There is no confusion – the most difficult sector in Nigeria to find opportunities is the insurance sector. It is one industry where great ideas have failed to bring value. The progress in the sector remains marginal as about 87 million Nigerians have no form of insurance and only 1.3 million can boast of something including the nearly useless auto insurance 3rd party insurance policy.
Insurance business remains unviable and its products hard to sell in the Nigerian market place. This unpalatable news raised worries for the captains of industry, who gathered at just concluded 2018 Insurance Industry Consultative Council (IICC) in Abuja, few weeks ago.They described the challenge as “bad message” in the ears of insurance companies and allied stakeholders, given the fact that the industry has been in existence in the country for nearly a century.
… “More Nigerians won’t and don’t intend to take up any form of insurance cover if given the choice.”
Outcome of new study
The available records in the industry indicate that 86.6 million Nigerians have no form of insurance, while 1.3 million adults, representing 1.5 per cent of the entire Nigerian adult population, maintain some category of formal insurance cover.
Numbers do not lie: the sector is growing at anemic rate and that is a problem. But there is an opportunity if government can reform the sector, especially on how the business is done, and allow technology to play more significant roles.
The volume of businesses written by insurance companies in the country grew from N315.96 billion in 2016 to about N363 billion in 2017, representing an increase of about 15 per cent over 2016 figure.
I just finished reviewing monthly updates on our business. One line was humbling from one of our offices: “The national grid is now our second backup”. That is from my Owerri (Nigeria) office. They added a second generator as it was evident that national grid had gone. I looked at the fuel cost; I sobbed.
Mr. President: you need to give Nigeria, Nigerians and Nigerian businesses constant electricity. We cannot continue this way. It is not your fault but you promised to get this done. Mr. President, declare a state of emergency on electricity and do all necessary to provide power to our economy. Power is a catalyst Nigeria needs. If you just get it done, you will see an exponential impact in whatever policy the nation is working upon.
Yes, farmers will move into farming some crops knowing that they have cold rooms to preserve produce. Bricklayers will work in the day instead of praying for light to come. Mechanics, shoemakers, engineers, doctors, accountants, etc will be working for Nigeria and you (our President).
The problems are huge because the paralysis has taken years to morph. I have explained some of the components but we can only write. You knew about these issues, and you did promise to get the job done. Please do. We desperately need your help. I do not want to see generator as an asset in my financials!
The SMEs need power to run the economy. But discos would need the help of some of the big manufacturers who typically are the cheapest to serve and usually most profitable to link into the network. But for this to happen, those major players would expect the discos to demonstrate reliability before they commit to national grid. If we do not manage this interface, what would happen is to expect discos to become profitable by serving the masses (typically expensive due to higher marginal cost). Most times, that does not happen. The business of power utilities is hard: only two utilities are profitable in Africa.
Yes, market forces can re-balance this when other companies that can tap into a reliable national grid to offer competitive products which are obviously cheaper due to lower power costs arise. When that happens, the companies which generate their own power may be challenged to abandon that practice and then connect to national grid. They would make those decisions based on market forces and nothing more.
People, it happened – Nigeria has leapfrogged electricity! Yes, the Nigeria Customs Service has adopted blockchain from Oracle. Why not, blockchain is the latest thing in town. The government is also working on smart city framework so that some of our major cities will be smart-ready. Do not ask me about electricity… and water to make those plans meaningful.
As I keep saying here – there is nothing that could not be sold in Nigeria. Few days ago we read how government imported many equipments, tools, etc and forgot them in the ports for more than a decade. Possibly, with blockchain, Customs did a great service by auctioning some of the items. If Oracle could sell blockchain to Nigeria at this time, our entrepreneurs need to improve their games – there is nothing you cannot sell.
Nigeria Customs Service has adopted the Oracle Blockchain Cloud Service which has recently just been introduced. The service enables organizations to easily build blockchain networks to allow more secure and efficient transactions and to track goods through supply chains.
“We used Oracle’s blockchain to build a trusted platform for the automation of Customs Excise Trade business processes and procedures,” said Aber T Benjamin, Assistant Comptroller General Modernization, Nigeria Customs Service. “Using this technology, we found the entire business environment can be migrated to blockchain to automate processes and create transparency and predictability. Once the transition to blockchain is completed, NCS expects revenue growth increase of about 50 percent. This technology helps our organization to build global trust for Nigerian businesses through irrefutable data on goods manufactured in the country.
In a state in Nigeria, water rates were last reviewed in 1987. Yet, the same state is looking for investors. When I explained that it was impossible to find one without updating water rates since projects must be structured to be investment-appealing, the politicians put the projects in a cooler. Simply, no politician would want consumers in Nigeria to pay more under his regime. You need votes and you do not mess up with the free stuff.
Yet, they want investors even when they do not have the boldness to allow market prices to rule. Investors then ask for (loan) guarantees to cover themselves. That is why when a government does not have the capacity to offer guarantees to investors, projects die. Interestingly, government guarantees are not scalable: if you guarantee $1 million to build a water plant, and I have additional water demands, and you are unable to offer more guarantees, nothing happens. That lack of scalability is why we do not have electricity and clean water across African communities.
Africa at Night (Source: NASA)
The broad argument across sectors in Africa is that keeping costs (of services from utilities) low is one way of helping poor people. Unfortunately, that is a very faulty argument because the people that benefit from cheap water rates are usually the people living in cities [the middle class and rich people]. The poorest citizens in villages do not have any access to government-funded water systems. The same goes in electricity where those in cities have access whereas government is still making a case that affordability is necessary to help the poor citizens. The poorest Africans do not have access to grid-provided electricity as where they live there is no grid infrastructure to start with. So, at the end, we are left with low-pricing of the services (mandated by regulation), creating underperforming utilities: only two out of 39 African utilities studied by World Bank are profitable.
The problem is that across Africa, the vast majority of the power utilities are effectively bankrupt. Another World Bank study (pdf) on African Utilities shows that only two of the 39 African utilities surveyed, in the Seychelles and Uganda, were able to generate enough cash to cover both their operating costs and capital expenditures necessary to invest in the maintenance and expansion of the grid. In fact, only 19 of the 39 companies were able to generate enough cash to cover their day-to-day operating costs. It means the rest were not even able to pay everyday costs, like salaries, in full.
It is very unfortunate when you visit places like Ikenegbu Layout (Owerri) and see people waste water because water is largely free. Yet, people living there are some of the most affluent in Imo State. But government wants to give them “poor” people water rates. The poorer citizens who live outside Owerri do not have water systems in any form. The Ikenegbu experience is how it is across Nigeria and African continent: rich people’s lives are subsidized by governments on the pretence of helping the poor who do not even have access to those subsidized services.
Any government that tells you that electricity and water rates have to be affordable because they have to support the poorer citizens is not telling the whole truth: the poor people do not live where water boards and grid-infrastructures function. Largely, government is subsidizing the lifestyles of middle-class and rich citizens at scale.
These points are articulated in a nice piece by former African Finance Corporation CEO on Quartz where he concluded thus: make the utilities marketplaces so that any solution provider can connect and help in fixing energy and water frictions.
Perhaps, grids will one day become marketplaces allowing people to sell excess power from their solar installations to those who have a need for power at that time. Prices can be set dynamically to allow supply to match demand.
LinkedIn Summary:Every year, Nigeria has been improving its cybersecurity laws and regulations. From NITDA to CBN, NSA to you name them, the laws keep evolving. In this piece, I argue, as I did when I spoke to the Senate last year that Nigeria does not have a cybersecurity law problem.
The thesis of my point is that cyber-criminals are lawless and no matter all the efforts to improve the laws, if you do not develop technical capabilities to stop them, nothing will change. Sure, you need good laws in the books to prosecute them, if you are lucky to lay hands on them. But the present laws are fair enough.
Nigeria needs to focus on deepening our technical cybersecurity resilience and capabilities instead of spending all the efforts on writing regulations.
Since 2010, Nigeria has created all kinds of cybersecurity regulations as the nation continues to find ways to curtail cyber-related attacks. President Jonathan government formulated some under the former National Security Adviser (Col. Sambo Dasuki, rtd) (download it here). The Buhari Administration has also created its own versions. From NITDA (National Information Technology & Development Agency) to Central Bank of Nigeria (CBN), all the way to the National Assembly, cybersecurity regulations have become amorphous ordinances in Nigeria. Last year, the Senate invited me to one of the sessions where I made a presentation.
The President of the Nigerian Senate, Senator Bukola Saraki, presented a paper during the National Conference on ICT and Cybersecurity which was held early this week in Abuja. He spoke eloquently on the challenges of cybersecurity in our nation, and the need for government to engineer effective policies to curtail their impacts.
In my presentation, I did explain that Nigeria does not have a severe problem of law. Rather, the challenge is technical resilience. Cybersecurity is a trade perpetuated by lawless people. That means, formulating laws will not fix the problem if you do not develop resilience and capabilities to prevent them from happening. The actors know their works are illegal.
Yes, most Nigerian laws are already decent enough to deal with them, if you can be lucky to lay hands on them. So, the focus should be developing homegrown capabilities over importing one-size-fits-all foreign equipment which adds no value. Recall, few years ago, the $10 million equipment installed in one room to secure Nigerian cyberspace!
In my talk, I made some proposals including harnessing talents across the nation to build organic pipelines of cyber-geeks with capabilities to secure Nigeria’s cyberspace. Ambiguously, Nigeria needs capabilities as we are losing huge money to cyber-criminals.
According to the 2017 Nigeria Cyber Security Report, the country was losing about N127 billion yearly due to cybercrimes.
Sure, our nation must continue to update our legal systems and frameworks. CBN has just noted that it would update its cybersecurity frameworks for the banking sector. That is important because we need a secure financial system.
The Central Bank of Nigeria said it was developing a Risk Based Cyber Security Framework for banks and payment service providers to combat internet fraud in the country. The Central Bank Governor, Mr Godwin Emefiele, said this on Thursday in Abuja at the 2018 Nigeria-JP Morgan Chase Cyber Security Conference.
Yes, despite all these frameworks and regulations, Nigeria needs to invest in technical capabilities on cybersecurity.
