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Insurance firms urged to invest more in infrastructure

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By Rosemary Onuoha

MANAGING Director of Infrastructure Bank Plc, Mr. Adekunle Oyinloye, has called on operators in the insurance industry to invest more in infrastructure financing in the country.


Speaking at the insurance brokers conference in Lagos last week, Oyinloye noted that with the long-term nature of life insurance, retirement savings and pension annuities, the industry is well positioned to participate in the financing of Private-Public Partnership (PPP) projects.

He stated: “The insurance industry has made only a marginal investment in the infrastructure sector in recent years. The federal government’s infrastructure blueprint – the National Integrated Infrastructure Master Plan (NIIMP) – stipulates that Nigeria will need an average of $25 billion per annum (i.e. 7% of GDP) for the next five years, to enable the nation kick-start its infrastructure renaissance.

The NIIMP estimates a total investment of $2.9 trillion will be required to build and maintain infrastructure in Nigeria, over the 30 year forecast period.  Presently, annual investments in infrastructure are estimated at about $10 billion per annum, indicating a significant funding shortfall of up to $15 billion annually.

“With the long-term nature of life insurance, retirement savings and pension annuities, the insurance industry is well positioned to participate in infrastructure financing of Private-Public Partnership (PPP) projects, given its need to match long-term liabilities with long-term assets.

There are unique opportunities for the industry to play a pivotal role in contributing private investment and sector expertise in long-term PPP infrastructure projects.

“It is an emerging reality in financial services that the insurance sector is ideally suited to serve as the nexus between capital providers (whether debt, equity or quasi-equity) – on the one hand and the broad range of real asset managers which cut across the real and service sectors – on the other hand.  This is because the investment decision-making process is primarily concerned with identifying, appraising, mitigating and pricing risks associated with such investments; for which the insurance sector is best-suited as the default manager of risks, duly equipped with the tools and techniques to spread and diversify risk portfolios.

“With an estimated insurance penetration rate of 0.4 percent and only one percent of the population holding any form of insurance policy, the opportunities in the Nigerian market are enormous.”


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