Insurance sector contracts 14.3% in Q4’20 on pandemic pressures, insecurity
Against national GDP growth of 0.11%
DESPITE THE 0.11 PER CENT year on year growth of Nigeria’s GDP, the insurance sector recorded a steep decline with a negative grate rate of -14.30 per cent year on year during the fourth quarter of 2020 from 3.21 per cent in the same period of 2019. According to the published GDP report from Nigeria’s official statistics board, the sector still remains in the negative zone and marking a third consecutive negative growth since the start of the year when it grew 2.94 per cent in Q1’20.
Elsewhere, the sector also recorded a negative growth of -15.3 for the full year from 3.59 per cent accounted for by the segment of the economy in the prior year.
The report further shows that the Financial and Insurance sector, which accounted for 91.40 per cent and 8.60 per cent of the sector respectively, grew by 9.37 per cent in the full year 2020 compared to 2.56 per cent in 2019 and 2.03 per cent in 2018 while the sector on a quarterly basis contracted by -3.63 per cent in fourth-quarter 2020 from 3.21 per cent in third-quarter 2020 and 20.18 per cent in fourth-quarter 2019.
With the growth rate of Financial Institutions as 0.07 per cent and –12.05 per cent recorded for Insurance, the sector grew at –1.10 per cent year on year in nominal terms as a whole. The overall rate was lower than in fourthquarter 2019 by –24.43 per cent points and –7.01 percent points than the preceding quarter. Also, while the quarter on quarter growth was 26.88 per cent, the annual growth of this sector was 11.98 per cent in 2020. The sector’s contribution to the overall nominal GDP was 2.80 percent in fourthquarter 2020, lower than the 3.12 percent it represented a year earlier, but higher than the contribution of 2.46 per cent it made in the preceding quarter. The sector in 2020, contributed 3.11 per cent of aggregate nominal GDP.
Similarly, growth in the financial and insurance sector, in real terms, totalled –3.63 per cent, lower than the rate recorded in fourth-quarter 2019, and the rate recorded in the preceding quarter. In addition, while the quarter on quarter real growth stood at 26.07 per cent, annual growth of 9.37 per cent was recorded in 2020, compared to 2.57 per cent in 2019 and the contribution of Finance and Insurance to real GDP stood at 3.07 per cent, lower than the contribution of 3.19 per cent recorded in the fourth quarter of 2019 by –0.12 per cent points, but higher than 2.67 per cent recorded in third-quarter 2020 by 0.40 per cent points. The annual sectoral contribution recorded in 2020 was 3.36 per cent.
Meanwhile, the 0.11 per cent year-on-year GDP growth in real terms in the fourth quarter represents the first positive quarterly growth in the last three quarters which reflects the gradual return of economic activities since the easing of restricted movements and limited local and international commercial activities in the preceding quarters.
The year 2020 saw the annual growth of real GDP estimated at –1.92 per cent, representing a decline of –420 percentage points when compared to the 2.27 per cent recorded in 2019. On a quarter on quarter basis, real GDP growth was 9.68 per cent indicating a second positive consecutive quarter on quarter real growth rate in 2020 after two negative quarters while the last quarter 2020 growth rate was lower than the growth rate recorded the previous year by –244 percentage points, it was higher by 374 percentage points compared to the third quarter of 2020.