Expert Points Way Forward for Insurance, Pension Sectors’ Contributions to $1tn Economy

Ebere Nwoji

Stakeholders in the insurance and pension sectors have  been asked to take five major steps  in their search for ways of making meaningful contributions to the achievement of the  federal government’s $1 trillion economy aspiration.

This is in the face of rising inflationary trend accompanied by high exchange rate of naira to dollar with federal government’s projection of the trillion economy by the year 2030.

These steps are: Technological advancement, improved capitalisation, development of innovative financial products to meet the changing needs of individuals, involvement in capital market development and investment in infrastructure and other key sectors.

The Managing Director /Chief Economist, Analysts Data Services and Resources, Dr Afolabi Olowookere, spoke while delivering a keynote address at the 9th Annual conference of the National Association of Insurance and Pension Editors (NAIPE) in Lagos.

The conference which has the theme: “Towards a $1 Trillion Economy: Roles of Insurance and Pension Sectors,” served as a rally point for chief executives of insurance firms and Pension Fund Administrators(PFAs)  to sit together, examine their contributions to the Gross Domestic Product (GDP) of the economy and point out their next line of action.

Addressing the audience, Olowookere,  quoting the National Bureau of Statistics (NBS) noted that in terms of GDP sector’s performance, the leading contributors to Nigerian outputs were agriculture, ICT, trade and manufacturing.

But he said that the finance and insurance sector which contributes 6.57 per cent of the GDP has continued to be the major driver of the economy as well as the fastest growing sector in recent times.

He said though various sectors of the economy have had their fair share of negative impact of the prevailing high inflationary rate and high exchange rate which  affected their contributions to the economy, insurance and pension should embrace the these key factors to remain relevant.

According to him, insurance and pension sector operators need to adopt technological innovations such as Artificial Intelligence (AI),  machine learning  and blockchain to improve research , portfolio management  and back – office operations.

“By improving efficiency and reducing costs, they can offer better returns to contributors and attract more funds, driving  economic growth through smarter and more sustainable investments”, he said.

In terms of capitalisation,  Olowookere said insurance and pension sectors could expand their assets by encouraging more Nigerians to save for retirement and underwriting higher portfolio risks.

“As life expectancy increases and the population builds wealth, these funds will grow, providing more capital for long-term investments in the economy,” he affirmed.

Insurance sector in particular was charged to increase its operating capital to build more premium and profit.

Quoting ADSR Research and Estimates as his source, Olowookere said the projected total assets of insurance sector under the $1 trillion GDP fell from $3.9 billion in 2023 to $2.2 billion in 2024 due to naira depreciation .

According to him, the baseline projection is for Nigeria’s GDP to reach $681.9 billion in 2030 from $265.4 billion in 2024.

“At the baseline rate, total assets of the insurance sector will be expected to rise to $6.4 billion in 2030. However if the government target of a $1 trillion GDP is met, insurance total asset is projected to reach $ 20.5 billion”, he said.