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OPS: War risk insurance suppressing GDP growth

Members of the Organised Private Sector (OPS) have hailed the bold statement by the Director-General of Nigerian Maritime Administration and Safety Agency (NIMASA), Bashir Jamoh on the right timing for Nigeria to be removed from the list of countries that pay ‘war risk insurance’ premium in the world.

 

They say stopping collection of such insurance premium on Nigerian bound ships would boost cargo throughput and reduce cost of freight for shipping goods into Nigeria.

 

The OPS, which is the umbrella body of the country’s chambers of commerces, comprising of Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce and Industry (LCCI), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Manufacturers Association of Nigeria Export Group (MANEG), Nigerian Association of Micro, Small and Medium Enterprises (NASME), Nigeria Employers Consultative Association (NECA) and Nigerian Association of Small Scale Industrialists (NASSI), further said that the labelling and tagging of Nigeria as a ‘war risk zone’ with imposed higher insurance premium covers is partly responsible for negative growth in the nation’s Gross Domestic Product (GDP) in 2020.

 

They also linked the massive diversion of cargoes meant for Nigeria to the Ports of the neigbouring countries to the imposition of the war risk insurance cover on Nigeria bound ships. In particular, they said war risk insurance is principally responsible for the rising cost inflation in Nigera as the final consumers of imported goods bear the brunt of the high cost of shipping goods into the country.

 

The private sector groups argued that Ni- geria is not at war in the first place but only experiencing forms of insecurity internally and surge in piracy at the Gulf of Guinea ibut which is being tackled by the Federal Government of Nigeria through NIMASA. A development, they said make removal of the insurance cover, very necessay and morally bound on the international insurance companies.

 

According to the former director-general, NACCIMA, Dr. John Isemede, the war risk insurance has severely depressed the country’s GDP in all ramifications Isemede added that the good result coming from the Blue Economy Project being implemented by NIMASA since February has made the call for the removal of the insurance cover well timed and morally binding on the international insurance companies to remove Nigeria’s name on their war risk zones list.

 

Isemede, a trade expert in export and import and National Expert on Value Chain at UNIDO specifically linked the war risk insurance cover Nigerian bound ships are forced to take, as the reason why cost of freighting to Nigeria is one of the highest in the world.

 

Isemede said: “We (private sector group) commend the bold step taken by the NIMASA DG on the war risk insurance imposed on Nigerian bound ships. Considering Nigeria’s huge investment in security infrastructure to tackle piracy in the Nigerian and Gulf of Guinea waters, we think the call is a right step in the right direction.”

 

He continued: “This war risk insurance is definitely behind the reason for multiple cargo diversion, inconsistency in shipping operation, high inflation rate, increase in shipping freight, rising cost of goods, trade deficits and others in our economy.”

 

Similarly, manufacturers and exporters under the auspice of the Manufacturers Association of Nigeria Export Promotion Group (MANEG) emphasized that the imposition of the war risk insurance on the country as a classified war risk zone, has disrupted volume of trade in terms of export and import. The development, according to MANEG, has caused importers and exporters to be struggling to remain in business amid rising cost of shipping charges in the maritime sector.

 

MANEG”s chairman and board member of Aarti Steel (Nigeria) Limited, Imokhai Ehimigbai said unless this insurance cover and the labelling of Nigeria as war risk zone are removed, final consumers will continue to pay higher for imported goods in the country.

 

Ehimigbai said importers will continue to pass the cost burden on consumers without them having a say on the price burden they bear. Also in his remarks, the former Chairman, Export Group of the Lagos Chamber of Commerce and Industry (LCCI) and also the Director-General of the African Centre for Supply Chain (ACSC), Dr. Obiora Madu said that removal of Nigeria from the war risk zone list will be more beneficial to the country’s economy and will also catalyze shipping industry development.

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