FAJEMIROKUN: AT DANGOTE, OUR ADHERENCE TO LOCAL CONTENT LAW IS 100%
They are when you come around and you are in my organisation and you give me a risk solution that is generic, it basically means I can use it, Airtel, MTN can use it, Nestle, Lafarge can use it, so you have not looked particularly at my risk portfolio to see what I need based on the structure of my organisation to say these are the risks I am exposed to and this is how you can mitigate it, but you have not tailor made it to my organisation. Generic risk solutions are necessary, like your motor insurance, it is a generic solution. It is the same kind of policy either its third party, it is comprehensive whereas credit risk insurance can be spoken to me because it may not be generic to me and I might need it because I have a lot of distributors, so you need to create something that works for me.
To what extents are assets you are managing being run or guided by local content? To the local content law, it is 100 per cent, because we have to fulfill all the capacity locally before we can go outside from the local content perspective; we must meet the requirement before we go outside, it is not actually a choice, there is what is called approved and the principle law, it is a regulatory requirement that you must have met the local requirement that you have reached capacity except where you have insurance that do not qualify, but that is not the only criteria. For insurance companies whose accounts have not been approved by NAICOM, you cannot qualify for local content and if I am looking for my insurance at that time to renew, you are disqualified, so you do not fit into the 100 per cent, but I will still have to share my 100 per cent with other Nigerian companies.
Perception of regulators in the industry, any progress made? I think they are very open compared to other regulators we have had in the past. This regime is very open; last year I did the same presentation, but with operators, but this year, Dangote went as a consumer which shows that the regulator is actually giving you a voice which was not normally the case, because we are the end user at the bottom of the chain, but what has happened is that the regulators are saying that they want to hear from the consumers to know the impacts of the decisions they are making so I think they are doing a good job basically around completeness than just enclosing everybody into one space and understanding the implications of the decisions they make, I do believe they are very progressive, I do think that there is a question around whether or not the speed at which they implement policies can affect a consumer and that is one of my biggest issues.
You create a policy in December and you send it to the industry in January and expect that we implement in January, that is the problem for me because I have done my budget in December and when you have compulsory rates coming out in January and you are telling me that an employee’s insurance has to go up to a certain level, it can affect me as an organisation because I can decide to start firing people because I cannot afford it.
I can also decide to not to hire even though I had budgeted to hire, so the implication for me are beyond what you as a regulator has got and you have not given me time to factor that in. The lead time which we process regulation is very important, I want to go into that area raised the other day when you said I need to raise my rate to a certain amount, I even want to know what statistics you used to do that, but I am not a regulator, you tell me what you want and I do it and we all know that there is a data issue in Nigeria so when you are increasing life insurance for employees, you will have to ask yourself if you have looked at the mortality rate of people between 25 and 50 and 50 to 75 and you come and tell me how many employees do I have on this band and that is how you charge me.
I have employees of different ages but I have to pay their rates and that is the problem for me as a consumer, so from the regulatory perspective, the speed and consultation around some of the policies, the regulators have the right to give whatever requirements but there should be a level of consultation and engagement with consumers, other parties, lenders. When you determine local content, a lender coming from the United States and you are in Nigeria, you need money, we are looking for money and we say we do not have money for investment, but we need to get this from overseas and we are trying to get these investments and the investors want most of the insurance to be abroad, but you are telling me I have to boost local content, but the foreign investors do not have confidence in our local content, so you have to engage with these lenders to get the money in and as a country, you are the one looking for money so they have to compromise. There is need for increased engagement with all stakeholders, consumers, lenders and different parties. What are the impacts of globalisation and technology on the insurance industry? For insurance, yes definitely. Nigeria’s penetration rate is very low at 10 per cent and that is being optimistic, with technology it is very different. The woman in the market or the informal sector as they call it, we could not reach them and they are not interested and they also have what they call community insurance where they put their money into and when somebody dies, they say it is your turn to bring etcetera, but now because of what we call the USSD where a lot of companies are using technology these set of people can buy insurance online and you are executing this service on a larger platform. The informal sector is the least penetrated sector in the industry. Technology is definitely playing a key part. Now I can buy my insurance online as oppose to having to talk to an agent and it is an interesting trend. Insurance was sold by agents coming to your door and it has created lots of problems, they can come and take cash and sometimes you do not know what they have done with it, but also people have changed and technology has helped in throwing more lights about the insurance industry. So it is a vicious circle and that circle is kind of slowing down the work of the agent which means, if you do not provide the technology, you cannot sell the insurance so that is where the technology comes in; where you can buy your insurance online. And for us at Dangote, if I want to reach all the employees, we have an online scheme we are starting which you can access online with your staff ID to buy insurance at the rate as a company have because of my economies of scale, so I can reach a lot more people, but you could not do that before, but with a Dangote ID, you can buy insurance, so technology has helped and it should help to increase the participation of insurance in Nigeria.
What is the best way to provide excellent services to consumers? Well, first of all, do not start if you do not understand your demography. You need to understand your demography, so different companies need to know who they are trying to sell to and what products they are trying to sell and you also need to know what channels to reach them, what do they use.
I will give you an example, there was a discussion I was having with somebody a year ago, and they were asking why women do not buy insurance and I said to them. It is because you do not sell to us insurance for hair, you have to speak the language that I am understanding, in fact the one I remembered is that people do not sell aso ebi insurance and this is one of the biggest money makers. Have aso ebi insurance, speak a language people can relate to and do not go to them and say you want to sell life insurance and of course, because we are also a very religious society where no one wants to think about death, but if you call it a succession insurance where their children can benefit after they are gone, they will be thinking of it in a different way. You have to understand your audience and communicate to them in that manner and another thing is to have the infrastructure to deliver it. I remember when they said cashless economy by CBN, but the ATMs and POS were not working. CBN can do that but you as a company if you do that you will die, because the minute they find out your internet is not working they go somewhere else and you cannot get them back. So you have to make sure your infrastructure is ready to deliver that service and ultimately you have to pay claims; so claims decide if this is a good company or if it is a bad one whether you pay my claim quickly and in terms of the amount that you actually give me is accurate as well.
What is the future of insurance industry considering the fact that a lot of people are apathetic to it? I think it has a long way to go and I really believe it is the next thing in the financial industry. Insurance opens up doors to so many things, so I think from investment income to different things that insurance can do in a society. The perception is low and there is so much to do around insurance and you are also protecting people, assets at the end of the day, so it is to the benefit of a country that the insurance industry is working and I think it can do it, but everything has to come together, the regulators must work in tandem with the insurance companies, with the insurance brokers, consumers and lenders. Everybody has to work together to attain common goals. For the regulators to make this industry grow, all the engines have to be put in place to make it work.
I have employees of different ages but I have to pay their rates and that is the problem for me as a consumer, so from the regulatory perspective, the speed and consultation around some of the policies, the regulators have the right to give whatever requirements but there should be a level of consultation and engagement with consumers, other parties, lenders