By Henry Uche
Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE) Dr. Muda Yusuf, has said that the ‘overzealous revenue target’ by the government may mount pressure on insurance companies from tax and regulatory authorities.
Speaking at the Year 2024 Chartered Insurance Institute of Nigeria (CIIN) Business Outlook in Lagos, on the topic, 2024 Budget and Insurance Industry, Mr Yusuf noted that Ministries, Departments and Agencies (MDAs) are under pressure to raise more revenue, stressing that this may be translate to investors in the form of additional levies, fees and taxes.
CPPE boss revealed that Finance Act normally comes with each budget, stating that it is not clear yet whether there will be one this year, noting that policy component of the budget typically comes under the Finance Act, with its implications for businesses inform of fiscal policy measure.
On insurance and inflation risk, he said there is risk of higher cost of claims; premium lagging behind inflation; high operating cost: erosion of shareholders value; erosion of the value of investment and risk of depressed demand for insurance.
On how insurance companies could manage risks associated with inflation, he opined that there should be flexible premium policy; innovative products to address macroeconomic risks; indexation of premium; diversification of investment portfolios; technology and digitization and communication with customers.
Analysts and industry observers have confirmed that the arduous revenue targets are already having a toll on MDAs as many of therm are struggling to pay salaries and meet other financial obligations following to presidential directives on 50 per cent automatic deduction from the internally generated revenue (IGR) of Federal Government Owned Enterprises (FGOEs).
Recall that the Federal Government had in December 2023 directed the Office of the Accountant General of the Federation (OAGF) to immediately commence the presidential directives on 50 per cent automatic deduction from the internally generated revenue (IGR) of Federal Government Owned Enterprises (FGOEs). The directive was contained in a circular issued on Thursday by Minister of Finance and Coordinating Minister of the Economy, Wale Edun.