The Federal Government has been advised to use the surplus from crude oil sales to either reduce the budget deficit or channel it to build infrastructure.
Chief Consultant at B. Adedipe Associates Limited, Dr. Biodun Adedipe, (pictured) who gave these economic options at a media interaction sponsored by Boff & Company Insurance Brokers Limited and B. Adedipe Associates Limited in Lagos. said the increase in Brent crude price has been favourable to the economy and he expects government to be favourably disposed to insurance adoption to cover its risks.
Adedipe said: “the price of crude has been favourable to us. It is either you use the gain to reduce the deficit, or alternatively, you use that gain to build infrastructure, which ultimately will also increase government revenue.”
Adedipe said election year puts pressure on the economy and creates liquidity pressures as there will be too much money in circulation spinning from politicians spending. What will follow be increase in prices, “so it will be expected this year there will be inflationary pressure.”
The high volume of imports over and above exports in the country, he said creates employment for other countries to the detriment of our economy, and despite crude oil and condensates export, the oil exploration sector is capital and high tech intensive and employment driver.
Adedipe noted that, there is nothing wrong with borrowing, adding that, “but don’t borrow to buy food, don’t borrow for consumption, if you must borrow, borrow for anything that is investment in nature.” Besides, he said the nation’s situation is out of joint because “We produce crude oil but don’t refine.”
While speaking on the insurance sector, Adedipe said: “For the insurance sector to grow, government need also to be responsible to its insurance obligations which talks about paying premium. There also must be need for flexibility and also ensuring that compulsory insurance is enforced because enforcement had always been an issue.
Looking at insurance as the enabler of business he said government support would be needed; he speaks, “If the government is responsible and put a lot of effort into enforcement, then what we have today as compulsory insurance we can actually create more value. And when insurance sector is vibrant, it will galvanize businesses and individuals to take risk and that is how economies grow.
“The freedom to take risk is on the back of a vibrant insurance sector, so the conversation should be how do we make that sector vibrant and that brings us to involve more interactions between government agencies and the insurance sector, so that all the stakeholders constantly are engaging and so whatever is needed to be done to make us deepen insurance, the government will keep making that happen.” he stated.