APA – Lagos (Nigeria)
The report that Nigeria and Brazil are seeking stronger ties is one of the trending stories in Nigerian newspapers on Monday.
The Vanguard newspaper reports that President Bola Tinubu and his Brazilian counterpart, President Luiz Inácio Lula da Silva, who met in Addis Ababa, Ethiopia, had fruitful discussions on comprehensive strengthening of bilateral ties in all fields.
A statement by Tinubu’s media aide, Ajuri Ngelale, noted that the Nigerian leader, at the meeting, emphasized the strength of Nigeria’s economic potential and influence, saying the country is witnessing a leap forward, despite some short-term reform pains, as his administration is removing all encumbrances to business.
The President further explained that his administration is investing in critical sectors of the economy like healthcare, education, and agriculture to ensure the welfare of all Nigerian citizens and to create sustainable economic prosperity for future generations.
“We have a very vibrant population of young Nigerians who are trainable, dependable, and should be empowered. The economic potential of Nigeria is enormous. We are ready to break all the walls standing in our way to progress.
“We are ready to fight corruption from top to bottom. We are ready to invest in critical sectors like healthcare, agriculture, education, infrastructure, and others. I have one of the most dedicated teams on agriculture,” he said.
The newspaper says that the recent sharp depreciation of the Naira in the foreign exchange market as well as the rising inflation rate has started eroding the value of assets under insurance cover.
Financial Vanguard findings from the recent developments in the industry have indicated that most risks are now under-insured as value of claims are getting lower than the assets they were supposed to cover.
Consequently, as claims continue to crystalise in the sector, insurance consumers are being paid claims far lower than the value of the asset insured.
Also, insurance firms are now off-loading their underwriting businesses to ceding arrangements with both local and foreign re-insurers, while also incurring higher reinsurance expenses especially on overseas ceding due to weaker Naira.
The development is expected to erode profitability in the sector despite improved gross premium income, while undermining their capacity to retain huge risks.
The industry operators told Financial Vanguard that the rise in reinsurance expenses is fueling capital flight menace that has plagued Nigeria’s insurance sector over the years due to their inability to retain huge businesses in-country.
Consequently, findings from the full-year report of 17 leading insurance companies released on the Nigerian Exchange Limited show that while Gross Premium Written, GPW, for full year 2023 increased by 25.9 per cent to N557.5 billion from N442.6 billion recorded in 2022, their reinsurance expenses went up by 28.4 per cent to N133.01 billion from N103.6 billion.
The companies are Aiico Insurance, Axa Mansard, Consolidated Hallmark, Cornerstone Insurance, Coronation, Custodian Investment, Guinea Insurance, Lasaco Assurance, Linkage Assurance, Mutual Benefits, Nem Insurance, Prestige Assurance, Regency Alliance, Sovereign Trust, Sunu Assurance, Universal Insurance, as well as Veritas Kapital Assurance.
Meanwhile, insurance experts have cautioned that insurance consumers should insure their assets as well as renew based on the prevailing value to get full coverage and adequate compensation when the risk crystalises.
The Punch reports that the Catholic Bishops Conference of Nigeria has said that the current administration’s reform agenda has increased the hardship being faced by citizens.
The President of the CBCN, Lucius Ugorji, made this declaration during his welcome speech on Sunday at the commencement of the 2024 First Plenary Assembly of the CBCN, held at the Catholic Secretariat of Nigeria Resource Centre in Durumi, Abuja.
The bishop noted that inflation had rendered it challenging for the typical Nigerian to afford essential commodities, such as food items and medication.
“The reform agenda of the present government has added to the plight of Nigerians. With the withdrawal of fuel subsidies and the unification of the foreign exchange market, there has been a sharp increase in the pump price of petroleum products and a steep decline in the value of the naira. Indeed, there is a free fall of the national currency.
“As a result of the government’s reform agenda, millions of Nigerians have been reduced to a life of grinding poverty, wanton suffering, and untold hardship as never before in our national history.
“In a bid to survive, an increasing number of the poor have resorted to begging. With more than 80 million Nigerians living under the poverty line of less than two dollars a day, our country, according to the recent disclosure of the World Bank, is the world’s second-largest poor population after India.
“While many impoverished Nigerians continue to suffer and die as a result of the hardship caused by the government’s economic reforms, the president has continued to urge the populace to make even more and more sacrifices with the assurance that brighter days lay ahead,” he said.
“As a result of the government’s reform agenda, millions of Nigerians have been reduced to a life of grinding poverty, wanton suffering, and untold hardship as never before in our national history.
“In a bid to survive, an increasing number of the poor have resorted to begging. With more than 80 million Nigerians living under the poverty line of less than two dollars a day, our country, according to the recent disclosure of the World Bank, is the world’s second-largest poor population after India.
“While many impoverished Nigerians continue to suffer and die as a result of the hardship caused by the government’s economic reforms, the president has continued to urge the populace to make even more and more sacrifices with the assurance that brighter days lay ahead,” he said.
The newspaper says that credit rating agency, Fitch Ratings, has said that the proposed foreign currency gateway bank announced by the Central Bank of Nigeria may have a negative impact on the liquidity of Nigerian banks.
This was revealed in the latest Fitch Ratings commentary on Nigerian banks.
The apex bank Governor, Dr Olayemi Cardoso, recently disclosed plans to introduce a new foreign currency gateway bank to ease the country’s forex crisis.
In a television interview, Cardoso said the CBN was “introducing a single FCY gateway bank to centralise all correspondent banking activities, currently dominated by two major banks in the corresponding banking space.”
The gateway bank termed the CBN’s medium-term plan is aimed at solving Nigeria’s lingering forex problem by centralising all correspondent banking activities.
Commenting on the proposal, Fitch Ratings said, “The Governor of the CBN, Yemi Cardoso, also announced plans to establish a FC gateway bank with the intention of centralising correspondent banking activities, while asserting that a recent audit has determined $2.4bn of overdue FX forwards invalid. Fitch believes these measures by the CBN may negatively affect the banking sector’s FC liquidity.”
Meanwhile, due to about 70 per cent devaluation of the local currency since end-2022, according to Fitch, banking sector impaired loans are expected to increase at a faster pace than before the devaluation.
GIK.APA