By PETER EGWUATU
The low level of financial inter-mediation has been attributed to the low level of patronage in the pension business, insurance business and the overall savings industry.
The Managing Director/CEO, FBN Capital Limited, Mr. Kayode Akinkugbe, made this assertion in his presentation at the 2nd Nigeria International Investment forum held in Lagos.
According to him, “Large gaps remain in the pensions business, insurance companies and in the overall savings industry. Filling those gaps on the buy side would transform the low level of financial intermediation. Pension assets under management have reached N2.75trillion but this is just 7 per cent of Gross Domestic Product (GDP) and covers just five million employees nationally. The public sector is under-represented.”
He further revealed that the insurance penetration in the Nigerian financial system stands at just 2 per cent of the population, and called for the promotion of Collective Investment Schemes (CIS).
While commenting on the Foreign Direct Investment (FDI) in Africa, the FBN Capital boss stated that Nigeria is a leading FDI destination in Africa.
According to him, “Nigeria was the no 3 destination in Africa in 2010 per United Nation (UN) figure. Figure for Nigeria for 2011 per Central Bank of Nigeria (CBN ) was US$8.9billion (gross) or US$8.1billion (net). Levels are modest in context of a market size of close to 170 million people.
He stated that there is need to more than double current rate of 2.7 per cent of GDP to soak up unemployment in order to join the likes of Brazil, Russia, Indonesia, and China (BRICs) .
While making a popular regional comparison of FDI in Africa, Akinkugbe, stated that the trend for Nigeria is more stable than South Africa (SA).
He stated that Nigeria outflows was largely in finance sector, which is now curtailed, adding “ SA outflows more diverse, including mining, telecoms and retail.”
According to him, “Potential of reform agenda and active infrastructure programme in Nigeria will yield substantial increase in FDI.”
Commenting on the gains of FDI, Akinkugbe, said, A substantial increase in FDI in conjunction with FGN’s infrastructure programme has the potential to push the GDP growth rate from 7 per cent to 10 per cent and beyond. The example of Brazil shows that agriculture has piggy-backed on the building of roads for the development of natural resources. FDI can help to soak up unemployment, which was running at 24 per cent nationally and as high as 38 per cent for the 15 to 24 year age group in 2011 according to the Nigeria Bureau of Statistics ( NBS).”