Nigeria’s substantial oil and gas reserves, its young and growing population and its position as Africa’s largest economy continue to point to significant development potential for its insurance sector. However, Nigeria has failed to deliver on that potential historically due in part to the volatility of growth in the country’s real gross domestic product (GDP), coupled with the sporadic enforcement of mandatory retail insurance lines.

In a new Best’s Market Segment Report, “Nigeria’s Insurance Market Offers Significant Potential Despite Headwinds”, AM Best notes that, due to the COVID-19-driven economic slowdown, the insurance market regulator (National Insurance Commission [NAICOM]) has agreed to further delay its revised plans to strengthen market capitalisation and limit the volume of premium flowing out of the country.

NAICOM has now opted for a staggered approach that requires partial recapitalisation by December 2020, with market participants obliged to meet the full requirements by September 2021. AM Best believes that a material proportion of (re)insurers will find it challenging to raise sufficient additional capital to meet the new standards. It estimates that only one fifth of Nigerian (re)insurers at year-end 2018 had sufficient capital and surplus to cover the new requirements. In addition, more than 10 companies will have to double their reported 2018 year-end capital and surplus figures to meet the requirements.

To access a complimentary copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=301771.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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By Libby George

UGHELLI, Delta State, Nigeria (Reuters) – Jonah Gbemre often has no electricity, but he says his home is permanently lit at night by the flames of waste gas being “flared” near his home town in Nigeria’s Delta State.

Like Gbemre, nearly half of Nigerians have no stable power supply, yet government attempts to harness gas belching from its oil fields to generate urgently-needed electricity or revenue have stalled.

And experts say that without progress towards its 2030 target of virtually eliminating flaring, which releases carbon dioxide along with polluting methane and soot, Nigeria cannot meet its pledge to cut greenhouse gas emissions by 20%.

Graphic – Gas Flaring and Nigeria’s CO2 Emissions: https://graphics.reuters.com/NIGERIA-OIL/GASFLARING/xklvyqmljvg/chart.png

“This flare site makes the nights like days,” said 42-year-old Gbemre, his eyes both bloodshot and milky, something he said his doctor attributes to the burning of the waste gas.

Reuters could not establish if there was any link between Gbemre’s eye problems and the flaring. Nigeria’s National Oil Spill Detection & Response Agency has said the practice can damage human health and the environment.

After sunset, nearly 200 blinking flares dot the landscape around Port Harcourt, the Delta oil hub. Experts say the gas that Nigeria flares nationwide could be worth billions of dollars if captured and transported to be used as liquefied natural gas or for plastics or fertilizers.

Graphic – Flaring costs Nigeria millions in lost revenue: https://graphics.reuters.com/NIGERIA-OIL/GASFLARING/ygdvzkneypw/chart.png

But a 2016 programme by the Nigerian government to address this by auctioning rights to capture and sell flared gas is struggling, six sources close to the process told Reuters.

The coronavirus crisis has compounded delays to a project which the World Bank hoped could serve as an example in its bid to cut global warming through zero flaring globally by 2030.