Expert sees greater economic growth with stronger insurance, pension industry

The role of insurance and pension industry in any economy particularly in mobilization of long-term funds cannot be taken for granted in the pursuit for economic growth and development in any nation, Glory Etaduovie, Managing Director/CEO, IEI Anchor Pensions Ltd has said.

Etaduovie who made the remark in a presentation titled “Contributions of the Insurance and Pension industries to the Economic Growth of Nigeria” said insurance and pension have enhanced the confidence to be adventurous knowing there is a back-up plan in the event of any mishap –be it corporate or individual.

“The confidence of secure savings will reduce the possibility of corruption in preparation for retirement or associated anxiety.”

He said, obviously, pension cannot be relied on solely. The Pension Industry provides a pool of usable funds that, in Nigeria, have accumulated over N8 trillion and still growing. With a chosen average 20 percent growth annually, it is sure to double in five years. Presently, at the current exchange rate to the dollar, it is about half of our national foreign Reserves. This amount competes with our National annual budget which for 2017 was N7.3 trillion, so the funds are there for use, though not without conditions.

“While the funds are available, accessibility would require the strong comfort that accountability would guarantee. The people’s future is tied to it, lest its purpose be defeated and contributors lose faith in the Industry. Consequently, the sanctity of the funds must be maintained, if the current advantages are to remain. It is like a pretty bride to be who must be careful in selecting from the array of suitors to be sure who would not leave her broken- hearted. The funds are sacrosanct.”

Etaduovie further stated that “this is the first time that the country’s savings culture has been so robust and discreetly managed. It thus raises many curiosities, suspicions and doubts. Despite all of these, it is our money, Nigerian money. Whether we keep it, grow it or destroy it and all its potentials, it is in our hands. We may thus harness greater possibilities through very focused government policies, a clear strategic direction and of course a clear understanding of dangers and opportunities that exist using the funds for misadventures.”

Looking at the challenges, he said pension in its new setting, is budding.

“It can harness a lot more and do more for the Nigerian economy. Given our previous history when pension funds were abused, there are strong cautionary measures in the control and safety of funds. Overtime, it is reasonable to think that the industry regulators will encourage a more creative and competitive environment, as it is already doing with a variety of financial instruments.”

“PFAs may, at some point in time, be allowed to initiate certain products relating to infrastructure and economic development as long as they are bank-able, with entry and exit points and meet security and regulatory standards.”

“The current level of growth of the pension funds vis-a-vis available investable instruments suggests that shortly, more funds will begin to chase lesser available investment products. This will create demand and supply related challenges.

As such, the investment/ development related ideologies need a revamp, as we might thus just begin to waste great development opportunities, if not addressed urgently.”

He further stated that part of the greater challenge facing the country, which cascades down to pension’s investment, is the absence of a strong sciences and technology background. This reduces national initiatives and productivity which should create wider circles of growth, development, financing and dynamics of financing. This must be addressed on both long and short term basis.

“No doubt, pension is a major partner in repositioning our economy. But, the dream has to be clear, well defined and driven with passion and a sense of urgency”.