Impact Of The Nigerian Capital Market On The Growth Of Insurance Sector In Nigeria

Impact Of The Nigerian Capital Market On The Growth Of Insurance Sector In Nigeria

Abstract

The end of this study is to dissect he impact and profit of the capital request in the consummation of the insurance assiduity contribute to the frugality. Despite the low number of insurance companies listed in the stock exchange, there are positive prospects of enhancement after the recent capitalization. The problems encountered during the exploration would be addressed through the perpetration of the suggested result. It was eventually conclude that capital request contributes to the growth of insurance sector in Nigeria.

Chapter One

Preface

For any country to be economically sound, she must witness a growing profitable sector. It’s of interest to Nigeria and other third world countries to attain a steady profitable growth rate, as this would enhance National development. profitable growth and development involves an increase overtime of per capita real gross public product(G.N.P) and the weal of the population.

For profitable growth to be achieved, a certain issues that act as constraints ought to be turned. These issues include technological development, mortal coffers development, low productivity, capital conformation, price stabilityetc.( Iniodu 1996). And as Nwankwo( 1991) observes, capital conformation which is the function of an effective fiscal system is veritably vital ” capital conformation involves the rallying and channeling or coffers form the fat spending units( ssu) to the deficiency spending unit( Osu). The Nigeria capital request is a critical part of the fiscal system which performs this allocative part.

The request is the long term end for fiscal request. It’s made up of the request and institutions, which grease the allocation and secondary trading of long term fiscal instruments. Unlike the plutocrat request which serve principally to give short- term finances, the capital request provides finances to diligence and government to meet their long- term conditions.

The capital request has it’s charge statement that’s “ promoting the Nigeria capital request to respond to the socio- profitable development need of the nation ”. The ideal of the capital request is to rally long- term finances for investment. The capital request is performing colorful functions. The capital request provides an fresh channel for engaging and marshaling domestic savings for productive investment and represents indispensable to bank deposit, real estate investment and the backing of consumption loans. It also provides deposit with better protection against affectation and currency and deprecation. Another major function of Nigeria capital request is to ameliorate the effectiveness operation changes as compared with the executive or implicit medium of public sector pots. The capital request facilitates the transfer of enterprises from the public sector to the private sector and encourages privatization by adding the marketability of new issues. The capital request employs some instruments used to raise finances, these instruments are equities-ordinary shares and preference shares. Debt government bonds( civil state and original government). Artificial loans debenture stocks and bonds.

The players in the capital request are the finances providers who are individualities, unit trusts, pension finances, insurance companies, government interposers are the stock broking enterprises, issuing casing, registers, inspection enterprises and controllerse.g. securities and exchange Commission. The Nigeria stock exchange central bank of Nigeria and the civil ministry of finance.

still, there’s a growing concern about the effectiveness or else of the Nigeria capital request and to the part f the insurance sector. Ajayi( 1984) sees it as “ effective in the sense that, the capital request has increased the nation’s affair and indifferent distribution of the affair.

But, Williams( 1988) see that capital request as “ hamstrung in pooling finances for investment ” he observe further that by participation of only a many elites, it has helped to widen the gap between the rich and poor.

This design attempts to determine the influence of this request on the growth of the insurance companies in Nigeria. In particularly, its sees to clarify the part of the insurance companies as crucial players in the capital request and how part has strengthened insurance business in Nigeria.

Statement Of The Problem

To understand the subject matter we will look at the capital request on the growth of insurance in Nigeria. We want to, also believe that the insurance company is a member of the capital request which serve among others involves in the channeling of long- term finances from the fat to the deficiency for investment, but after the finding of William( 1988) was sees the capital request as being hamstrung, inferring that insurance company is hamstrung in pooling finances fro investment. He also added that only a many elites get similar finances thereby creating a gap between the rich and the poor.

At this point I’ll like to identify those factors that have render the insurance sector the effective and that must be done to correct those capital of both life and general insurance to# 20 million and# 50 million, where the general business includes oil painting and gas insurance, among another conditioning. Reinsurance has a minimal paid- up capital of# 150 million( Akpan 1999). One of the major sources of capital insurance companies is the capital request that has being completely spied in the preface.

Examining the performance of the five companies quoted on the stock exchange, prestige assurance, Nigeria insurance and Allco insurance company’s profit before taxation and also an increase in the profit after taxation. tips were also recommended a tip payout of NGN, 55,440, 625, while Allco recommended NGN 70 million to partake holders. This was made possible by the allotment of right issues in the time 2003 per all three insurance companies which was as a result of the company’s recapitalization plan.

The same can not be said for campaign and unic insurance, which recorded a slight drop in 2002 and 2001 despite the impact of the capital request. This can be as a result of the general impact of variable knowing completely well that the main function of an insurance company is reprisal which is taking an individual to where he or she was before he or she suffers loss and eventually is want to know why only many insurance companies are quoted.

Ideal Of The Study

The ideal of this exploration are as following

i) Examine the capital request in the development of the insurance sector.

ii) estimate the impact of the Nigeria capital request on the growth of the insurance business in Nigeria.

iii) Identity the problem defying the insurance companies as heirs of the services handed by the Nigeria capital request.

iv) Make recommendations on the effective operation of the Nigeria capital request.

Significance Of The Study

At this time, the Nigeria government is enhancing sweats to boost the country’s frugality, the need to probe on the fact that led to profitable growth in Nigeria can not be understated. This study will prop our understanding of profitable development via the insurancesub-sectors participation in the capital request.

therefore, this exploration work is considered to be important to

i) The government for policy expression.

ii) The business community for the purpose of investment and capital expression.

iii) The result of work will serve as a reference accoutrements for inquiries.

iv) This study will enhance the knowledge of the experimenter further about the capital request and the insurance sector.

Compass And Limitation Of The Study

In the course of carrying out this exploration work the experimenter was faced with some limitation. similar as

1) Time constraint The duration allowed for this study is limited and inadequate for wide traveling together accoutrements .