NAICOM sees cross border expansion, growth

…The National Insurance Commission (NAICOM), says

The African Continental Free Trade Area (AfCFTA) presents a transformative opportunity for Nigeria and the insurance industry to expand into new markets, drive growth, and create prosperity.

According to the Commission, with the removal of trade barriers, insurance companies can develop and offer cross-border insurance products, including coverage for businesses operating in multiple African countries, which can enhance the attractiveness of Nigerian insurers to multinational clients.

Olusegun Omosehin, commissioner for Insurance/ CEO NAICOM made the remark at the workshop for insurance companies organized by the Nigerian Insurance Industry Committee on AfCFTA held in Lagos.

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Omosehin said embracing AfCFTA will bring about increased investment, as it is likely to attract foreign direct investment. “This influx of capital can boost the insurance sector by providing the necessary funds for innovation, technology adoption, and capacity building in the industry.”

“We are also not oblivious of different regulatory environments across various African countries, creating complexities in compliance and operational standards. In this regard, we are committed to bilateral negotiations underpinned by Mutual Recognition Agreements (based on the principle of reciprocity) and Most Favoured Treatment (on National Treatment), among other considerations.”

Omosehin speaking further said the critical concern remains the collective preparedness of the insurance industry to capitalize on these prospects.

“As CEOs of insurance companies and members of the NIA, we must ponder whether we will relinquish our position as a continental leader, allowing other nations to assume the mantle, or whether we will assert our dominance in Africa, harnessing our collective strengths to drive growth, innovation, and prosperity.”

Ekeoma Ezeibe, chair of the Nigerian Insurance Industry Committee on AFCFTA in her welcome remarks at the event said a long-term goal of AfCFTA is to lay the foundation for the establishment of a unitary African customs union, which, like the European Union (EU), would require a common external tariff structure. Or put differently, the same customs duties and other import rules would apply to all goods entering the AfCFTA area.

According to her, of particular consequence for the insurance sector, AfCFTA aims to promote industrialization and diversification of economies by encouraging the development of regional value chains and manufacturing sector. The anticipation is that diversified economic activity and sectors should lead to increased demand for insurance.

“And as AfCFTA eventually harmonizes trade and investment regulations across member countries, it is critical that the insurance sector of Africa’s largest economy, Nigeria, begins to contemplate the following potential opportunities and challenges in a continent-wide insurance regulatory regime:

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Among them she said include, harmonisation of insurance regulations among state parties in order to achieve market confidence and growth and a regulatory balance that protects consumers, multilateralism and Reciprocity, standardisation of practice, cross-border opportunities and risks, trade in Services without barrier, intra-continental movement of Personnel, and creation of a single big market as against a near stagnant market.

World Bank Group estimates that AfCFTA will increase Africa’s income by $450 billion by 2035 and increase intra-African exports by more than 81 percent. Separately, the UN Economic Commission for Africa estimates that AfCFTA single-market trade agreement will enable the African economy to reach the $29 trillion mark by 2050. As of January of 2023, forty-seven of the 54 AfCFTA signatories have ratified the agreement.