This sector represents the backbone of Nigeria’s risk management system, ensures financial security, serves as an significant component in the financial intermediation chain, and offers a ready source of long term capital for the infrastructure projects. The role of insurance in the growth and development of our economy cannot be over-emphasized.it mitigates the influence of risk and positively correlates to growth as entrepreneurs cover their exposures, otherwise risk-taking abilities are hampered. Thus, a strong and competitive insurance industry is a compelling imperative for Nigeria’s economic development and growth.
The Nigerian macro-economy overview is a compelling story of progression and advancement, attributably to a stable political environment and successful implementation of socio-economic and financial reforms. However Nigeria has previously been enormously dependent on Oil and Gas revenue, latest statistics display a switch in this trend. Militants unrest affecting oil producing region have resulted in significant reductions in oil contributions to GDP. On this roll side, enlargening concentrate on developing the non- oil sector, combined with growth in key sectors such as Telecoms and Building Construction have boosted non-oil sector earnings and growth.
As at Aug. 2005, prior to the announcement of the recapitalization directives, there were 22 insurance companies with a market capitalization ofN28.94 billion listed on the Nigeria Stock Exchange. Now there are 26 active companies with a market capitalization ofN683.1 billion, a Two,260% growth over two and half years,with fairly a few still expected to be listed this year.
The Nigerian Insurance Industry has evolved over the years following the announcement of fresh capitalization requirements for companies operating the sector. With the conclusion of the consolidation exercise, the number of players dropped from 103 to 49. Activities in the sector , however, noticeably enlargened; with enhanced public awareness of the sector and their operations, rapid expansions and strategic business acquisition, improved visibility and stringent supervisory regulations.
Therefore, in anticipation of the enormity of responsibility of the insurance sector, given the expected role in the transformation of the nation’s economy, the reform in the sector became unavoidable. One of the major outcomes of the consolidation and recapitalization exercise in the sector was the recertification of 49 companies, as against over 100 companies that were in existence in 2005. However, in spite of the reforms, the insurance sector is still faced with daunting challenges, which must be addressed to galvanize the economy.
The growth of this sector was on how effectively the insurers are able to come up with designs suitableto our context and howeffectively they are able to switch the perceptions of Nigerians and make them aware of the insurable risks. Thegrowthalso depended on how service -oriented insurers are going to be, and the effective ness of the regulation. In latest times, NICOM has taken the bold steps the release of trapped funding to the sector, in the verification and recertification of insurance firms, in ensuring that claims are better scrutinized and in guidance note as well as corporate governance.
The following functions were injected into the economy by the sector in order to better the lot of Nigerian Economy;
a. Provision of indemnity/ compensation: as professional risk bearer that have entered into a contract of insurance with the insured that regularly pays his premium, it believes on the insurance company to indemnify if the insured peril occurs. When indemnified, it cushions the effect of loss suffered by the insured.
b. Reduction of losses: through the payment of indemnity, losses suffered are diminished, making it possible for the sufferer to embark again his business.
c. Distribution or sharing of financial loss: insurance operations enable loss or losses to be distributed among different contributors that mean insurers who normally pay their premium regularly. These insurer contributions or premium normally grow to form what is known as a “pool” of financial resources. If any insured peril occurs, compensation or indemnification is effected from this common pool. Payment made from this common pool represents or infers that the loss has been distributed among the various premium payers. Infect, the loss cargo has been borne collectively.
d. Confidence in investment: insurance has directly stimulated investment in various fields of human endeavors. Any investor who remembers that he is going to be indemnified if the insured peril occurs will be willing and certain to put more funds in his business or even expand his business.
e. Provision of employment: normally, insurers and insured provide job opportunities to the citizenry. The insurance companies do employ extra forearms as their business increases, while investors who take insurance protections are certain to invest and or expand their business. By so doing they identically employ people to work for them.
f. Increase in investment: taking insurance polices to serve as boost to investors and entrepreneurs, various fields of business that are looked upon as very risky are being ventured into, meaning that with introduction of insurance many people are investing without fear of losing their capital.
g. Mobilization of financial resources: different participants in insurance business/ classes of insurance normally pay their consideration/ premium. These insurers mobilize these funds which they utilizes to indemnify losses. Some of these funds are usually invested in other variable businesses or companies. For example, the mobilized fund may be used to buy shares of a blue chip company, attracting dividend to the insurance company yearly.
h. Industrial growth and economic development: insurance business do stimulate entrepreneur to invest, expand, and diversify their various business. By so doing, they are contributing to the over all industrial, commercial and economic development of the nation.
Where can you get business contacts or a list of Nigerian companies?
Where to Find Nigerian CompaniesThe Nigerian Yellow Pages is a business directory published by Xybertek Systems Limited. You can get it in the available four formats: . Mobile WAP-site Directory . Mobile SMS-text Directory . Printed Directory – Yellow Pages Book . Internet Directory
Why is the Nigerian economy called a mixed economy?
Response . It’s simply bcos the country does not want to be one-controlled by either government or markets,so they choose to collaboratein order to help each other along the way. . Reaction Two . There is a veriety of reasons why countries choose the policies they do. Policies are not mutually special – very few policies will not be determined by ideology. Generally speaking, government intervention is used to correct market failures. In the more puritan sense… A communist country, for example China or Cuba, may seek to expand private enterprise to meet consumer request for items that cannot be planned for effectively. A capitalist country, for example the UK, may seek to choose to control a key resource to ensure markets can operate effectively. .
What are the roles of taxation in Nigerian economy development?
Response . tax proceeds helps in rural and urban development in the form of road constructions, hospitals, schools and other social amenities.
What is the history of the Islamic banking system in the Nigerian economy?
Islamic banking has the same purpose as conventional banking except that it operates in accordance with the rules of Sharia, known as Fiqh al-Muamalat (Islamic rules on transactions). The basic principle of Islamic banking is the sharing of profit and loss and the prohibition of ribaÂ´ (interest). Amongst the common Islamic concepts used in Islamic banking are profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijarah). In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while permitting the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no extra penalties for late payment. In order to protect itself against default, the bank asks for stringent collateral. The goods or land is registered to the name of the buyer from the commence of the transaction. This arrangement is called Murabaha. Another treatment is Ijara wa Iqtina, which is similar to real-estate leasing. Islamic banks treat loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid). There are several other approaches used in business deals. Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company’s individual rate of come back. Thus the bank’s profit on the loan is equal to a certain percentage of the company’s profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. This practice is called Musharaka. Further, Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are collective. Such participatory arrangements inbetween capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not permitting lender to monopolize the economy. And ultimately, Islamic banking is restricted to islamically acceptable deals, which exclude those involving alcohol, pork, gambling, etc. Thus ethical investing is the only acceptable form of investment, and moral purchasing is encouraged. JAIZ International is attempting to see that it has establish an Islamic bank in this country, however with the review of Capital adequacy in Nigerian banks, the Islamic bank is delayed. Albeit the N25B Capital base is one condition for the establishment of an Islamic bank in Nigeria, but we see that there is more to meeting this CBN condition. The most significant required conditions are: Managerial commitment, sharia supervisory board, safeguarding Muslim investor’s fund and compliance with AAOIFI standards. Managerial commitment: The management must be fully persuaded of the concept and fully committed and dedicated to it. Unless the entire management is committed and wooed, the business activities and the enterprise will not be foul free or will not escape irregularities and deviation. Regardless of how stringent and stringent fatwa and contracts are, this will not ensure sound practices if there is no one adequately Veritable and committed to implement the principles. â¢ Sharia Supervisory Board: There should be a sharia supervisory board for any Islamic bank, and that board should consist of trustworthy scholars who are very qualified to issue fatawa on financial transactions. Providing our present situation within the MUSLIMS today how do we constitute the members of the board? Another issue is TRUST from the customers who may use the banks fund, when it comes to profit sharing. Last but not the least is ENLIGHTEMENT, many people even within the Muslim are not aware of how Islamic banks operate. Therefore there is urgent need for a serious enlightenment to the public on operational modalities and requirement of an Islamic bank. Other options that may be considered by JAIZ or even states like SOKOTO, KANO BORNO, KATSINA etc is to establish an ISLAMIC MICRO FINANCE at local government level. The recently approved MICRO FINANCE BANKS can be converted to an Islamic one. In a symposium held at Harvard University on FINANCING THE POOR: Towards Islamic Microfinance some time last year, Nazim Ali has pointed out that Microfinance is not reaching the poorest of the poor, even tho’ this is its purpose, and loans are going to activities unrelated to entrepreneurship. Islamic finance could, in principle and in practice, correct these defects. Robert Annibale, global director of microfinance for Citigroup, collective his insights into both Islamic finance and microfinance. He described microfinance institutions as self-styled “bankers of the poor `, originally rooted in domestic, local markets but enlargening expanding into larger markets and suggesting a broader range of services. He noted that the high operating costs, passed on to the customer in the form of high interest rates, are a hurdle for the poor. He felt that this was where there is potential for Islamic finance to make a difference. Under conventional microfinance, risk is borne by borrowers and infrequently held by the institutions. Islamic finance concentrates on interest-free methods of providing capital, because the shari’ah holds lending to be a purely charitable exercise, rather than a means of making a profit, Islamic finance is also habitual to methods of risk-reward sharing inbetween the institution and the borrower. Islamic microfinance banks have grown significantly in countries like Pakistan, Indonesia, Malaysia, and Bangladesh. In fact, Islamic microfinance institutions love greater invasion than traditional commercial banks in Bangladesh. It is high time for us here in Nigeria (particularly in the north because the south have commenced) to commence introducing Islamic microfinance banks which will graduate to a utter BANK in future. Requirements for Islamic Banking in NigeriaAccording to a draft framework released by the Central Bank in March, Ã Islamic banks, referred to as non-interest banks shall be licensed in accordance with the requirements for a fresh banking license issued by the Central Bank of Nigeria from time to time. Ã Conventional banks operating in Nigeria may suggest sharia-compliant products and services through their non-interest banking branches or windows. However, such branches or windows cannot suggest conventional banking or interest based products and services. Ã Banks suggesting non-interest banking products and services shall not include the words “Islamic” as part of their registered or licensed name. This, the draft described as being in line with the provisions of Section 39 (1) of Banks and other Financial Institutions Act (BOFIA) 1991 (as amended). They shall how-ever, be recognized by a uniform logo to be designed and approved by the CBN. The CBN shall require all the banks’ signages and promotional materials to carry the logo to facilitate recognition by consumers. Ã The Central Bank shall set up an advisory committee on non-interest bank-ing within the CBN to be called the CBN Shariah Council (CSC), which will be outsourced. The Council shall advise the CBN on Islamic laws and principles for the purposes of regulating non-interest banking business. Ã All non-interest banks are required to maintain a minimum Risk Weighted Asset Ratio of Ten.0% or as may be determined by the CBN from time to time for the purpose of calculating its Capital Adequacy Ratio (CAR). Ã All applications must be submitted with the required documents including a Non-refundable application fee of N500, 000.00 and deposit of minimum capital of N25 billion with the Central Bank of Nigeria. Ã Not later than six (6) months after the grant of an Approval In Principle (A.I.P), the promoters of a proposed bank must submit application for the grant of a final banking license to the Director of Banking Supervision with a Non-refundable licensing fee of N5 million in bank draft payable to the CBN and other required documents
What is the role of puny business in the Indian economy?
During the period of independence, Agriculture is the back born of the Indian Economy. But, now a days its contribution is relatively low compare inbetween the Industrial Sectors.Most of the Petite scale Industrial sectors are fully or partially depend on the agricultural sector. So Agriculture sectors are developed and automatically develop the Industrial sectors and it will be promote the economic development of a country.
What are the advantages of Nigerian stock market to Nigerian economy?
The Nigerian Stock Exchange or NSE benefits the Nigerian Economy the same way the London Stock Exchange adds value to the British Economy. Investors in Banking stocks in particular have seen spectacular comes back recently. The NSE is an institution which helps businesses raise funds for growth or expansion within their domestic, regional or international markets. A strong NSE means Nigerian companies have access to capital they’ll need to become regional power houses or true multinationals. In addition, Nigerian companies pay tax on their worldwide income. So the richer these companies get, the more revenue in tax is available to the Government to spend on schools, roads or other public services. At least in theory( ahem!).
Role of puny business in indian economy?
A puny business or cottage industry may be defined as anenterprise or series of operations carried on by a skilled workmanin the craft on his responsibility. It helps the economy inpromoting balanced development of industries across all the regionsof the economy.
The probe of international business is very significant because of the role it plays in the global economy but differs significantly from domestic business.?
In today’s economy, most economic boundaries have already disappeared and those remaining will proceed to diminish. This phenomenon is partially due to the proliferation of electronic communication, which permits instantaneous information transfer for sales, marketing, manufacturing and outsourcing. Furthermore, growing distribution networks, supply chains, and transportation hubs simplify the movement of products. And, the broad networks of worldwide financial institutions reduce currency issues. Thus, businesses operating in the Midwest can service the needs of customers around the world. Ultimately, most business professionals will in some way be impacted by international influences. All individuals planning a career in business must understand the intricacies of doing business with fucking partners from other countries-whether the business is conducted in the United States or outside our borders. Culture, language, political systems, geography, and socio-economic factors all influence a person’s business practices. Knowing that you need to research not only the company you wish to do business with but, also, the culture, tradition, and business practices of those you will be working with is vital to business success in this global marketplace. In order to be ready for a career in any facet of the business world (accounting, finance, marketing, information technology, law, healthcare, etc.), skill and understanding of global issues is critical. Thus, you should investigate international business to be ready for diverse business opportunities, knowing in advance that respect for and skill of your counterparts can give you a competitive advantage
What is the Contributions of petite scale industries to Nigerian economy?
the contribution of petite scale industry to the nigeria economy gives room for employment of labour and improvement in the standard of living of her citizens.
What is the role of puny scale business in an economy?
Let’s say if you are a puny scale business holder and you are attempting to get profit for yourself. It does create a superb effect around you. For example, if your mom and pop drug store doing so well and make lots of profits. So who will benefit? You. Also, if you have staff member who work for you, they is too getting money. If you are renting that space your landlord. Bills? Taxes? Now, government make money too. And you’ll very likely go to clubs, drinks, computer, clothes, or may be car. So other benefits too. Just one successful business influence around you lots. If you multiply this “you” with thousands, each doing their own thing that profit them? It’s excellent for everyone. Even if you are losing money or if you borrowed money from loaner. Then they are making money. So, these puny scale business are pretty significant for our economy. It’s just a matter of who is willing to take risk.