Fed Govt to Recapitalise BoI, BoA, Others with N10b

The Federal Government plans to recapitalise the nation’s development finance institutions with about N10 billion next year.

It has also ramped up its commitment to secure the lives of civil servants and national assets.

In the 2023 budget, the Federal Government has earmarked N303.44 billion to fund pension and insurance coverage for civil servants and national assets.

N10 billion has been set aside for the Pension Protection Fund. Contributions are made into the fund by Pension Fund Operators (PenOp), the National Pension Commission (PenCom) and the Federal Government.

In the last four years, pressure has been mounted on the Federal Government to make its contribution to the fund while PenCom and PenOp have been making theirs.

PenCom is “developing the framework and eligibility criteria required for pensioners to access the fund”.

The Pension Protection Fund was created to augment shortfalls in pensioners’ monthly payouts. For example, “if the money in a pensioner’s account cannot meet his/her monthly take-home before retirement, money from the fund will be used to ‘top up’ his/her post retirement take-home to equal what it used to be”.

It is into this fund that the Federal Government wants to contribute N10 billion to next year.

Another N268,702,315,305 has been budgeted  for the redemption fund. This fund is domiciled in the Central Bank of Nigeria (CBN) and it is used “to redeem the promissory notes issued by Federal Government to retired civil servants when the notes fall due”.

A source at the Budget Office of the Federation (BoF) told press that “the Federal Government is already making a monthly payment into the Fund of an amount equal to five percent of the total monthly wage bill payable to employees of the Federal Government and the Federal Capital Territory”.

For insurance coverage, the Federal Government has budgeted N24,733,742,477 for “group life assurance for Ministries, Departments and Agencies (MDAs), including the DSS and insurance of sensitive assets, Corps members plus administration and monitoring”.

At the weekend, the National Insurance Commission (NAICOM), in its Bulletin of the Insurance Market Performance,  said “the market recorded about N369.2 billion during the second quarter of 2022, indicating a 20.1 per cent growth rate compared to the same period of the previous year and an impressive 65.0 per cent, quarter on quarter”.

NAICOM said “the continued steady growth from the first quarter of the year correlates with the current performance of the second quarter”.

With the federal government actively participating in insurance by paying premiums to cover it’s workers and assets, the insurance industry will get a much needed boost.

According to NAICOM, “the industry grew 20.1 percent higher than the national real Gross Domestic Product (GDP) of 3.5 percent during the same period. This indicates the industry’s impressive performance given the recent trajectory”.

According to the report, General, Accident and Miscellaneous insurance reported a share of 12.3 percent, 10.9 percent and 8.9 percent in this order. Life business on the other hand recorded 40.6 percent of the insurance market production as its share contribution to the insurance market.

Also contained in the 2023 budget proposal is the demand for N10 billion for the “Recapitalisation of Development Finance Institution (DFI)”. This will position the benefiting DFI to effectively support the government in funding its fiscal intervention programmes several of which have been captured in the budget for funding.