Business
Nigeria: Successful presidential election a major boost to economy
Axa SA, the largest external insurer active in Nigeria, sees the peaceful manner in which the country is handling its first transition in political power in decades as supporting economic growth in the country and beyond.
According to head of Axa’s global property and casualty business, Jean-Laurent Granier, the political stability and the respect of democratic rules in the recently concluded presidential elections, “can only consolidate development potential in Nigeria and other African countries.”
The largely peaceful election in which Muhammadu Buhari defeated the incumbent president, Goodluck Jonathan, has bolstered investor confidence. Nigeria’s insurance penetration is about a fifth of the average on the continent and less than a 20th of the level in South Africa, underscoring the opportunity in a country with 177 million people.
Axa SA has disposed of US$9.7 billion of assets in developed markets since 2010 to invest in faster-growing nations, including African markets. In December, it spent US$216 million to buy a majority stake in Mansard, Nigeria’s fourth-largest insurer. Last month, Axa SA completed the purchase of a 7.2 percent stake in pan-African reinsurer Africa Re for US$61 million.
The victory by Buhari, 72, marked the first time an opposition candidate beat a sitting president since independence in 1960.
Insurance penetration in Nigeria, as measured as a percentage of premiums to gross domestic product (GDP), was 0.68 percent in 2012, according to a KPMG report in August. That compares with a 3.5 percent average for Africa and 15.4 percent in South Africa, the continent’s biggest insurance market, according to figures from PriceWaterhouseCoopers in October.
Insurance premiums tend to increase faster than economic growth in Nigeria and African countries, as companies and households adjust their coverage to “catch up” with rising living standards.
The corporate insurance market was first to develop and now the market for individuals is opening. Health insurance products sold through corporate or individual policies, car-insurance needs and micro-insurance initiatives are contributing to insurance expansion in Nigeria, as in other fast-growing African markets.
Since March 31, when Buhari won the election, Nigeria’s benchmark stock index has climbed 15 percent to levels not seen since November last year. It is the Nigerian Stock Exchange All Share Index’s longest streak of gains since September 2012.
