The Chairman of Nigeria Social Insurance Trust Fund (NSITF), Austin Enajemo-Isire, has called for a review of the laws guiding investment of insurance and pension funds in the country.
Enajemo-Isire made the at the fifth annual conference of the National Association of Insurance and Pension Correspondents (NAIPCO).
According to him, the review of the insurance and pension laws will help to guard against the current restrictive nature of its outlets.
He said, “The current restrictive nature of insurance and pension funds investment outlets calls for review of the legislations guiding investment of Insurance and Pension Fund. The yelling and plea from the organised private sector (OPS) to create more access to investible funds deserves attention.”
“A consideration for review of these legislations to enable some special and real sectors of the economy have access to insurance and pension funds to finance their operations, will be most beneficial to the growth and development of the Nation’s macroeconomic activities.”
Enajemo-Isire further suggested a deliberate policy by the authorities to invest insurance and pension funds in sectors such as manufacturing, agriculture and aviation, among others, with an inbuilt safety net.
“As at 31st August, 2020, Pension Fund and Assets stood at about N11.35 trillion. Of this amount, 66.27% was invested in FGN Securities; money market accounted for 16.6%, whilst state bond accounts for 1.31%, all totaling 84.18%.
“Insurance investible fund’s administration follows the same pattern as the pension fund. What then is left for other sectors of the economy?
“It will also interest us to know that this year has witnessed the unprecedented crash in yields and interest rates payable in the Bond, Capital and Money Market. Bond rates have fallen to as low as 2.5% Pa, depending on the tenor.
“The Nigerian Treasury Bills (NTB) is currently an unattractive short term investment window with a rate as low as 0.5% pa. Stock Market has its share of the economic down turn, just as the money market operations is not an exception.
“How can contributors, policy and shareholders maximize their wealth and grow the economy under such situation? There is urgent need to consider alternative strategies to retool the economy for survival and growth,” he added
The NSITF boss noted that the outbreak of COVID-19 and the recent #EndSARS protests have impacted the economy negatively.
“As we all know, year 2020 has been a very remarkable year. A year that have been bedeviled by different crisis, ranging from the dreaded corona virus, that shut down Nigeria and the world economy for many months with loss of many life and still counting, to the most recent wanton destruction of life and properties across the country caused by the ‘#EndSARS Mayhem, among many others.
“The impact of these crisis have resulted into the National Gross Domestic Product declining from a growth of 2.2% in 2019 to about -4% by year end.”
According to him, government, private sector institutions and individuals have continued to search for economic survival strategies to change the narratives and create the new normal.
“We are in a time when interest rate payable on investment instruments have all crashed and many sectors of the economy are losing value due to low returns and accelerated decline in contributors, policy and shareholders wealth,” he said.
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