REFORMS IN THE INSURANCE INDUSTRY

More Job Losses On The Way

By Toyin Raheem, Chairman, Agege NCP

The government of General Olusegun Obasanjo has proved beyond reasonable doubt it is all out to unleash ceaseless neo-liberal attack on workers and poor masses. Every government should be able to appraise itself and retrace its steps towards improving on the welfare of the people. With the colossal failure of the concluded banking reforms, the expectation of the working class people would have been that General Obasanjo would put a stop at the devilish counter-reforms. But for a rabid pro-capitalist Obasanjo government such expectation is misplaced. The last banking reforms succeeded only in throwing many workers into the employment market. In Central Bank of Nigeria alone, thousands of people lost their jobs while tens of thousands were relieved of their jobs in the commercial banks.

Some of the banks after the so-called ‘public offer’ of shares were said to have failed to meet up with the recapitalisation deadline, thereby must be forcefully liquidated. The government, despite its promise, has not ensured that those whose deposits or shares were entrapped in the liquidated banks get their money back. Although some of the affected banks are still in courts to challenge the forceful liquidation of their banks.

The ongoing reform in the insurance industry will in no way be different from that of the banks. It is not an under-statement that insurance culture is not well developed in this part of the world, therefore most insurance companies in Nigeria depend on government patronage to survive. Despite the unionisation of some of those insurance companies with Association of Senior Staff of Banks, Insurance and Financial Institutions Employees (ASSIBIFIE) and National Union of Banks, Insurance and Financial Institution Employees (NUBIFIE), they are still bending rules by engaging people mainly as casuals or perhaps “slaves” and never address them as staff but agents so as to place them on commission based on duties performed. They have perhaps adopted this as survival strategy as they are unable to make enough profit to put every person engaged on their staff list.

The insurance companies have been ordered to raise their minimum capital base up to the tune of N10billion by February 28, 2007. Most of the companies including AIICO Insurance, Niger Insurance, Standard Alliance Insurance, etc, have gone to the capital market to raise money while many others including WAPIC Insurance are still selling their public offer shares or planning to “hit” the capital market. While the idea of using public money to finance the recapitalisation of companies is the highest corruption one can think of. The money likely to be raised from the public is now going to be “trapped” in those insurance just as it happened in the banks.

Presently, half of the 103 insurance companies in Nigeria may not be able to meet the capital base while 45 of the remaining are already discussing fusion into only 17 companies. This certainly is going to lead to more job loss. Already, the Chief Executive Officer of National Insurance Commission (NACOM), Chief Emmanuel Chukwulozie has stated that 50% of insurance companies are comatose; it is certain many insurance companies will close shop come 1st March 2007. What does it portend? The already saturated employment market shall welcome new set of people that are “economically reformed” by General Olusegun Obasanjo and has economic experts.

The community banks, offshoot of the rural banking scheme which came into existence in 1990 with the promulgation of the community banking decree of General Ibrahim Babangida’s junta, are not spared. The control of the banks hitherto entrusted with National Board for Community Banks (NBCB) has been transferred to Banks and other Financial Institutions Department (BOFD) of Central Bank. This was followed with the executive pronouncement by Charles Soludo that all Community Banks should metamorphose into Micro-Finance Banks by raising their initial capital to N200million before December 31st, 2007 or close shop.

Community banks are little better than “Esusu” (thrift) banks. What then is the essence of asking a “thrift collector” to recapitalise to the tune of N200million? The truth of the matter is that the anti-poor government of General Olusegun Obasanjo just like capitalist neo-liberal administrations worldwide will stop at nothing to make life miserable for the poor masses. It is certain most community banks are going to close shop while other set of banks called “Micro Finance Banks” will emerge to serve the interest of the rich. While the rural dwellers, the peasants and the poor that are just imbibing banking culture will have to forget being bank customers again.

As Karl Marx put it, “Philosophers have interpreted the world, the task is to change it”. To ensure decent living standard for workers and poor masses, there is need for system change. This is the ultimate way by which anti-poor neo-liberal capitalist order can be permanently defeated. However, the first step is the formation of a working people party built on socialist programme to wrest political power from the thieving capitalist elite.