Economy
Nigerian Insurance Industry Will Survive Weak Economy, Election—Agusto
By Adedapo Adesanya
A credit rating agency, Agusto & Co, has revealed that Nigeria’s insurance industry is poised to emerge stronger amid weak macroeconomic indicators and uncertainties surrounding the 2023 general elections.
This was contained in its 2023 insurance industry report, which provides a comprehensive review of the insurance landscape in Nigeria and the near-term expectation for the industry.
The report contains a review of how the Nigerian insurance industry has fared amidst the lingering macroeconomic headwinds and outlook for the Industry in an election year.
According to Agusto & Co., the Nigerian insurance industry’s estimated gross premium income (GPI) maintained its double-digit growth trend and crossed the N700 billion mark in FY 2022.
The uptick in the industry’s premium was driven by several factors, including improved economic activities and stronger regulatory support.
Furthermore, while the Industry’s performance in FY2021 was moderated by the payout of claims emanating from the violence that trailed the #EndSARS protest, such outflows were minimal in 2022, given the non-recurring nature of the crisis.
Consequently, the Nigerian insurance industry’s estimated net claims for FY2022 rose by a lower 13 per cent relative to the previous year. Notwithstanding, inflationary pressures continue to adversely impact claim settlements, underwriting costs, operating expenses and also moderate profitability indices.
Agusto & Co. also recognises that the country’s insecurity gaps, infrastructural shocks and aftermath of the#EndSARS protest have emphasised the benefits of insurance products, particularly fire and general accident policies.
One of the most notable highlights of the Industry in 2022 was the increase in third-party motor insurance policy rates by the National Insurance Commission (NAICOM), the apex regulator, on December 22, 2022. NAICOM raised the new premium for private motors to N15,000, staff buses to N20,000, commercial trucks/general cartage to N100,000, commercial tricycles to N5,000 and commercial motorcycles to N3,000. These policies previously had a basic rate of N5,000.
In addition to the new premium rates, NAICOM announced that the comprehensive motor insurance policy premium rate should not be less than 5 per cent of the sum insured after all rebates or discounts.
Although the policy has received some criticisms, Agusto & Co. believes that it would cushion the rising loss rates from the associated business line and support a boost in GPI in FY2023.
Nevertheless, Nigeria’s political environment will define the financial year 2023 for insurance operators.
The first half of 2023 would be characterised by electioneering activities, while the second half would bring a new administration and fresh ideas for fiscal and economic transformation.
The firm noted that possible election violence poses a downside risk that could adversely impact insurance operators, especially if it is a widespread occurrence across several states.
However, there will also be opportunities to secure new insurance contracts from the public sector, especially in the second half of 2023.
In the near term, Agusto & Co. expects the introduction of a risk-based capital regime to gain momentum while NAICOM continues to implement policies and directives that would boost the industry’s sustainability.
“A strong regulatory stance to claims payments which resulted in the withdrawal of the license of some insurers in 2022, though being contested in the court of law, would remain in 2023 and possibly going forward as part of NAICOM’s efforts to sanitise the industry.
“The non-conventional takaful insurance segment, which is an under-tapped area, is already witnessing significant growth as evidenced by the marked 172 per cent growth in GPI in FY2021.
“We anticipate that the segment would continue on its upward trajectory in the near term. Takaful insurers offer alternatives to conventional insurance, and their model is based on the concept of social solidarity, cooperation and mutual indemnification of losses of members,” according to a note shared with Business Post.
Agusto&Co. also believes that these alternative insurers would continue to leverage the large Muslim population in Nigeria, estimated at over 100 million, to grow the segment.
Albeit, the relatively low awareness of these alternative products remains a challenge to be surmounted.
Microinsurance is also poised for growth given the dwindling consumer purchasing power, large informal sector and relatively high poverty rate in the country.
“Overall, Agusto & Co. expects a modest performance by the Industry in FY 2023, supported by the rising yield environment. Initiatives such as the bancassurance model, which would enable insurance operators to partner with the banking industry to deepen their reach in the retail market, will also bolster the industry in our view. The rate hikes for third-party motor insurance and the bullish growth track for microinsurance, takaful insurance and some new entrants in the conventional insurance landscape are also growth drivers for the industry.
“Furthermore, the intensified marketing campaigns, awareness programmes and adoption of digital channels would continue to support penetration, albeit strong broker relationships would remain vital in bolstering performance,” the note said.
Agusto&Co. noted that the political terrain would also shift in the year 2023, and the operators’ ability to respond promptly to these changes would be a key factor for the industry’s performance in the near term.
By Adedapo Adesanya
GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided a 100 per cent guarantee to support a $75 million debt facility for Robust International Pte Ltd (Robust) to construct a new cashew nut processing plant in Ogun State, Nigeria.
GuarantCo, under the PIDG is funded by the United Kingdom, the Netherlands, Switzerland, Australia, Sweden and Canada, mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower-income countries across Africa and Asia.
Nigeria is one of Africa’s largest cashew producers of 300,000 tonnes of raw cashew nuts annually, yet currently less than 10 per cent are processed domestically. Most raw nuts are exported unprocessed to Asian and other countries, forfeiting up to 80 per cent of their potential export value and adding exposure to foreign exchange fluctuations.
According to GuarantCo, this additional plant will more than double Robust’s existing cashew processing capacity from 100 metric tonnes per day to 220 metric tonnes per day to help reduce this structural gap.
The new plant will be of extensive benefit to the local economy, with the procurement of cashew nuts from around 10,000 primarily low-income smallholder farmers.
There is an expected increase in export revenue of up to $335 million and procurement from the local supply chain over the lifetime of the guarantee.
Furthermore, the new plant will incorporate functionality to convert waste by-products into value-added biomass and biofuel inputs to enhance the environmental impact of the transaction.
It is anticipated that up to 900 jobs will be created, with as many as 78 per cent to be held by women. Robust also has a target to gradually increase the share of procurement from women farmers, from 15 per cent to 25 per cent by 2028, as it reaches new regions in Nigeria and extends its ongoing gender-responsive outreach programme for farmers.
Terms of the deal showed that the debt facility was provided by a Symbiotics-arranged bond platform, which in turn issued notes with the benefit of the GuarantCo guarantee. These notes have been subscribed to in full by M&G Investments. The transaction was executed in record time due to the successful replication of two recent transactions in Côte d’Ivoire and Senegal, again in collaboration with M&G Investments and Symbiotics.
Speaking on the development, the British Deputy High Commissioner, Mr Jonny Baxter, said: “The UK is proud to support innovative financing that mobilises private capital into Nigeria’s productive economy through UK-backed institutions such as PIDG. By backing investment into local processing and value addition, this transaction supports jobs, exports and more resilient agricultural supply chains. Complementing this, through the UK-Nigeria Enhanced Trade and Investment Partnerships and the Developing Countries Trading Scheme, the UK is supporting Nigerian businesses to scale exports to the UK and beyond, demonstrating how UK-backed partnerships help firms grow and compete internationally.”
Mr Dave Chalila, Head of Africa and Middle East Investments at GuarantCo, said: “This transaction marks GuarantCo’s third collaboration with M&G Investments and Symbiotics, emphasising our efforts to bring replicability to everything we do so that we accelerate socio-economic development where it matters most. The transaction is consistent with PIDG’s mandate to mobilise private capital into high-impact, underfinanced sectors. In this case, crowding in institutional investors in the African agri-processing value chain.
“As with the two recent similarly structured transactions, funding is channelled through the Symbiotics institutional investor platform, with the notes externally rated by Fitch and benefiting from a rating uplift due to the GuarantCo guarantee.”
Adding his input, Mr Vishanth Narayan, Group Executive Director at Robust International Group, said: “As a global leader in agricultural commodities, Robust International remains steadfast in its commitment to building resilient, ethical and value-adding supply chains across origin and destination markets. This transaction represents an important step in advancing our long-term strategy of strengthening processing capabilities, deepening engagement with farmers and enhancing local value addition in the regions where we operate. Through sustained investment, disciplined execution and decades of operating experience, we continue to focus on delivering reliable, high-quality products while fostering inclusive and sustainable economic growth.”
For Ms María Redondo, director at M&G Investments, “The guarantee gives us the assurance to invest in hard currency, emerging market debt, while supporting Robust’s new cashew processing plant in Nigeria. It’s a clear example of how smart credit enhancement can unlock institutional capital for high-impact development and manage currency and credit risks effectively. This is another strong step in channelling institutional capital into meaningful, on‑the‑ground growth.”
Also, Ms Valeria Berzunza, Structuring & Arranging at Symbiotics, said: “We are pleased to continue our collaboration with M&G Investments, GuarantCo, and now with Robust through a transaction with a strong social and gender focus, demonstrating that well-structured products can boost commercially attractive, viable, and impactful investments.”
By Adedapo Adesanya
MTN Group, Africa’s largest mobile network operator, has entered advanced discussions to buy approximately 75 per cent of shares in IHS Holding Limited (IHS Towers) that it does not already own.
The move would give the South African telco full control of IHS, which is the leading independent tower operator in several of its key markets, providing colocation services and supporting the expansion of mobile networks in regions with growing demand for digital connectivity.
In a cautionary announcement to investors on Thursday, MTN confirmed it is considering a transaction to acquire the remaining stake in the New York Stock Exchange-listed IHS, following recent market speculation.
The potential offer price would be “at a level near the last trading price” of IHS shares on the NYSE as of February 4, 2025, a period when the stock has seen a sharp rise in recent months, reflecting renewed investor confidence in the sector.
No binding agreement has been reached, and MTN emphasised there is no certainty that the deal will proceed.
However, if completed, the transaction could materially impact MTN’s share price, prompting the company to advise shareholders to exercise caution in trading until further updates.
MTN already holds a significant stake in IHS and maintains a deep operational partnership across multiple African markets.
Over the past decade, MTN has sold thousands of passive network sites to IHS through sale-and-leaseback deals, including a major transaction in South Africa in 2022 involving over 5,700 towers.
These arrangements allowed MTN to free up capital from infrastructure while securing long-term tower access via master lease agreements.
A full buyout would represent a dramatic strategic pivot for MTN, effectively bringing tower infrastructure back in-house after years of outsourcing to specialised operators like IHS.
MTN has previously voiced concerns about corporate governance at IHS, adding context to its cautious approach in the announcement.
If the deal falls through, MTN said it would continue exploring options to unlock value from its IHS investment, consistent with its disciplined capital allocation strategy.
The potential acquisition underscores the evolving dynamics in Africa’s telecom infrastructure sector, where operators weigh the benefits of owning versus leasing critical assets amid rising data demands and economic pressures.
By Adedapo Adesanya
For the third consecutive trading session, the NASD Over-the-Counter (OTC) Securities Exchange ended in the green territory, rising further by 0.77 per cent on Thursday, February 5.
Two price gainers helped the bourse to rally during the session, with the market capitalisation up by N16.87 billion to N2.197 trillion from N2.180 trillion and the NASD Unlisted Security Index (NSI) up by 3.18 points to 3,672 points from the 3,644.48 points in the midweek session.
The advancers’ group was led by Central Securities Clearing System (CSCS), which added N3.70 to sell at N48.67 per share versus the previous day’s N44.97 per share, and Afriland Properties Plc expanded by N1.01 to N15.01 per unit from N14.01 per unit.
It was observed that the alternative stock exchange recorded two price losers led by Geo-Fluids Plc, which further lost 51 Kobo to sell at N4.75 per share versus Wednesday’s closing price of N5.26 per share, and Industrial and General Insurance (IGI) declined by 6 Kobo to 59 Kobo per unit from 65 Kobo per unit.
During the session, the volume of securities transacted by investors slid by 51.9 per cent to 1.2 million units from 2.5 million units, the value of securities went down by 32.0 per cent to N12.0 million from N17.7 million, and the number of deals increased by 27.8 per cent to 23 deals from 18 deals.
At the close of trades, CSCS Plc was the most traded stock by value on a year-to-date basis with 16.2 million units exchanged for N659.9 million, followed by FrieslandCampina Wamco Nigeria Plc with 1.7 million units traded for N117.8 million, and Geo-Fluids Plc with 12.3 million units valued at N79.1 million.
CSCS Plc remained the most active stock by volume on a year-to-date basis with 16.2 million units sold for N659.9 million, trailed by Mass Telecom Innovation Plc with 13.6 million units valued at N5.5 million, and Geo-Fluids Plc with 12.3 million units worth N79.1 million.
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