Reduced costs help Mutual Assurance revert to profitability

The ability of the management of Mutual Assurance Nigeria plc to trim costs has helped the insurer revert to the path of profitability, analysis of its financial statement shows.

The audited 2013 financial statement o released on the website of the Nigeria Stock Exchange (NSE) showed the Nigeria Insurer posting a profit before tax of N911.07m from N3.07bn losses recorded in the corresponding period (FY) of 2012.

Similarly, a profit after (PAT) of N555.75m in FY 2013 was recorded compared with a loss of N3.39bn recorded the preceding year.

Analysts attribute the Nigeria insurer’s impressive performance at the bottom line level to effective cost control mechanism by its management as operating expenses were down by 20.1 percent to N5.84bn in the review period from N7.31bn the preceding year.

However, there was slight reduction at the top line level as Gross premium income (GPI) reduced by 3.90 percent to N7.68bn as against N7.98bn the preceding year, while net premium income fell by 9.79 percent to N6.72bn.
 

Underwriting expenses increased by 7.52 percent to N4.30bn as against N4.65bn the same period of the corresponding year (FY) 2012.

Total assets surged by 27.22 percent to N2.38bn compared with N1.87bn the preceding year – thanks to a 140.26 percent surge in cash and cash equivalent and a 26.59 percent rise in loans and receivable.

Total equity also increased by 27.22 percent to N2.38bn in the review period from N1.87bn in 2012.

It will be recalled that the Insurer established a micro finance bank (MFM) to promote its micro-insurance offerings, which carry premiums as low as NGN 50 (USD 0.30) per three day period covering up to NGN100,000 (USD 600) in hospital expenses and in the event of loss of life.

Furthermore, it also signed a Memorandum of Understanding (MoU) with members of the Finance Correspondents Association of Nigeria (FICAN) for a Group Personal Accident insurance cover.

This cover which became effective January 1, 2014 covers medical, permanent disability and Death resulting from accident. The policy which is renewable annually and covering initial 72 members of the Association, according to industry players provides a moral boost for journalist considering the critical nature of their job and profession.

Mutual Assurance’s share price closed at N0.5 on the floor of the NSE while market capitalisation was N4bn.

RMB sees Nigeria’s creative industry as catalyst to economic growth

In a clear move to replicate feats already achieved in South Africa’s creative arts sector, Rand Merchant Bank (RMB) Nigeria Limited has unveiled a new partnership with the Nigeria Theatre Society, aimed at harnessing the immense potentials of the country’s creative industry to spur economic growth.

The new partnership which will provide a viable platform for indigenous talents to be discovered, grown and nurtured, is also expected to berth economic growth, innovative thinking, employment and trade.

Speaking at the sidelines of an event to unveil the new partnership, Michael Larbie, CEO, RMB Nigeria, explained that the new move will also help more Nigerian’s engage effectively and profitably in the broader economy.

“It is part of what we hope will be the beginning of RMBs participation in the Nigerian creative art industry, replicating we have done in South Africa where the creaive arts sector, has always been an essential aspect of our culture,” Larbie said.

The CEO stressed that the brand which is synonymous with the arts industry in South Africa hopes to replicate the same feat in Nigeria, adding that the bank’s commitment will enable it play an increasingly important role in growing the arts sector by uniting its aims, goals and ultimate effectiveness in society.

“Our partnership, with the arts has been well received working with the very best of South African arts society and we aim to do the same here,” he said.

According to him, the bank’s commitment to the creative economy is hinged growing realisation that effective arts education provides useful strategies for communicating across communities, engaging and persisting inspite of challenges and difficulties.

“We believe that the growth of this sector will enable many more Nigerians engage effectively and profitably in the broader economy,” Larbie said.

According to Larbie, through its sponsorship and funding, the bank has give more young Africans access to learning opportunities offered in the creative arts, regardless of physical or socio-economic background.

“We currently have 27 partners in our creative arts funding programme, including schools teaching the disciples of ballet, music and opera. RMB remains one of the few corporates that has a pragmatic funding plan for the arts sector in South Africa, where we funded selected initiatives in three year cycles,” he added.

RMB Nigeria Limited, is a division of FirstRand Bank Limited. Having established a representative office in Nigeria in 2010 and subsequently opened a full-fledged merchant bank in early 2013, the bank boasts of five years of transactional experience ranging from advisory on infrastructure projects to funding of various transactions across multiple sectors in Nigeria.

Pension Reform Act 2014: Redefining future of Nigerian retiree

The Pension Reform Act, 2004 ushered in a uniformed Contributory Pension Scheme for workers in both the private and public sectors in Nigeria. The law, whose implementation started June, 2004 reformed the crisis-ridden unfunded and under-funded defined benefit pension schemes in the country.

Before then, the huge and increasing pension liabilities in the public sector needed to be addressed while most workers in the private sector were not covered by any form of retirement benefit scheme. The inefficient administration of pension schemes and demographic shifts made defined benefit scheme unsustainable.

A decade of contributory pension:

Under the new Contributory Pension Scheme, both employers and employees were mandated to contribute certain percentage of an employee’s total emoluments into a Retirement Savings Account (RSA) opened by the worker with a Pension Fund Administrator (PFA). The scheme, which is complemented by group life insurance to the tune of 300 per cent of the individual worker’s emolument, also allows withdrawals under strict conditions. The accumulated pension assets in custody of Pension Fund Custodians (PFCs) are being privately managed by PFAs while the National Pension Commission (PenCom) regulates and supervises pension operators.

Putting the challenges, gains, implementation drive and sustainability of the Contributory Pension Scheme into perspective; it is evident that breakthroughs have been recorded in the last ten years. The number of contributors has increased, more workers in the private and informal sectors are covered and the scheme has continued to impact positively on the Nigerian economy.

The Contributory Pension Scheme had generated a pool of long term investible funds that is attractive to fund managers, investment advisers and capital market operators who want to access part of the fund for different purposes.

From the lessons learnt and the identified loopholes and areas for improvement, the stage was set for the amendment of the enabling law. The amendments were to take care of shortfalls in coverage, address supervisory and enforcement challenges, correct anomalies in the taxation of pension assets and to enable deployment of the pension fund to develop infrastructure.

There was need to criminalise fraudulent diversion and conversion of retirement savings of workers and retirees and bring the pension reform law in tune with current developments. The above necessitated a change in the strategy with a view to exploring new investment windows for pension funds among other things.
 

Sensitisation programme:

The new developments and points of divergence between the repealed Pension Reform Act, 2004 and Pension Reform Act, 2014 with regard to capital and investment windows for pension assets was the focus of the sensitization conference on the Pension Reform Act, 2014 held in Lagos recently.

Pension Reform Act, 2014:

Reviewing the Pension Reform Act, 2014, Gbolahan Elias, who commended PenCom for being a “well-run regulator,” noted that the exemption of pension transactions from stamp duty and income tax is good for the system. He said the confidentiality obligation on the part of the Commission and its staff as well as the power to replace the management of ailing PFAs and the transfer of pension assets being managed by ailing PFAs to the strong ones were some of the commendable provisions in the new law.

He however queried the rationale for an aggrieved person to have recourse first to the Commission before going for arbitration and to the court, saying the right to litigation ought to have been the first option.

Setting an agenda for Contributory Pension Scheme, former Commissioner in charge of Inspectorate at PenCom, Musa Ibrahim was of the opinion that pension should not have been a constitutional issue since it is purely a contract between an employer and his employee, he stressed.

He also dwelt on the enforcement limitations, compliance issues and abuse of court processes in addition to supervisory and regulatory challenges. He advocated self-regulation and improvement in service delivery and recommended a shift in supervisory and regulatory activities to promote better internal governance and enhance consumer protection.

Deployment of Pension Asset to Infrastructure:

While commenting on the responsibility of finance industry regulators and the impact of pension reform on the capital market in Nigeria, the Director-General of Securities and Exchange Commission (SEC), Arunma Oteh, said the focus should be on how to leverage on the lessons learnt to fix infrastructure in the country. She advocated the use of pension funds for infrastructural development and asset financing, stressing the need to minimise risks in this regard to ensure workers do not lose their pensions. The capital market provides a safe and secure market for pension funds, she assured.

Stakeholders also welcomed the use of RSA balances as collateral for mortgages and underscored the need to channel pension funds to grow infrastructure and clear the housing deficit in the country.

Stakeholders’ Take

According to Timi Austen-Peters, the provision on the safety of pension assets, growth in pension funds, increase in coverage and applicability of the scheme were commendable. He said difficulties in getting private sector employers to comply with relevant provisions in the pension law, very low accumulated pension savings for low income earners and other enforcement issues were some of the challenges facing the scheme.

Oluwatoyin Sanni noted that the 58 per cent annual growth of the Contributory Pension Scheme is a huge improvement, adding that there is room for improvement especially when one considers the Gross Domestic Product (GDP) of Nigeria and the rate of growth in other countries.

She commended the National Assembly for making pension savings and returns on investment of the fund tax free, protecting investors the more and introducing stiffer penalties for breach of provisions in the law. She also recommended the investment of pension fund on quoted equities to check interest-pushed inflation and advised PenCom to liberalise its policy on investment while ensuring compliance by operators.

Worried about Nigeria’s demography, the Managing Director of Financial Derivatives Limited, Bismarck Rewane, said many young people cannot save in an economy where the number of middle aged people is very high. The more sophisticated a country’s financial system is, the lower its savings rate; if government saves less, the people will save more, he said.

Rewane also noted that with the pension contributions at 8 per cent and 10 per cent of individual workers’ income by an employee and his employer respectively, Nigeria should channel this large pool of fund to meet its infrastructural demands like other emerging markets. Nigeria could build new capital from its pool of pension fund and ensure that this fund is profitably deployed in the economy as is the case in Brazil, Columbia and Morocco, he advised.

They also noted that 6 million RSA holders out of over 70 million of working population and the 6 per cent return on pension funds were not good enough saying pension operators need to take more risks to maximise return on pension assets.

Conclusion

The new Contributory Pension Scheme has turned the thoughts of retirement into a sweet dream for workers since they now look forward to good life after work.

Meanwhile, as PenCom considers the views of relevant stakeholders on how to make Contributory Pension Scheme more beneficial to the Nigerian economy, the increased awareness on the part of both employers and employees will guarantee sustainability for the Scheme.

Deploy creativity in product marketing, expert tells operators in the North

Bringing creativity in product marketing and distribution will help operators in the crises ridden northern Nigerian market survive the harsh operating environment.

This, it is noted, would help close the income gap and equally keep the business alive, waiting for when normalcy returns in the troubles region.

Ayodapo Shoderu, president of Nigerian Council of Registered Insurance Brokers’ (NCRIB), gave this advice at the investiture of new executives of the Kano Chapter of the council.

Shoderu lamented the challenges posed to insurance and the economy generally in the North following the grinding security challenges in the region.

He specifically told the brokers who are professional intermediaries in the insurance value chain, to study their environment as well as people’s needs and come up with tailor-made insurance policies to suit their needs.

In the same token, the NCRIB boss also implored governments in the region to stem up strategies for combating the security challenges so that the economy of the area could be afoot again.

According to him, the importance of the North to the nation’s economic growth cannot be undermined going by its antecedents. He explained that the northern part of Nigeria constitutes the industrial hub of the nation, considering the existence of large industries sited there.

“Permit me to state that in spite of all odds, if you are doggedly determined, the sky can only be your starting point. This is definitely an auspicious moment to admonish all my professional colleagues to brace up to the challenges confronting our practice, and strive at all times to be ingenious.

“My take is that if other professions and trades are thriving in Kano State in spite of the present challenges, Insurance brokers can also thrive, if you brace up and evolve products that will naturally meet customer’s needs and aspirations.”

In his acceptance speech, the newly elected Chairman of Kano Chapter, Olalekan Olaniran craved the indulgence of all stakeholders in the industry for support and cooperation at all times stressing the need for the broking arm in the northern market to wake up to fully participate in the activities of the nation’s economy.

He said, “Insurance Industry plays a pivotal role in engineering of a nation’s economy hence the industry players cannot afford to be on the fence in the scheme of events within the nation’s economy. For us to be reckoned with by the government and other players in the economy, we must have to make ourselves relevant at all times.

“The window of opportunities which the law on local initiative contents afforded our industry has not been fully tapped as Commissioner for Insurance, Fola Daniel has challenged our industry for not taking full advantage of the law. Of course, we cannot be there to take full advantage of the law if we are not organised and work together to provide and share information that will be useful to the members of the industry.

“Another reason why our industry must have to wake up fast is that insurance penetration in Nigeria is considered to be too low compared to the population and thereby contributing very small to the GDP of the nation. We cannot expect to be respected in the communities of the nations where comparative analysis of our GDP is nothing to write home about.

“Here in the North, insurance acceptance is still very poor in spite of the advantages which the large population and massive land provide the region.

The government of the northern states are advised at this juncture to re-appraise their policies to embrace insurance in order for us in the north to catch up with the economy of the southern Nigeria.

“There is no way we can achieve economic parity between the North and the South as economic wastes in the South are always passed back to the government.

Incidents that lead to economic waste all over the world are fully commercially insured by any prudent government as losses emanating from the insured incidents can be recouped from the commercial insurers and thereby allowing the government to focus on their traditional responsibilities of providing infrastructures and security for the citizens.”

Also, Mohammed Koguna, a Northern-based past president of the Council, encouraged the national secretariat not to be too far from the local chapters particularly, the northern chapter in view of the fact that insurance awareness there is still low compared to the South.

FG distributes inputs to 8,000 cassava farmers in Oyo

Over 8,000 farmers have benefited in Oyo state as the Federal Government has flagged-off the distribution of inputs for cassava farmers in the state in pursuant of the High Quality Cassava Flour (HQCF) initiative.

Each farmer was given four litres of herbicide per hectare of farmland they cultivate, three bags of fertilizer per hectare, and 60 bundles of cassava stem per hectare. Also, the sum of N80,000 per hectare of cassava farm was presented to each farmer of which N52,000 is grant and N28,000 is loan.

Speaking at Oyo town, venue of the flag-off event, Akinwunmi Adesina, Minister of Agriculture said all the promises made by the government on the HQCF initiative would be fulfilled in the state. Adesina said one HQCF processing factory would be established at Ilora and another at Ayete as promised.

The minister who was represented by Adebayo Lasisi, the state director, Federal Ministry of Agriculture said the Federal Government’s Agricultural Transformation Agenda was on course and had been recording great success in the sector as the country had begun exporting agricultural products.

Earlier in his welcome speech, Muyideen Adekunle, the state chairman, Nigeria Cassava Growers Association (NCGA), said the association had already planted 8,431 hectares of farmland for the HQCF programme.

Adekunle said that in the state, 22 local government areas were allotted improved cassava stems, fertilizers, chemicals and tractors for NCGA members so as to enhance the HQCF programme. “Cassava farmers in Oyo state and South – western Nigeria appreciate the agricultural support programme of President Goodluck Jonathan and the Minister of Agriculture, Akinwunmi Adesina, “ he said. The NCGA chairman said that the commendation was because the HQCF initiative was the first of its kind for cassava farmers since 1987 when the association was formed in the country.

Those present at the distribution ceremony included Rufus Babatunde. the Zonal Manager, Oyo State Agricultural Development Programme, and Olukemi Olusesi, Manager, Bank of Agriculture in Oyo town,

Others were Adeoye Adelabu, Desk Officer (Growth Enhancement Scheme) Federal Ministry of Agriculture, Oyo State and Leticia Laniyonu, member, Board of Trustees of NCGA.

Stakeholders to unlock financial investments in tomato value chain

Local and international players in the country’s tomato value chain have strategised on ways to improve operations in the tomato value chain and unlock financial investments along this value chain.

This was at a private sector stakeholders’ workshop on market development in the tomato value chain held recently by Growth and Employment in States (GEMS4) – Wholesale/Retail Sector. GEMS 4 is a project funded by the United Kingdom Department For International Development (DFID) in Lagos, Nigeria on recently.

Richard Ogundele, intervention manager for DFID funded GEMS4 Project, explains, “We are working with partners to unlock financial investments in various operations – tomato production, tomato processing, tomato packaging and tomato distribution. Improving primary handling operations – fresh produce packing house models, returnable plastic crate rental models, expansion of cold chain services for transport and storage and capacity building in good handling practices for fresh produce.”

The workshop brought together various stakeholders in the tomato industry to explore ways to develop the tomato value chain in Nigeria.

During the technical and plenary sessions, there were in-depth deliberations on how to unlock financial investments in production, processing, packaging and distribution; improve primary handling operations from farm to processing centers; and improve and expand support services like structuring farmers’ organisations, improving technical and managerial skills, agricultural extension and training, storage and transportation – all within the tomato industry.

During the workshop several business linkages were made between different partners to work collaboratively on different business plans.

M. Manoj of Origin Group, Vegefresh stated. “…let us not look at each other as competitors but supplementing each other…we can gain a lot and understand how we can actually reduce wastage of produce and increase yield.”

Also at the forum, Olawunmi Funsho, senior special assistant to the Lagos state governor on agriculture and cooperative said, “This is an issue that I have been trying to find a solution to which I think GEMS4 can do something. There are issues that have to be addressed if the industry is to succeed. Like the minister of agriculture said agriculture is no long a developmental business but a business itself…”

Also, issues of Women Economic Empowerment (WEE) and ways to ensure that women get more significant roles to play in developing the sector were also discussed. It came to the fore that in some cases women were known to be ill-informed of the market situations in the sector.

Nigeria is considered the second largest producer of tomato in Africa and 13th in the world but up to 50 percent of tomato produced in the country is lost due to lack of storage and under- developed marketing channels.

The forum drew large participation from stakeholders which included tomato farmers, Vegefresh/Origin group; Bank of Agriculture, Education Sector Support Programme in Nigeria (ESSPIN); Growth and Employment in States – Business Environment (GEMS3); Fresh Fruits Vegetable Dealers Association of Nigeria (FFVDAN); Novus Agro; Nigeria Stored Products Research Institute (NSPRI); Total Agric Solution; Standards Organisation of Nigeria (SON); Afrofoods; Lagos State Agricultural Development Programme; Syngenta; Ministry of Agriculture, International Fertilizer Development Center (IFDC); Agricultural Fresh Produce Growers & Exporters Association Of Nigeria (AFGEAN); Bank of Agriculture (BOA), Union Bank and so on.

Afreximbank gives $350m in financing to African cocoa producing countries

The African Export-Import Bank (Afreximbank) says it has provided about 350 million dollars in financing to support cocoa processing activities in the African four major cocoa producing countries.

This is contained in a statement in Lagos credited to the bank President, Jean-Louis Ekra, on Monday.

The statement quoted Ekra as saying this at the signing of a memorandum of understanding between Afreximbank and the International Cocoa Organization (ICCO) in Cairo.

It said that the gesture was aimed at boosting the development of the African cocoa sector and cocoa related business.

The statement said that the bank also has in the pipeline an additional $400 million for the purpose.

It reaffirmed Afreximbank’s commitment to help achieve greater involvement of Africa in the global cocoa value chain and to increase cocoa consumption in Africa.

“Besides, it is to diversify the continent’s cocoa export markets, and improve productivity and income levels for African cocoa farmers.

“It is to achieve these ends that the bank launched its African Cocoa Initiative (AFRICOIN),” said Ekra.

The statement said that under the terms of the memorandum of understanding, the initial focus would be on the development and implementation of solutions to improve the structural conditions of cocoa markets.

It added that focus would be to enhance the long-term competitiveness of small-holder cocoa farms and of the continental cocoa and chocolate products industry, to reinforce their capacity to participate in global trade.

Mr Jean-Marc Anga, Executive Director of ICCO, lauded Afreximbank for the gesture.

Anga reiterated that there was need for a strong focus to support indigenous African businesses to play an active role in the processing of Africa’s cocoa.

The African Export-Import Bank (Afreximbank) is the foremost Pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade.

The bank was established in October 1993 by African governments, African private and institutional investors, and non-African investors.

Its two basic constitutive documents are the Establishment Agreement, which gives it the status of an international organisation, and the Charter, which governs its corporate structure and operations.

Since 1994, Afreximbank has approved almost $30 billion in credit facilities for African businesses, including about $3.5 billion in 2013.

Afreximbank is headquartered in Cairo.

FIRS extends South-South tax recovery drive to Calabar

The Federal Inland Revenue Service (FIRS) has extended its South-South tax recovery drive to Calabar, the Cross River State capital, as the enforcement team from the federal revenue agency embarked on aggressive tax recovery of five defaulting firms in the state.

Dikko Dauda Betrus, tax controller, Micro and Small tax payers in Calabar, told BusinessDay in an interview that his team aimed to recover huge unpaid arrears of company taxes running into millions of naira.

Betrus discloses that the amount owed the FIRS since 1998, to the last Q1 of 2014, runs into tens of millions naira.

After the raid by the enforcement team, 10 persons from the affected companies were arrested for alleged non-filling of returns and defaulting tax remittance.

The FIRS controller says the tax recovery drive became necessary in the face of dwindling oil prices, which is now a serious issue, affecting the country’s economy in the execution of capital projects.

He says the clampdown on the defaulting firms became very imperative after serving the affected firms series of reminders over their non-compliance of their withholding tax payment and Value Added Tax (VAT) within the period.

Dikko says his department handles turnover of companies from N1 to N199 million to register and grow companies, and at the same time, the department is committed to excellent tax administration service to stakeholders, as well as ensure effective, convenient and efficient improvement of firms within the Calabar metropolis and environs.

Among the companies raided include Franphinas Nigeria Limited of 173 Murtala Mohammed Highway, owing N1.142 million; Hotschop Limited, N3 million; Orange Resort, N701,000; The Mirage Calabar N208 million, and Freddy’s Investment Nigeria Limited by Atekong Drive N3.03 million.

Meanwhile, the legal adviser to the Mirage Calabar, William Anwan pleads with the tax controller on behalf of the minister of culture and tourism, Edem Duke, who is the owner of the hotel facility, asking for more time to enable his client settles his liabilities before the end of the year.

According to him, “Mirage is not denying owing FIRS. We are going to make substantial payments. The minister told me to come and make an appeal.”

Asekong Egbe, the manager of Franphina Nigeria Limited, also owned by a governorship aspirant in Cross River, Francis Bulem appeals to FIRS to offset their liabilities through installments before the first quarters of next year.

In his reaction to the appeals, the tax controller, Dikko Dauda says the requests was beyond his capacity, as he can only grant three installmental payments of the amount owed to FIRS.

He says the directive by the enforcement team was by the coordinating minister of the economy and minister of finance, Ngozi Okonjo-Iweala, to work round the state capital to trace some of the defaulting firms with a view to recovering their liabilities ahead of the 2015 budget.