Oil Price Rebound: Pension, Insurance Sectors Investors Optimistic About Higher Yields

By Ebere Nwoji

With the current rebound in the price of crude oil in the international market, renewed interest  by both individual and corporate Nigerians in agricultural activities as well as federal government’s economic recovery and growth plans, investors in the pension and insurance  sectors are  optimistic  that their stakes in firms operating in the two sectors would earn higher  returns.

The investors who expressed confidence in the two sectors due to these developments said should the trend of these recoveries continue, the sectors  will be safe haven for both local and foreign investors.

General Manager, Business Development  Radix Pension Managers Ltd, Kunle Adeboye,  in a recent chat  with THISDAY on  his company’s venture into pension fund management business  said his company was motivated to venture into pension  business despite the current economic realities on ground in the country  which  has hindered regular salary payment and remittances of pension funds to fund managers  by employers because it sees greater opportunities in the sector.

According to him, Nigeria’s economy went into recession in 2016 because people were only depending on oil thereby neglecting other sectors that  hold more potentials for the economy and as soon as oil price crashed, the recession set in.

He however said  during and after the recession, Nigerians have learnt their lessons and government has gone into various economic recovery and growth plans while business operators now focus more attention on agricultural activities and other activities  that enhance  other sector growth for survival.

He said when these activities begin to yield results, the economy will become more vibrant more people will get employment and contribute into pension accounts while people will have more money to  save in life insurance and other classes of insurance

“Before now, like you said, things were moving on smoothly until Nigeria went into recession in 2016 with problem of irregular payment of salaries. Even the pension assets itself experienced the shock because more people were agitating to withdraw from their pension savings rather than contributing because of loss of job. But the  good thing  now is that  with economic recovery and growth plan of the federal government, things are beginning to look up because before now, over reliance on oil was what plunged us into recession. The oil production and the price went down and that  negatively affected the exchange rate. Now Nigerians are looking more towards agriculture  and other sectors of the economy that was hitherto abandoned  and  you saw  the National SMEs clinic  that the federal government piloted sometime in July and any economy that the youth , the SME are the mirror turns out to succeed”,  he said.

Adeboye, said his company, Radix Pension  Managers, which  was recently launched  in Lagos was formerly IGI Pension but was bought over by Radix Capital which now holds majority stake in the company.

According to him, in coming into the business this time, Radix Pension is well aware of challenges of irregular payment of salaries by many employers as well as non remittances of deducted pensions  funds by employers but still ventured into the business because the owners and managers have seen a lot of opportunities in the pension sub sector especially for the future.

He said the company is bringing to the sector the idea of developing the interest of the youths  in pension savings.

“One thing that is already out there is that we are  passionate about the youths. We are passionate about the fact that the youth should save for the rainy day. For most of us, when we were young, we took savings for granted. Looking back now, we will see why our parents told us that we should put something aside for the rainy day .So we are passionate about seeing the youths understand the benefit of savings and that will be good for the economy. When we were all young, we were young and restless.  But there is this beauty of youthful age, you are creative, you have ideas, you are not afraid to take up challenges you are not afraid of deals when it comes to ventures you want to go into. but  you need money, you need capital and support, if you don’t put something aside now how do you get your  ventures on ground.

He said the reason people in advanced economy like US go further than their contemporaries in Africa is the fact that  while we grapple about where the next meal  will come from, they have safety nets in their societies  that they can think outside the box. “They have the Silicon Valley and so on. People come up with innovations.Now if you don’t have a system where people  are comfortable by reason of having something set aside,where people can say  yes I have this money aside I can go into the journey of venturing into this or that and if it doesn’t work, I have something to fall back on ,then people are limited in their thinking, in their creativity and in their achievements .Now for Nigerian youths, I believe starting to save early could also lead to early retirement”, Adeboye stated.

He advised that regarding pensions savings and investment of the saved funds, Nigerians don’t have to grow very old they don’t have to work until  they  are seventy  before  they retire.

From insurance sector’s side, the managing Director, Law Union and Rock Insurance, Jide  Orimolade, speaking on the opportunities in the insurance sector said the sector is a good investment destination.

According to him, despite the prevailing economic hardship in the country, there are high hopes and opportunities for investors in the insurance sector.

He was optimistic that these opportunities will start unfolding in 2018 judging from the  federal and state budgets.

“I believe that with promises by the Buhari’s administration  like feeding children in school, we believe that with that, it is going to provide a lot of income for the insurance companies because there is no way the money released by the government will not spread. It is either the government does it personally or brings in private arms to do it.    For us, we believe it will provide income for the insurance industry because right now, there are a lot of public and private partnerships going on. I think going forward, it will continue to happen.

“Look at our rail system the Chinese bank is the one to fund it  and the insurance aspect, is not going to be done in their country because of the local  content.

On his company’s effort to benefit from it, Orimolade said: “For us at Law Union and Rock, we will in 2018 focus on public sector insurance”.

He said his company has competence in engineering insurance disclosing that right now, it is leading other insurance firms in insuring eight  power generating plants  projects  in Nigeria. He was also optimistic that insurance firms would benefit immensely from the $5.5billion Mambila power plant contract signed by federal government with Chinese government.

“There is gap in power sector that was why government signed the contract and it is an area that will bring a lot of income for insurance  industry  because  of local content and their competence .