By Bisi Bamishe
As the Federal Government consolidates the economy towards meeting its $1 trillion projection by 2030, an economics and financial analyst has charged the federal government to put mechanisms in place that will align current economic realities with the expected economic growth.
Presenting his paper on Tuesday in Lagos at the 9th edition of Nigerian Association of Insurance and Pension Editors’ (NAIPE) Conference with the theme, “Towards A $1trillion Economy, Roles of Insurance And Pension Sectors,” the Managing Director/Chief Economist, Analysts Data Services & Resources Limited, Dr. Afolabi Olowookere, advised the Federal Government to tinker with the current policies and speed up infrastructure development to encourage more investments, if it must realise the $1 trillion economy projection.
According to Olowookere, the country’s Gross Domestic Product grew from 2.98 per cent in the first quarter of the year to 3.19 per cent in the second quarter, noting that the forecasts in the short to medium term remained weak.
He said inflation and other socio-economic manifestations, such as interest rates could constitute obstacles to achieving the projection.
According to him, “inflation rate rose from 21.82 per cent in January 2023 to 34.19 per cent in June 2024 and declined slightly to 33.40 per cent in July 2024 and further to 32.15 per cent in August 2024.
“Inflation reached 32.15 per cent (YoY) in August 2024, driven mainly by food price inflation and loose financial conditions.
“With continued monetary tightening, IMF projects inflation would gradually decline to 24 per cent (YoY) at the end of 2024 and further to 14 per cent by 2027.
“Hence, interest rate is expected to remain relatively high in response to inflation and economic instability.
“Naira has depreciated by 71.15 per cent between January 2023 and August 2024, rising from N461/US$l to NI,598.1/US$, now around NI,650/US$. Naira will likely continue to face gradual depreciation pressures due to trade imbalances and inflation,” he said.
He emphasised that managing the economy under the current economic setting would, at best, grow the economy to around $450 billion by the projected 2030 date.
Reflecting on the current GDP position, the financial analyst identified the leading contributors to Nigerian outputs to include Agriculture, ICT, Trade and Manufacturing.
Olowookere noted that the financial and insurance sectors account for 6.579 per cent of Nigeria’s GDP, but continue as the major driver of economic growth.
He said: “It has remained the fastest growing sector in recent time. The performance of Nigerian economy has been mixed in the last one year.
“The performance of the financial sector and fiscal space has been largely positive. But changes in the real sector of the economy have not been impressive.
On Nigerian insurance sector’s outlook and contribution to the GDP, Olowookere mentioned that the total assets in Nigeria’s insurance industry grew by 36.9 per cent in Q1 2024 from N2.4 trillion in Q1 2023 to N3.3 trillion.
“Non-life businesses accounted for NI.94 trillion while life businesses contributed NI.39 trillion. NAICOM sees the market as sound, stable, and profitable with a positive outlook.
“The insurance uptake remains stagnant and critically low as only 3.1 per cent of adults (3.4 million) were reportedly covered by a regulated insurance policy, according to EFInA 2023 report.
“The sector’s total value added in 2023 was N687.3 billion. Its contribution to GDP is less than 0.6 per cent. Its growth rate fluctuates over time, recording 13.3 per cent in Q2’24, far higher than 3.19 recorded for the entire economy.”
The financial analyst also hinted on the emerging trend in the sector with regard to digital transformation, adding that the adoption of digital technologies was revolutionising the way insurance products are marketed, sold, and serviced.
According to him, from online policy purchases to mobile claims processing, insurers are leveraging technology to enhance the customer experience and streamline operations.
“Insurtech companies are revolutionising the traditional insurance industry by introducing new products, streamlining processes, and reaching untapped market segments, enhancing efficiency and customer engagement. “Insurers are utilising data analytics to provide personalised products and services, enhancing customer experience and loyalty through improved communication channels like chatbots and social media engagement,” he added.
Earlier in his goodwill message, the Chairman of the occasion, and a former Commissioner for Insurance, Mr Fola Daniel, commended NAIPE for putting the programme together.
He said: “As we gather here today, we stand at a pivotal moment in our industry, one that calls for reflection, innovation, and collaboration.
“Over the past decade, NAIPE has grown from a nascent idea into a formidable platform that champions a vital role in the insurance and pension sectors.
“Our mission has always been clear: to enhance the quality of information disseminated to the public and to foster a deeper understanding of the complexities within our industries.
“Today, we are privileged to have with us diverse array of speakers, thought leaders, and industry experts who will share their insights on the evolving landscape of insurance and pensions.
“The themes we will explore in thisconference, are not just timely but essential as we navigate the challenges and opportunities.”
The conference attracted stakeholders in pension and insurance sectors, as well as retirees and university students.
