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Chuks Udo Okonta
The insurance sector contracted by 28.15 per cent in the second quarter of this year, the National Bureau of Statistics (NBS), has said.
The NBS disclosed this in its Gross Domestic Product (GDP) report for the second quarter of 2020.
The bureau stated that the finance and insurance sector consisted of two sub-sectors, namely financial institutions and insurance, which accounted for 89.82 per cent and 10.18 per cent of the sector respectively in real terms in Q2.
Part of the report read, “As a whole, the sector grew at 20.82 per cent in nominal terms (year-on-year), with the growth rate of financial institutions as 30.94 per cent but –28.15 per cent growth rate recorded for Insurance.
“The overall rate was higher than that in Q2 2019 by 19.85 per cent points, and lower by –3.14 per cent points than the preceding quarter. Quarter on quarter, growth was 0.49 per cent.
“The sector’s contribution to aggregate nominal GDP was 3.76 per cent in Q2 2020, higher than the 3.03 per cent it represented a year earlier, and higher than the contribution of 3.57 per cent it made in the preceding quarter.”
Growth in the sector in real terms totalled 18.49 per cent, higher by 20.73 per cent points from the rate recorded in 2019 second quarter, but down by 2.30 per cent points from the rate recorded in the preceding quarter.
NBS said Quarter on quarter, growth in real terms stood at –0.16 per cent.
The contribution of finance and insurance to real GDP was four per cent, higher than the contribution of 3.17 per cent recorded in the second quarter of 2019 by 0.83 points, and higher than 3.81 per cent recorded in Q1 2020 by 0.20 per cent points.
According to the NBS report, Nigeria’s GDP decreased by 6.10 per cent (year-on-year) in real terms in Q2, ending the third-year trend of low but positive real growth rates recorded since the 2016/17 recession.
The decline was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.
The domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets among others, affecting both local and international trade.
The Commissioner for Insurance, Sunday Thomas, had noted that this year has no doubt been a very challenging one for the insurance sector, individual households and the economy at large as a result of the COVID-19 pandemic. “However, to us in the insurance sector, what this situation has thrown up is that there must be a paradigm shift from our usual way of business practice. It is therefore imperative on us to embrace and align our businesses to the new world order if we must be seen to be relevant,” he posited.