ECONOMIC and financial experts have charged the Federal Government to put in place measures that would align with the current economic realities to achieve the projected $1 trillion economy by 2030.
They urged the Federal Government to tinker with its current policies and speed up infrastructure development to encourage more investments if it must realise the target.
Managing Director/Chief Economist of the Analysts Data Services & Resources Limited, Dr. Afolabi Olowookere, advocated this while presenting a paper at the 9th edition of Nigerian Association of Insurance and Pension Editors (NAIPE) conference in Lagos with the theme, “Towards a $1 trillion Economy, Roles of Insurance and Pension Sectors”.
He said the country’s Gross Domestic Product (GDP) grew from 2.98 percent in the first quarter of 2024 to 3.19 percent in the second quarter, noting that the forecasts in the short to medium term remained weak.
Dr. Olowookere noted that inflation and other socio-economic manifestations, such as interest rates could constitute obstacles to achieving the projection.
He highlighted that inflation rate rose from 21.82 percent in January 2023 to 34.19 percent in June 2024, and declined slightly to 33.40 percent in July 2024 and further fell to 32.15 percent in August 2024.
According to him, “Inflation reached 32.15 percent (YoY) in August 2024, driven mainly by food price inflation and loose financial conditions. With continued monetary tightening, IMF projects inflation would gradually decline to 24 percent (YoY) at the end of 2024 and further to 14 percent by 2027.
“Hence, interest rate is expected to remain relatively high in response to inflation and economic instability. Naira has depreciated by 71.15 percent between January 2023 and August 2024, rising from N461/US$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 stressed that managing the economy under the current setting would, at best grow it to around $450 billion by the projected 2030 date.
The financial analyst while reflecting on the current GDP position identified the leading contributors to Nigerian outputs to include Agriculture, ICT, Trade and Manufacturing.
Dr. Olowookere noted that the financial and insurance sectors account for 6.579 percent of Nigeria’s GDP, but continue as the major driver of economic growth.
He stated, “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”.
Delving on the Nigerian insurance sector’s outlook and contribution to the GDP, Olowookere stated that the total assets in Nigeria’s insurance industry grew by 36.9 percent 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 percent 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 percent. Its growth rate fluctuates over time, recording 13.3 percent in Q2 ’24, far higher than 3.19 recorded for the entire economy,” he said.
The financial analyst submitted 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 revolutionizing 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 personalized products and services, enhancing customer experience and loyalty through improved communication channels like chatbots and social media engagement,” he stressed.
The Chairman of the occasion and a former Commissioner for Insurance, Mr. Fola Daniel in his goodwill message commended NAIPE for putting the programme together.
He said the nation stands at a pivotal moment in the industry, one that calls for reflection, innovation, and collaboration.
He noted “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 this conference, are not just timely but essential as we navigate the challenges and opportunities.”
Stakeholders in pension and insurance sectors, as well as retirees and University students, were in attendance at the conference.
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