vehicles, trucks and equipment that are manufactured from steel to Nigeria are very expensive with the nation’s weak naira. That is why we cannot afford new ones but fairly used plant, vehicles and equipment. Invariably, if the steel company becomes very active, honestly speaking, prices of steel-based materials will become affordable.
Are you not worried about the huge unemployment rate among Nigerian artisans despite various re-training exercises?
The unemployment is general, it cuts across all professions. We should try to find out from the cement manufacturing companies and steel rolling mills, they would be able to provide data of what they have been producing in the past. When juxtapose with the present, it shows there was a decline in construction activities. Also, when you have a competitive market, you would advitise yourself to me that your handwork would also be under perpetual request. It is one thing to train them, it is another thing for the trainees to market themselves when such trainings are offered. It is one thing to train people who are offered such opportunities to display their skills, but somehow they could not impress their supervisors. This means their patronage would not be constant. It is one thing for you to make claims on a trade, it is another thing to deliver.
There is argument that foreign artisans are taking over their jobs despite being trained and certified by government. Is this true?
System of construction makes it difficult to impose workers on contractors because the construction companies have the right to recruit workers and access them. So if they bid for government’s project and you now introduce a clause that whosoever win the contract must engage building artisans trained by government, what do you think would happen to the artisans they groomed over the years? If you say government has trained some artisans and that those building artisans working with the construction companies should hand off while local artisans take over the jobs, do you know that the contractors might use it as an excuse for poor performance?
This means that government has interfered in the system they have enjoyed over the years. It is a complex situation for any government to impose building artisans on contractors.
Also, if they talk of foreign artisans like those from West African countries, our local artisans should replace them because we need to empower them. But the area we need to also address is dexterity, skill and expertness.
When you talk of skills, are we satisfied with the skills the indigenous building artisans are displaying?
Some of them are acceptable; some of them are below average.
Is this the main reason for their joblessness?
It might be. Some of them are below standards. If you go around, government projects are not so many when it comes to building construction. Most of the estates are being developed by private companies or private developers. So this is the area where building artisans have to focus. Can those developers who are making use of Chinese, Indians and Togolesse be convinced to start patronizing indigenous building artisans? Whether you like it or not, anybody that has fund to execute project would not want to engage building artisans that would be creating problems for the project. A developer told me her experience that large building that were constructed in one of her project sites ended up having plumbing issues. She said people who procured the apartments were just complaining. They have to concentrate on rectifying plumbing issues. So, would you say such a person would not scout for the best hands? This makes it very complex. We can patronize local artisans, but they need to provide good credentials.
We are worried about capital flight, aren’t you?
We are concerned. We have understudied major reasons foreign artisans are more competent than ours. Some of them passed through the system of National Vocational Qualification for Frameworks (NVQF) – that is the system that would be assessing the performance and skills or abilities of building artisans and put them under gradation or levels. They would go through the system, they would assess their works practically and discover their shortcomings and deficiencies, and then improve on them. I am an assessor. I have gone through the training and I can assess artisans and discover their deficiencies and have a way of improving on them. We don’t have this system. Presently, the National Board of Technical Education has introduced it to our system. We now have National Skills Qualification Framework. This will enable us to assess the ability of our local artisans, assess level of their skills and introduce up-skills, having discovered their area of deficiencies. If this is done, local artisans would be able to compete successfully with foreign artisans.
What is your advice to these artisans?
They should not despair; they should not be frustrated, they should be optimistic that things will get better. It is a matter of time, they would become more relevant than foreign artisans. Of course, as I have told you, private sector is re-investing more into the building sector than government. If you go to Lekki axis, you will see huge estates and construction going on there. We are going to be having meeting with developers as part of my programme on how to patronize local artisans and make them gainfully engaged in construction work.
PPPRA: Nigeria records steady growth in domestic LPG utilisation
The Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Saidu has commended the efforts of the Federal Government, industry operators and regulators in deepening the utilization of Liquified Petroleum Gas (LPG). According to him, the effort is paying off in the penetration in the country.
The Executive Secretary made this disclosure in Abuja in a statement he issued on Sunday.
According to him, while domestic utilization ranged between 40,000MT and 54, 000MT from January to April 2018, July 2019 monthly utilization hit 78,000MT.
He said: “this figure is expected to increase in the months ahead as some of government and industry initiatives take root.
“Correspondingly, there has been a steady decrease in kerosene utilization within the same period indicating that Nigerians are increasingly finding value in the switch to LPG from House Hold kerosene for cooking and other domestic purposes.”
Speakin further, he said: “The rapid growth in LPG utilization is in fulfillment of the vision of the government on deepening LPG utilization in the country as encapsulated in the National Gas Policy 2017.”
He assured that government, regulators, operators and other stakeholders will remain focused on the formulation and implementation of a stream of policies that will see to the actualisation of the 5 million Metric Tons cumulative target by the year 2022.
SEC: Rules on Sukuk has enhanced issuance process
he Securities and Exchange Commission (SEC) has said that the release of rules on Sukuk bonds has enhanced the issuance process and fostered participation in the instrument.
The Acting Director General of SEC, Ms. Mary Uduk who stated this at a two-day international capital market conference held in Lagos by SEC in collaboration with the University of Lagos, said that following the development, Osun state issued a Sukuk bond to finance building of schools while the Federal Government used two series of Sukuk isuances to finance roads and other infrastructure.
“As we move into the future, we expect to see the issuances of such new products in our market,” she said.
Uduk noted that to further support infrastructure financing, especially projects with positive environmental impact, SEC released the rules on Green Bonds in December, 2018.
“The rule defines Green Bond as any type of debt instrument, the proceeds of which would be exclusively applied to finance or refinance in part or in full new and/or existing projects that have positive environmental impact. You may agree with me that green bonds are essential elements of our journey towards economic development and sustainability.
“So far, the Federal Government has issued two green bonds to finance afforestation, renewable energy, provision of clean energy and other climate change initiatives. Also, two companies (NSP-SPV Powercorp Limited and Access Bank Plc) have issued this instrument to finance eligible green assets and projects,” Uduk said.
“As we move into the future, we need to continuously embrace innovation in the way we carry out our market operations and regulation. Financial innovation is germane for the conception and delivery of a dynamic industrial society. Market participants and regulators have to continually familiarize themselves with the rapid ever-changing economic, regulatory and business environment.
Flooding: Averting farmers’ yearly losses
As the rainy season gradually gets to its peak with attendant flooding, stakeholders in agric and insurance sectors are expected to step up efforts to minimise losses that are peculiar to the season. Sunday Ojeme reports
ast year, some agric sector stakeholders in the country lamented the grave losses by farmers to attacks on various crops and livestock attacks.
Although they put the estimated loss from livestocks alone at over N20 billion annually, efforts to stem the tide appear not to be enough as agric investors are continually being exposed to series of natural disasters, especially flooding that keeps ravaging their investment.
According to the stakeholders, absence of insurance cover for smallholder farmers is part of the reasons livestock agriculture was not growing in the country.
Although they acknowledged the importance of insurance in their business, they, however, lamented the absence of specific products tailored along their investment.
According to the Executive Director, Zynosism Nigeria Ltd, Dr. Kolade Adebayo, the insurance sector should create products that capture small farmers.
“The absence of insurance products for small farmers is costing the agricultural sector over N20 billion annually. We need insurance products that will aggregate small farmers cooperatively and provide cover for them. As such, insurance companies need to deal with poultry associations, rice farmers association and so on so that agricultural produce can be enhanced.
“Risk is an integral element of the farming industry, but the challenge we are having is that we don’t have the insurance partnership to cover most of our risks. The association of livestock farmers usually organize annual agric forums where we come together to discuss issues. For years we have always invited stakeholders from other sectors to rob minds together on ways of moving agric business forward. For over 10 years that we have been having this forum, while we have had many representatives from other sectors, we only see one person from the whole of the insurance industry. This is not good for the insurance sector.”
Similarly, the Chairman, SME Trade Group, Lagos Chamber of Commerce and Industry (LCCI) Mr. Biodun Oladapo, echoed Adebayo when he said that livestock business was still stunted in Nigeria because over the years there has not been insurance support to give it a boost.
Oladapo said: “We have seen little growth in livestock business in the country because we have not had adequate insurance support. Any farmer that has any insurance cover today got it because they wanted bank loans. Unfortunately, no bank in Nigeria will give any farmer loan without insurance cover.
“For the farmers that have insurance, when cows enter a rice farm and eat up the rice, the insurance companies will tell you that ‘cow eating rice’ was not covered. At the end of the day, no claim will be paid and the farmer is abandoned to his fate. Such incidents have contributed in impoverishing many farmers and the experience is causing apathy between us and insurers. So there is need for the insurance sector to introduce products that will cover all our risks.”
Touched by the outcry, the President of the Nigerian Insurers Association (NIA), Mr. Tope Smart, promised that the insurance industry would partner the agricultural sector going forward as part of measures to survive and thrive, saying that even the insurance sector was under threat of survival, and as such, should re-strategize and innovate to continue to exist.
This is not the first time that farmers would come out openly to bemoan losses to disasters, especially following their failure to take advantage of benefits provided by government through insurance.
Recall that last year, President Muhammadu Buhari had personally promised compensation to farmers whose investments were lost to flooding. It has, thus, become an annual ritual for the few farmers now in the business, as bandits and cattle herders have scared others out, to agonise over losses to flooding and other disasters including strange insects.
Raising the alarm
As a matter of caution and the need to be prepared, the management of Nigerian Agricultural Insurance Corporation (NAIC) has again drawn their attention to the ‘Red Flood Alert’ issued by the Nigerian Hydrological Services Agency (NHISA) with respect to some states of the federation.
NAIC’s alarm to farmers is to enable them prepare early by arranging insurance cover for their investments.
According to the Managing Director/CEO of the Corporation, Mrs. Folashade Joseph, the reminder underscores the need for farmers to keep abreast of the impact of the heavy rains, which is expected to peak between the months of August and October, 2019.
She advised all farmers, especially those covered by NAIC, to strictly adhere to best agricultural practices, as they have already been educated by the Corporation during various farmers sensitisation programmes on how to maintain sound house-keeping on their insured projects, thereby closing gaps of risk occurrence.
To consolidate on Federal Government’s seriousness in putting an end to the farmers’ plight, the National Insurance Commission (NAICOM), issued licences to more operators for agric insurance business.
In the past, about $5 million was approved by Federal Government to enhance the activities of NAIC for adequate crop and livestock insurance, a gesture that was meant to support NAIC’s institutional reforms, strengthen operations and roll out agricultural insurance products.
The Federal Government said then that it understood the importance of risk management in agricultural investment and, therefore, decided to build its capacity and prepare it to effectively meet the insurance needs of the agricultural sector.
“As we continue to modernise the agricultural sector, we will ensure that farmers are protected from the effects of climate change. The devastating flood of 2012 was a wake-up call for the need to develop policies and risk transfer systems to protect the government and farmers from effects of climate change,” it said.
Last year, the rainy season, which typically runs from March to September, brought with it inevitable flooding, killing over 100 people.
The flooding, which submerged houses, farmland and other businesses, is always exacerbated by poor infrastructure and lack of planning to protect against the waters.
Already, flood has started taking over some parts of the country with houses and farmlands being submerged, thus exposing farmers to risk of losing their investment, considering the heavy rains still expected within the next few weeks into the month of October.
To further encourage the farmers, the management of NAIC had emphasised that the underwriting firm would always pay appropriate compensation to insured, whose agricultural farmlands were ravaged by the flood disaster across the country.
She urged insured farmers to make all efforts possible to avert and minimise the untoward effects of the torrential rains and floods on their farms by promptly informing the nearest NAIC office in their states of their travails so appropriate support will be extended to them in a timely manner with emphasis that the succour would be strictly for farmers insured under its policy.
Despite efforts by government and insurance firms, a practicing farmer, Mr. Anga Tonya, had blamed the poor utilisation of agric insurance on ignorance on the part of farmers.
He described agric insurance as the best form of support for farmers to recoup their investment in the case of losses.
He said: “Agric insurance is very good. Over the years, farmers have not utilised crop insurance adequately and as a result they suffered colossal losses. The reason actually is due to ignorance and that is still the same reason a lot of farmers are not involved in it.
“Another reason is the cost implication. Most of the farmers don’t know what it costs. They think it is very expensive whereas it is something they can afford if only they take time to find out.
“I believe the best thing to do, moving forward, is to sensitise farmers on the benefits. Basic knowledge and information would make a lot of difference. When they know it will protect their interest and crop, they will go for it.”
As the raining season typically sets in again with all the threats already being visible through early signs of disasters as typified by flooding, it is expedient for farmers to tow the path of wisdom by approaching any of the licensed agric insurer for advice and the best insurance product to ensure his investment does not end in vain.
Stock market halts weekly losses with 2.3% gain
Financial Services industry led the activity chart with 840.704 million shares valued at N10.765 billion traded in 11,331 deals
rading activities on the floor of the Nigerian Stock Exchange (NSE) at the weekend finished on the green route as the NSE All-Share Index and market capitalization appreciated by 2.33 per cent and 2.39 per cent to close last week at 27,779 and N13.523 trillion respectively.
Similarly, all other indices finished higher with the exception of NSE Insurance and NSE Industrial Goods Indices which depreciated by 2.13 per cent and 0.41 per cent while the NSE ASeM index closed flat.
A total turnover of 1.147 billion shares worth N14.082 billion in 17,980 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 1.101 billion shares valued at N17.082 billion that exchanged hands the previous week in 15,431 deals.
The Financial Services industry (measured by volume) led the activity chart with 840.704 million shares valued at N10.765 billion traded in 11,331 deals; thus contributing 73.30 per cent and 76.45 per cent to the total equity turnover volume and value respectively.
The Conglomerates industry followed with 111.231 million shares worth N243.124 million in 963 deals. The third place was ICT Industry with a turnover of 95.087 million shares worth N605.135 million in 404 deals.
Trading in the top three equities namely, Guaranty Trust Bank Plc, Access Bank Plc and FBN Holdings Plc (measured by volume) accounted for 484.003 million shares worth N8.306 billion in 4,265 deals, contributing 42.20 per cent and 58.99 per cent to the total equity turnover volume and value respectively.
Thirty nine equities appreciated in price during the week, higher than 27 equities in the previous week. 19 equities depreciated in price, lower than 34 equities in the previous week, while 108 equities remained unchanged, higher than 105 equities recorded in the preceding week.
A total of 6,540 units valued at N23,650.70 were traded last week in five deals compared with a total of 3,692 units valued at N1.974 million transacted the previous week in 10 deals.
A total of 274 units of Federal Government Bonds valued at N280,932.14 were traded last week in 7 deals compared with a total of 47,690 units valued at N51.008 million transacted the pprevious week in 15 deals.
Nigeria’s broadband growth slows
●Rises by 2% in 7 months
In the absence of a new plan, broadband growth in Nigeria has become lethargic
fter surpassing 30 per cent target last December, broadband penetration growth in Nigeria has slowed down since the beginning of this year, as penetration figure released by the Nigerian Communications Commission (NCC) revealed that the country only managed to grow broadband by 2.2 per cent between January and July 2019.
This was a departure from the level of growth recorded last year, where penetration grew averagely by one per cent monthly. While some months recorded less than one per cent growth, others witnessed more than one per cent. For instance, in April 2018, penetration grew by 2.9 per cent, while it rose by 1.6 per cent in May. In September, the penetration rose by 2.8 per cent. The steady growth helped the country achieve 11.6 per cent growth in the full year, bringing the total penetration to 31.48 per cent in December.
However, analysis of seven months data released so far for this year by the NCC showed that penetration grew by 0.86 per cent in January to 32.34 per cent. By February, it rose by 0.74 per cent and in March it went up marginally by 0.14 per cent. In April, it grew by 0.48 per cent. However, in May, there was a reversal of growth, as penetration declined by 0.57 per cent. In June and July, Nigeria’s broadband penetration rose by 0.18 per cent and 0.41 respectively, bringing the total penetration to 33.72 per cent.
According to a World Bank study, a 10 per cent point increase in fixed broadband penetration would increase Gross Domestic Product (GDP) growth by 1.21 per cent in developed economies and 1.38 per cent in developing ones.
Speaking with our correspondent on the cause of the slow growth, President of the Association of Telecommunications Companies of Nigeria (ATCON) Mr Olusola Teniola, said the methodology used to arrive at the level of broadband penetration last year took into account population lower than the current peg of 200 million. He noted that the rate of population growth in the country is higher than the rate of broadband subscribers’ growth hence the penetration rate may start dropping as population increases.
Teniola added that operators’ efforts to increase the rate of penetration are still being hindered by myriads of challenges, which the government has not addressed as part of the National Broadband Plan (NBP). He said with the current state of things in the sector, broadband growth is not sustainable in the country. “Without a religious focus on the details highlighted in the NBP, it is very unlikely that the broadband penetration achieved will remain sustainable in the future. It is exceedingly important to note that a revised NBP from 2019 – 2024 is now overdue to revise the minimum speeds and other areas of demand that makes any broadband penetration relevant to the present context,” he said.
The Federal Government had in 2013 launched a five-year National Broadband Plan (NBP 2013-2018) with a target of achieving 30 per cent penetration by end of 2018, from six per cent in 2013. By last December, the country was said to have surpassed the target, as penetration hit 31.48 per cent.
However, the ATCON President noted that absence of a new plan after the expiration of the NBP 2013-2018 has slowed down the momentum. “ATCON has already recommended to government in 2018 a figure of 70 per cent by 2024 to ensure the momentum in terms of effort and necessary levels of investments are encouraged,” he said.
The Executive Vice Chairman of NCC, Prof. Umar Danbatta, recently said that there was no official pronouncement on a new plan yet from the government, adding that plans were afoot to come up with another penetration target to be attained in the next five years of the mission of National Broadband Plan phase two.
Climate change ranked top extreme risk for investors
lobal temperature change is the number one extreme risk to economic growth and asset returns for investors, a new ranking by the Thinking Ahead Institute has suggested.
Also, a global trade collapse is the number two extreme risk listed in the index, driven by a rise in protectionism and other geopolitical developments over the last six years.
Cyber warfare completes the top three risks, with the prospect of a weaponised internet thought to be increasingly possible as the world becomes more connected.
Tim Hodgson, head of the Thinking Ahead Group, said that extreme events are much more likely than previously thought in a complex world, even if they are hard to imagine, according to a report obtained from The Actuary.
“We believe that the world is subject to fundamental changes, whether environmental or political, which will alter power balances,” he continued.
“Global temperature change becomes the highest ranked risk due to our assessment of higher likelihood coupled with significant impact in the extreme, this would mean mass extinction.”
Extreme risks are described as “events that are very unlikely to occur but that could have a significant impact on economic growth and asset returns should they happen.”
Biodiversity collapse and abandonment of fiat money enter the top 15 risks for the first time, while deflation, terrorism and an insurance crisis drop out.
The Thinking Ahead Institute, established by Willis Towers Watson in 2015 said there are three main hedging strategies available to investors, one of which is holding cash.
It highlighted how cash has held its real value through episodes of inflation and deflation over long historical periods, although there is no guarantee this will remain so in the future.
The researchers also said that investors should look to hold derivatives and a negatively-correlated asset, but warned that no asset will work against all possible bad outcomes.
AfDB to host West Africa fertilizer financing forum
he African Development Bank (AfDB) has announced that it will be hosting the first West Africa Fertilizer Financing Forum, in collaboration with the Africa Fertilizer Financing Mechanism (AFFM) and the West Africa Fertilizer Association from September 30 to October 1 at its headquarters in Abidjan.
In a statement, the bank said: “As the right fertilization is essential to achieve food security and reduce hunger, the Forum aims to showcase enabling financing, especially to private sector players, and build strong links between them and lending schemes, to help increase access to affordable funding and improve farmers’ access to quality fertilizers.”
It further stated that the forum, “fostering fertilizer future” will discuss the financing needs of the fertilizer value chain and appropriate financing products, adding that the event: “will serve as a platform for the African Development Bank and the AFFM to present their products that support the industry, and to connect private sector dealers to the bank and other regional financial institutions.”
The event will bring together West African stakeholders in the fertilizer value chain, including regional policy makers; producers, importers, blenders and distributors representing the 42-member West Africa Fertilizer Association. Commercial banks, development finance bodies and private funds, as well as agriculture digitalization companies and related non-governmental development organizations, are also expected to attend.
Retirees under annuity plan hit 68,857
Initial rift between insurance and Pension regulators has long been settled with life insurers opening accounts with PFCs
s life insurance operators keep faith in annuity business despite a few hitches as regards custody of the funds, the number of retirees under the arrangement climbed to 68,857 as at the end of second quarter of the year.
Records from the National Pension Commission (PenCom) also show that premium received in this respect also amounted to N371.21 billion within the period.
The figure covers for retirees from the public and private sectors, who are active contributors since the inception of the Contributory Pension Scheme (CPS).
According to PenCom, a total of 2,941 applications for retirement under life annuity were approved during the period under review, bringing the total number of retirees receiving their retirement benefits through the annuity plan to 68,857 from inception.
The Commission also noted that the 2,941 retirees received N4.68 billion as lump sum payment and paid premium of N17.53 billion to insurance companies and monthly annuity of N184.50 million.
It added that this resulted in total lumps sum payment of N91.28 billion, premium of N371.21 billion and monthly annuity payments of N3.70 billion as at the end of second quarter, 2019.
On the other hand, the commission noted that retirees under Programmed Withdrawal (PW), which is managed by Pension Fund Administrators (PFAs) increased by 3.81 per cent.
The figures moved from 214,538 as at the first quarter to 222,712 retirees as at the period under review.
According to sectorial breakdown, 65.75 per cent of those that received pension under the PW were from the public sector while retirees from the private sector accounted for the remaining 34.25 per cent.
The pension regulator maintained that during the quarter under review, the sum of N 20.57 billion was paid to 8,174 retirees as lump sum and N 355.09 million as monthly-programmed withdrawals.
It noted that from inception to last June, the sum of N580.05 billion had been paid as lump sum and the monthly Programmed Withdrawals amounted to N9.50 billion.
Annuity business had in recent times continued to provide the largest chunk of premium income to life underwriters, as revealed by data obtained from the Nigerian Insurers Association (NIA).
According to the NIA, life insurers generated N77.77 billion from annuity business, which was 48 per cent of life business in 2017, of which the breakdown showed that of the total gross premium of N161.59 billion, Life Insurers earned N44.58 billion, 28 per cent from group life, N39.27 billion, 24 per cent from individual life business and N77.77 billion, 48 per cent from annuity.
A breakdown of net written premium earned by some companies showed that Leadway Assurance Company Limited posted N56.17 billion; Custodian Life Assurance Limited, N7.71 billion; FBNInsurance Limited, N6.76 billion; AIICO Insurance Plc, N3.22 billion and ARM Life Plc, N2.71 billion.
Recall that two years ago, PenCom and the National Insurance Commission (NAICOM) had agreed to allow life insurance firms open operational accounts with Pension Fund Custodians (PFCs) of their choice for custody of the annuity fund.
ICRC President commends Tony Elumelu Foundation’s humanitarian efforts
resident of the International Committee of the Red Cross (ICRC), Peter Maurer, has commended the Tony Elumelu Foundation’s (TEF) private-sector-led approach as the gold standard of humanitarian development in Africa focused on impacting lives at scale and transforming the continent.
He stated this at the just concluded Forum organised by the ICRC.
Maurer said: “On one side, it is important that we assist and protect people when they are disrupted by violence and war. But what brought me together with Tony is not the white shirt and the blue suit, it is his deep conviction that with longer and protracted conflict we need to bring people much earlier into independence.
“We need, more than ever, in the most fragile, violent parts of society to show the pathway to independence and to a dignified life and this goes with income-generating activities, productive activities, with small businesses. This is why we partnered with the Tony Elumelu Foundation.”
On his part during the discussion themed: “Private Sector Partnerships with Humanitarian Organisations: Putting People First,” founder of TEF, Mr. Tony Elumelu, commended Maurer’s leadership and the decision to partner with The Tony Elumelu Foundation to eradicate extremism and violence.
He said: “Through the partnership between TEF and ICRC, a lot is happening that shows the catalytic impact of your vision. Ours was the first ever partnership that ICRC had explored using a different approach to humanitarian development, from the angle of empowering the private sector.
“Today, the Tony Elumelu Foundation has partnered with AfDB on empowering 1000 beneficiaries, UNDP which started with 1000 entrepreneurs and has now been scaled up to empower 100,000 African entrepreneurs starting with the Sahel region. The most important thing is that we give economic hope and opportunity to our people and reduce the cases of fragility that we see across the continent.”
Elumelu and Maurer both proffered entrepreneurship as the most sustainable solution to accelerating Africa’s transformation.
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