Operators in the real sector as well as the insurance and pension sectors have called for urgent review of legislations guiding investments in various sectors of the economy in order to allow real sector operators have access to long-term funds.
The operators who spoke at the 2020 national conference of the National Association of Insurance and Pension Correspondents (NAIPCO) held in Lagos on Wednesday, noted that currently, some legislations on investment in Nigeria do not favour investments in most sectors of the economy.
The Director General, Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, while speaking on the theme: “Promoting Bankable Investments Portfolio for Insurance and Pension Sectors,” said bankable investment portfolio has become a general economic challenge facing Nigerian banking system.
He noted that insurance and pension funds are larger sources of long-term fund but are not available for real sector investment, whereas funds from financial system which is short-term in nature are the only available fund for them.
He, however, noted that the tight regulation in investment of pension fund somehow saved the sector during crash in capital market investment.
He said key issues to put into consideration in investing pension funds in the real sector includes safety of the investment, returns on investment, liquidity of the investment especially for insurance funds because of payment of claims which may arise ant time.
He noted that the N11.35 trillion pension funds as at August this year means a lot in Nigeria investment market if there is right kind of investment environment and regulation.
He said there was need for government to put in place a unified exchange rate to encourage diaspora remittances.
Also speaking, the Chairman, Nigeria Social Insurance Trust Fund, (NSITF), Mr. Austin Enajemo-Isere, said there was urgent need to consider alternative strategies to retool the economy for survival and growth even as he called for the review of the Pension Reform Act (PRA) to enable those in real sector have access to insurance and Pension fund to finance their operations.
Enajemo-Isere, who was the chairman at the conference, identified the effect of the ravaging COVID-19 pandemic and wanton destruction of life and properties across the country in the wake of the #EndSARS protest that was hijacked by hoodlums, among many others on the economy and noted that the impact of these crisis have resulted into the Nation GDP declining from a growth of 2.2 percent in 2019 to about -4 percent by year end.
He said as a result of this, the government, private sector institutions and individuals have continued to search for economic survival strategies to change the narratives and create new normal.
The NSITF boss, advocated for a deliberate policy by the authorities, in addition to what is currently obtainable, directly or through moral suasion to invest Insurance and Pension Fund in sectors such as Manufacturing, Agriculture and Aviation among others with an inbuilt safety net.
“In furtherance to the foregoing, the current restrictive nature of insurance and pension funds investment outlets calls for review of the legislations guiding investment of insurance and pension fund. The yelling and plea from the Organised Private sector of Nigeria (OPSN) to create more access to investible funds deserves attention.
“It is worthy to note and be reminded that insurance and pension funds are subject to regulatory guidelines as provided in section 25 of the Insurance Act 2003 as amended and Sect 86 of the PRA 2014, for the purpose of safety and Returns.
“However, a consideration for review of these legislations to enable some special and real sectors of the economy have access to insurance and pension fund to finance their operations, will be most beneficial to the growth and development of the Nation’s Macroeconomic activities. A deliberate policy by the authorities, in addition to what is currently obtainable, directly or through moral suasion to invest insurance and pension fund in sectors such as manufacturing, agriculture and aviation, etc with an inbuilt safety net, will be a welcome development,” he suggested.
The NSTIF boss, who stressed the important role of insurance as a catalyst for nation-building and risk transfer mechanism, commended underwriters for rising to their responsibility, noting that, “some operators, in recent times have given assurances to the insuring public that reported claims emanating from the EndSARS protest, among others, will be promptly honored, particularly policies with extension that cover strike, riot and civil commotions (SRCC). This is cheering news for the industry and the nation in general.”