FG’s ambitious revenue targets may put pressure on insurance companies – Dr. Yusuf

CIIN President, Edwin Igbiti presenting appreciation plaque to Dr. Muda Yusuf, the Guest Speaker at the Year 2024 CIIN Business Outlook in Lagos

Kindly leave a comment and share

Chuks Udo Okonta

The ambitious revenue targets by the government may put pressure on insurance companies from tax and regulatory authorities, Chief Executive Officer Centre for the Promotion of Private Enterprise (CPPE) Dr. Muda Yusuf, has said.

He said this while speaking on the topic: 2024 Budget and Insurance Industry at the Year 2024 Chartered Insurance Institute of Nigeria (CIIN) Business Outlook in Lagos.

Commenting on budget implications for insurance, he noted that Ministries, Departments and Agencies (MDAs) are under pressure to raise more revenue, stressing that this may be transmitted to investors in the form of additional levies, fees and taxes

Dr. Yusuf posited that Finance Act normally comes with each budget, stating that it is not clear yet whether there will be one this year.

He said the policy component of the budget typically comes under the Finance Act, adding that it typically has implications for businesses inform of fiscal policy measure.

Speaking 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 inflation risk, he suggested that there should be flexible premium policy; product innovation to address macroeconomic risks; indexation of premium; diversification of investment portfolios; technology and digitization and communication with customers.

According to industry observers, the ambitious revenue targets are already having a toll on MDAs as many of therm are now finding it difficult to pay salaries and meet other financial needs due 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 on December 28, 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.

The circular titled, “Re: Implementation of the Presidential Directives on 50% Automatic Deduction from Internally Generated Revenue of Federal Government Owned Enterprises (FGOEs),” was dated December 28, 2023. It read, “Further to Circulars Ref. Nos. FMFBNP/OTGHERS/lGR/CRF/12/2021 dated 20th December, 2021 on Revenue, Expenditure and IGR Remittances to the Consolidated Revenue Fund (CRF); the following guidelines are hereby issued for immediate compliance by all federal government agencies/parastatals for the collections, utilisation and remittances of IGR:

“All Ministries, Departments and Agencies (MDAs) that are fully funded through the Annual Federal Government Budget (receiving personnel, overhead and capital allocation) and on the schedule of Fiscal Responsibility Act, 2007 and any addition by the Federal Ministry of Finance (FMF) should remit one hundred per cent (100%) of their IGR to the Sub-Recurrent Account which is a sub- component of the CRF.”

The CRF is an account in which revenues from taxes, statutory allocations from federation account, and other federally-collected revenues are deposited and disbursed.

Leave a Comment

Your email address will not be published. Required fields are marked *