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Only recently, during the inauguration of new members of the governing board of the National Insurance Commission (NAICOM), the apex insurance regulator in the country, Minister of State for Finance, Dr. Yerima Ngama, had hinted that the commission would henceforth be denied budgetary allocation beginning from next year.
According to the minister, government believed that the insurance industry had come of age and should be able to generate sufficient internal revenue to carry out its activities without relying on budgetary support from the federation account.
Although the decision to stop fund to the insurance agency was greeted with mixed reactions by stakeholders, Commissioner for Insurance/Chief Executive of NAICOM, Mr. Fola Daniel, was quick to welcome the development assuring that the proposed stoppage would not cripple the commission.
The commissioner had further assured that the commission could ultimately survive without government subvention.
Similarly, in December last year, the House of Representative refused to approve statutory allocation for the Securities and Exchange Committee (SEC) as it passed the Budget 2013 Bill mainly because the Director-General of the commission, Aruma Oteh, had in controversial circumstances refused to step down from office as demanded by the lawmakers.
But barely ten months after approving a zero budget for SEC, the capital market regulator has continued to meet its financial obligations without recourse to budgetary allocation.
In the midst of the controversy, it was learnt that the presidency was said to have given the go-ahead for the commission to utilise the revenue it generated from its operations to thrive.
The commission’s main revenue sources are from premiums from capital market operators and levies for infractions among others.
To date, SEC has been paying staff salaries promptly as well as fulfilling other obligations, although it remained unclear how long the commission would continue funding itself without support from the treasury.
However, observers have argued that the development could force the Federal Government to further consider cutting funding to other government agencies, especially in the face of dwindling revenue expectation occasioned by oil theft and production challenges.
Besides, it is argued that leaving public agencies to survive on the revenues they generate from their activities would make them more efficient and proactive in their operation as they tend to maximise every opportunity to make money.
Already agencies like the Nigeria Customs Service (NCS), the Federal Inland Revenue Service (FIRS) as well as the Central Bank of Nigeria (CBN) are self-financing institutions which fund their operations and pay staff salaries from the revenue they generate before remitting the balance to the federation account.
But, experts believe the planned stoppage of public funding to NAICOM is likely to make the insurance regulator more aggressive in its activities as stiffer sanctions and tighter regulation may become the order of the day.
SEC, in particular, had in recent times stepped up its regulatory and enforcement responsibilities on capital market operators, by keeping a closer watch on them and imposing sanctions where appropriate against alleged abuses.
Similarly, insurance had often been handled with levity in almost every sector of the economy as various studies had indicated that majority of Nigerians don’t have any form of cover.
It is however argued that leaving NAICOM to fend for itself could be the beginning of the much-expected transformation of the sector and the economy in general.
But while some members of the public welcome the removal of public funding to agencies of government as a way of making them more efficient in their operations, others still believe not all of the agencies could actually survive it.