Vice President Yemi Osinbajo has said that despite the monumental challenges posed by climate change, especially energy transition and related issues, the coming decade anchored on the African Continental Free Trade Area offers great opportunities for Africa’s socioeconomic transformation.
This is as he said that a slight reduction in the customs procedures could drive up Nigeria and other members’ revenues by at least $250bn.
Osinbajo stated this on Wednesday in a message delivered at the closing of the 2021 Conference of African Insurance Practitioners, themed ‘Rebuilding Africa’s economy: An insurance perspective’.
Senior Special Assistant to the Vice President on Media and Publicity, Laolu Akande, disclosed this in a statement titled, ‘Monumental challenges, great opportunities ahead of Africa next decade- Osinbajo’.
Urging African insurance practitioners to leverage opportunities in the AfCFTA, the Vice President said, “Every smart economic grouping, whether governments or businesses, must be thinking, planning and strategising for these new times.
“The free trade agreement presents a major opportunity for African countries. By some estimates, if we get it right, we can bring several million out of extreme poverty and raise the incomes of 68 million others who live on less than $5.50 per day.
“There are potential income gains of up to $450bn, and just cutting red tape and simplifying customs procedures alone could drive up to $250bn of that sum.
“So, what does all this mean for the insurance industry in Africa? Well, plenty of opportunities. More trade in goods will mean a greater need for insurance services, brokers, in particular, should expect a boom; demand for trade facilitation services will rise, but companies that already have market presence in other African countries, even if by collaboration, will benefit more than others.”
On climate change, Osinbajo probed, “how is the African insurance industry preparing for the interesting days ahead?”
He referenced a Mackenzie podcast transcript, describing it as eye-opening.
He said, “Here in Nigeria, the growing intensity of flooding and damage to vast agricultural acreages might have a knock-on effect on other areas of the economy. Further slumps in the economy are bad for everyone, even insurers.”
The Vice President added, “For Africa, there is perhaps a more significant challenge. In the past two years, the wealthier countries, after building their economies on fossil fuels, are now banning or restricting public investments in fossil fuels, including gas.
“Seven European countries, including France, Germany, and the United Kingdom, announced that they would halt public funding for certain fossil fuel projects abroad.
“Also, the World Bank and other multilateral development banks are being urged by some shareholders to do the same.
“The African Development Bank, for instance, is increasingly unable to support large natural gas projects. Already, some OECD based insurance companies are committing to reducing their commitments to carbon-intensive industries by 2030.”
Explaining the implication of the trend on Africa’s growing oil and gas markets, Osinbajo said, “I think African insurance companies must now speak and act differently.
“You must be at the forefront of the campaign for a just and equitable transition to a low carbon future. This means that we cannot accept a defunding of gas projects when gas is an important transition fuel for us; not just to get our people from the environmentally damaging firewood to cooking gas, and also autogas for our auto vehicles, but to also provide much-needed power for industries and domestic use.”
He added that Africa’s economic future might be at risk if the continent did not insist that the necessary speed to zero emissions must not mean disaster for African economies.
