The Executive Committee of the African Insurance Organisation (AIO) has formally postponed the 47th AIO Conference & General Assembly earlier scheduled for Lagos, Nigeria from May 31 to June 3, 2020 due to the COVID-19 pandemic.
The new date for the conference is now October 3, 2020 in Lagos, Nigeria.
The World Travel & Tourism Council (WTTC) has cried out that the Coronavirus pandemic now threatens over 50 million jobs in the global travel and tourism sector.
In a Letter to Governments around the world, Gloria Guevara, the President & CEO of WTTC said the sector contributes over 10.4 percent of global Gross Domestic Product (GDP) and 320 million jobs. She said the COVID-19 pandemic has put about 50 million jobs at risk.
“Without Travel & Tourism, economies around the world face an existential threat.”
Guevara therefore called on governments around the world to support the survival of the sector by rendering financial help to protect the income of millions of workers in the travel and tourism industry; extend interest-free loans to major operators and SMEs in the sector to avoid corporate collapse and to waive taxes, dues and other financial demands with immediate effect for 12 months.
Patrick Winters
Switzerland’s top insurance companies are in talks with the financial regulator about the impact of the coronavirus outbreak on their capital buffers and their business, according to people familiar with the matter.
The watchdog contacted Swiss Re AG, Zurich Insurance Group AG, Swiss Life Holding AG and other local insurers to discuss capital and liquidity issues after the market slump and ahead of an expected wave of claims related to coronavirus deaths, cancellations and business disruption, the people said, asking not to be identified talks are private.
The regulator, known as Finma, is in “close contact” with the institutions that it regulates in such situations, a spokesman said, adding that it’s closely monitoring the situation and possible effects. Insurers are likely to be more impacted by the correction in financial markets than by claims, he said, declining to comment on specific companies.
Insurers — as well as the re-insurers who take up their losses — are assessing the cost of disruptions related to the virus – which has claimed the lives of more than 10,000 and put swathes of the U.S. and Europe on lockdown. The industry has worked to reduce its exposure to pandemics since the 2003 outbreak of SARS in Asia. Over recent years, that’s included tightening their policies by inserting communicable-disease exclusions in contracts.
A Zurich and Swiss Re spokesperson declined to comment. Swiss Life said that and other insurers are “regularly in exchange with the supervisory authority Finma regarding their business activities. As a matter of principle, we do not comment on our ongoing exchange with Finma.”
Insurers that fall under Finma’s regulation have solvency ratios that are on average well over the required minimum, the watchdog said. Capital buffers built up over the years can also be used in case that’s required, Finma said.
Munich Re and Swiss Re, the world’s two biggest re-insurers, in recent days sought to reassure investors that the virus would have a limited impact on their businesses.
“Even in the very unlikely scenario of a worldwide pandemic equivalent to a 200-year event, Munich Re would face a maximum of 1.4 billion euros in life and health insurance claims – similar in scope to a medium-sized natural catastrophe in property-casualty reinsurance,” the firm said in its annual report on Wednesday. It doesn’t expect the coronavirus outbreak to have any overall material effect on annual results.
The major impact of Covid-19 on the insurance industry to date is on the asset side of the balance sheet, Swiss Re chief financial officer John Dacey said at an investor conference. The company put in place hedges to mitigate the economic impacts of falling equity prices and widening credit spreads and sees the impact to be entirely manageable at this point, he said.
Herbert Wigwe
Group Managing Director/CEO
Access Bank Plc
The successful listing of Access Bank’s N15bn Green Bond on the Luxembourg Stock Exchange (LuxSE) represents a major milestone in the development of sustainable financing in Nigeria.
The successful cross-listing of this 15.50 percent fixed rate green bond with five-year maturity has enjoyed many firsts including the first-ever climate bonds standard certified corporate green bond to be issued in Africa; the first to be listed on The Nigerian Stock Exchange (NSE) in 2019; and now, the first successful cross-listing of a bond born out of the partnership between NSE and LuxSE.
According to the World Economic Forum’s Global Risks Report, the top 5 risks in the world today closely related to climate change issues. There is, therefore, an increased urgency to reverse recent environmental trends such as ravaging bushfires, extremes of temperatures, floods, cyclones and season disruptions that have made the effects of climate change even more real.
These developments have thrust the concept of sustainable financing into the limelight, allowing products like Green Bonds to gain increasing significance.
It is, therefore, no surprise that the green bond market has witnessed tremendous growth globally with a total of $181bn raised from global investors in 2019 representing a 14-fold increase from the $13Bn raised in 2013. On the demand side, there has been heightened consideration of Environment, Social and Governance (ESG) factors in the demand for profitable investment products.
Looking at the Nigerian market, notable milestones have been achieved through the collaboration of public and private stakeholders.
In 2016, NSE boldly reached out to the Ministry of Environment with a proposal for the issuance of a Green Bond which was embraced and championed by former Minister of Environment and now Deputy Secretary General of the United Nations, Mrs. Amina Mohammed. This move led to a series of partnerships and innovations that have delivered gradual uptake in this market segment.
Among these were:
The Green Bonds market presents great opportunities to reap value if it continues to enjoy the unwavering commitment of key capital market stakeholders. Access Bank has pledged its support to the global climate change mitigation and adaptation agenda which seeks to promote responsible green lending globally.
Group Managing Director, Access Bank Plc, Herbert Wigwe affirmed that, “The cross-listing of the bond will make a material contribution to address climate change and provide institutional investors with access to a deep pool of green capital domestically and internationally.”
The NSE on its part has expressed its resolute commitment to the development of a sustainable capital market in Nigeria.
The Chief Executive Officer, NSE, Mr. Oscar N. Onyema has been reported to have said, “We will continue to maintain a dedicated sustainable market segment which provides issuers, asset managers and investors, access to green, social, sustainable, or ESG-focused securities. Asides Green Bonds, this segment will also promote the development of green labelled Fixed Income Products, Indices and Exchange Traded Products (ETFs) that help direct funding of green projects and environmentally aligned issuers as well as the green transition that ensures market resilience to the economic impacts of climate change.”
By Insurance Specialists at Webber Wentzel
After the likely spike in insurance claims arising from the COVID-19 pandemic, insurers are likely to introduce new or change existing exclusionary clauses which were not previously considered to be necessary.
The rapid spread and potential damage of the Coronavirus presents an extraordinary situation for governments, businesses and individuals. The Coronavirus is twice as contagious as ordinary flu, but mortality associated with the virus is 20 times higher. The last comparable event was about 100 years ago, when the Spanish flu epidemic occurred just after World War I.
In the following sections, we discuss the insurance policies that are most likely to experience claims as a result of events arising from the Coronavirus outbreak.
Life insurance, income protection and disability policies, which pay out when the policyholder dies or is incapacitated, could provide protection in this event, if all other conditions are met and there are no other exclusions or limitations.
One exclusion is risk-taking behaviour. If the policyholder does not follow well-publicised government recommendations to avoid contagion, for example by visiting banned countries, then the insurance company could regard this as high-risk behaviour and may not pay out on the policy.
These policies generally preclude pre-existing conditions, such as HIV. The policyholder should check what diseases are excluded. Other policies may specifically exclude a pandemic of certain diseases.
This covers any act, error or omission on the part of a doctor, specialist, nurse or health establishment, in the context of providing a health service to patients that gives rise to a claim for damages. The standard of reasonableness applies. In a pandemic, the circumstances will be dictated by international best practice, so the health practitioner or establishment will be held to the infection control measures recommended by global bodies.
Given the numbers affected by the Coronavirus, there may be class actions formed by groups of patients exposed to harm through inadequate infection control measures. In this situation, the reality that health infrastructure is under stress could be raised as a valid defence.
In SA, there are only about 7,000 critical-care beds available (across the public and private sectors) and it would only require 20,000 severe infections to reach the upper limit of what our health infrastructure can respond to.
Unfortunately, businesses interruption policies may not cover damage arising from the consequences of Coronavirus. Certain policies require that there must be underlying material damage to insured property to trigger the business interruption section of a policy, and the spread of the Coronavirus and COVID-19 are unlikely to result in physical damage to insured property.
However, some business interruption policies do include extension clauses for infectious or contagious diseases.
Those clauses do not require material damage as a condition of indemnity, although even some of those extension clauses can be limited to a certain radius from the insured’s premises before the policy will respond. Some interruptions may be outside the specified radius, making it difficult to claim under the extension clause.
These policies cover the liability of an individual to pay damages to a third party as a result of negligent conduct, e.g. the “slip and fall” cover that supermarkets carry to protect themselves against claims from shoppers who injure themselves as a result of a slippery floor.
In the Coronavirus situation, businesses may potentially be sued for negligently allowing it to spread. A typical example would be a business in the hospitality industry which holds a gathering of more than 100 people, despite the prohibition, at which someone is infected with Coronavirus.
It is difficult to prove negligence and causation in the event of the spread of a disease. The claimant would have to demonstrate the necessary steps were not taken to contain it and that the infection was a direct result of the event.
It might be easier to prove negligence on the part of the government (for not having correct infection control in public buildings or government institutions, such as prisons) than it would be against individual businesses. Currently, to limit the potential number and size of those claims, a State Liability Amendment Bill is under discussion, but it has not yet been passed.
These policies cover wrongful acts by directors and officers of a company that result in the company or third parties such as shareholders and creditors incurring a loss. This can result in a claim against the directors and officers of the company in their personal capacities to make good the loss.
The Coronavirus could present a similar scenario to that experienced in the case of Cyber-attacks on companies. This can result in claims against directors and officers for failing to take steps to protect the business, which may be covered under directors and officers insurance.
If appropriate policies and procedures are not implemented, directors and officers may risk being liable. For example, the liquidator of a company could sue the directors and officers as a result of acts or omissions that caused the company to collapse. The US and China are already seeing the first sign of class actions.
Employment practices insurance provides additional compensation for employees above that provided by the Compensation for Occupational Injuries and Diseases (COID) Fund, for example if employees contract COVID-19 in the course of their work.
Many companies are recommending that their employees work from home because they cannot guarantee their protection in the workplace. There has to be a balance between keeping employees safe and continuing to earn revenue.
In the context of COVID-19, travel insurance may pay out for claims arising from events such as the cancellation of flights or travel plans, repatriation, medical expenses and delays.
Credit insurance will protect a company against non-payment of accounts by debtors who go insolvent. Their insolvency could be triggered by supply disruptions or business closure caused by the Coronavirus pandemic.
Although we expect that COVID-19 will result in an increase in the number of insurance claims, the success of claims arising from the pandemic is not inevitable. At this stage, the effect and consequences of the Coronavirus pandemic and COVID-19 on insurance are as uncertain as what to do next to avoid catastrophe.
In the face of the global coronavirus crisis, as in any other emergency, the speed and efficiency of our response is proportional to the level of preparedness. To help countries better manage disaster response activities at a time when the frequency, intensity and human and economic impact of disasters is on the rise worldwide, the International Telecommunication Union (ITU) launches new guidelines for the development and implementation of National Emergency Telecommunication Plans.
These guidelines will assist national authorities and policymakers in developing policies and regulations that can ensure the continued use of telecommunication networks and services before, during and after a disaster.
“The exceptional COVID-19 crisis we are going through right now shows how vital information and communication technology networks and services are, both to respond to the current pandemic and to address disaster management,” says ITU Secretary-General Houlin Zhao.
“Now more than ever, the implementation of comprehensive national emergency telecommunication plans can ensure there is effective and timely sharing of information across all levels of government, within affected communities and among humanitarian agencies to prioritize response efforts and to save lives.”
A national emergency telecommunication plan sets out a strategy to enable and ensure communication availability during the phases of disaster mitigation, preparedness, response and recovery by promoting coordination and engagement across all levels of government, humanitarian agencies, service providers and communities at risk.
The Guidelines also highlight major areas of risk during a disaster, provide justification for the funding of vital equipment and personnel in an emergency, and advocate the need for day-to-day resources and procedures that keep national authorities prepared, especially in relation to maintaining vital communications, the essential lifeline during emergencies.
“When disaster strikes there is no time to think about what to do and how to organize response. It is crucial that all stakeholders are prepared beforehand and ready to take action,” says Doreen Bogdan-Martin, Director of the ITU Telecommunication Development Bureau.
“Mock exercises including tabletop, talk-through and walk-through exercises to full-scale drills, help to ensure smooth emergency response among those involved in disaster management and communications.”
ITU has already assisted several countries in developing their national emergency telecommunication plans, setting up of early warning and monitoring systems and the provision of emergency telecommunications equipment.
With emergency readiness in mind, ITU and the Global Emergency Telecommunications Cluster (ETC), a global network of organisations that work together to provide shared communications services in humanitarian emergencies, have joined forces to develop a Tabletop Emergency Simulation Guide which offers tools to test and refine the national emergency telecommunication plans using simulated scenarios.
“With the growing frequency and complexity of disasters, it’s vital to test, identify and close any gaps in national readiness. The scenarios in this simulation guide will make it easier for all stakeholders to do that ahead of time,” says Enrica Porcari, Chair of the ETC, Chief Information Officer & Director Technology Division of the UN World Food Programme.
The World Bank and IFC’s Boards of Directors have approved an increased $14 billion package of fast-track financing to assist companies and countries in their efforts to prevent, detect and respond to the rapid spread of COVID-19.
The package will strengthen national systems for public health preparedness, including for disease containment, diagnosis, and treatment, and support the private sector.
IFC, a member of the World Bank Group, will increase its COVID-19 related financing availability to $8 billion as part of the $14 billion package, up from an earlier $6 billion, to support private companies and their employees hurt by the economic downturn caused by the spread of COVID-19.
The bulk of the IFC financing will go to client financial institutions to enable them to continue to offer trade financing, working-capital support and medium-term financing to private companies struggling with disruptions in supply chains.
IFC’s response will also help existing clients in economic sectors directly affected by the pandemic–such as tourism and manufacturing—to continue to pay their bills. The package will also benefit sectors involved in responding to the pandemic, including healthcare and related industries, which face increased demand for services, medical equipment and pharmaceuticals.
“It’s essential that we shorten the time to recovery. This package provides urgent support to businesses and their workers to reduce the financial and economic impact of the spread of COVID-19,” said David Malpass, President of the World Bank Group. “The World Bank Group is committed to a fast, flexible response based on the needs of developing countries. Support operations are already underway, and the expanded funding tools approved today will help sustain economies, companies and jobs.”
The additional $2 billion builds on the announcement of the original response package on March 3, which included $6 billion in financing by the World Bank to strengthen health systems and disease surveillance and $6 billion by IFC to help provide a lifeline for micro, small and medium sized enterprises, which are more vulnerable to economic shocks.
“Not only is this pandemic costing lives, but its impact on economies and living standards will likely outlive the health emergency phase. By ensuring our clients sustain their operations during this time, we hope the private sector in the developing world will be better equipped to help economies recover more quickly,” said Philippe Le Houérou, Chief Executive Officer of IFC. “In turn, this will help vulnerable groups to more quickly recover their livelihoods and continue to invest in the future.”
Having mobilised quickly at the time of the 2008 global financial crisis and the Western African Ebola virus epidemic, IFC has a successful track record of implementing response initiatives to address global and regional crises hampering private-sector activity and economic growth in developing countries.
Mr. Tope Smart
Chairman
Nigerian Insurers Association
An operator in the insurance industry has enjoined the National Insurance Commission (NAICOM) to extend the deadline given the market to recapitalise from December 31, 2020 to 2021 in view of the market disruptions and uncertainties created by the coronavirus crisis in Nigeria and around the world.
He said the prevailing situation has made all the recapitalisation strategies and game-plans by operators unrealistic and largely overtaken by events of the moment.
The operator told Business Journal thus: “It is important for the market to appeal to NAICOM to extend the recapitalisation deadline from December 31, 2020 to 2021 because of this coronavirus issue. If the COVID-19 problem does not go away by the third quarter of 2020, it would be rather difficult for many operators to meet the December 31, 2020 recapitalisation deadline set by NAICOM. The reality is that the current situation is adversely affecting all our strategies and plans to recapitalise on or before the deadline. I believe that if the market decides to approach the regulator on this issue as a body, something positive could be done.”
…Govs Ayade, Ugwuanyi, Airpeace CEO, Zenith Bank GMD, Globacom others make list
The best of the nation’s human resources and institutions will be on parade on Friday March 20, 2020 as Champion News Media, the publishers of Champion Newspapers rolls out the drums in celebration of the winners of its 2019 awards and recognitions.
Scheduled to hold at the prestigious Oriental Hotel in Victoria Island, Lagos, the Champion Newspapers Awards is targeted at acknowledging the contributions of some of the outstanding individuals, organisations, agencies and institutions of both state and federal government to the development of Nigeria in particular and humanity in general in the areas of business, politics, culture, social and infrastructural developments.
The Group Managing Director, GMD and Editor-in-Chief of Champion Newspaper, Dr. (Mrs.) Nwadiuto Iheakannwa who spoke on the preparations for the event had expressed delight at the elevation of the 2019 edition of the awards to an ‘A’ list event saying that the event will translate to a parade of stars.
“The awards and recognitions are intended to acknowledge those persons, organisations, institutions and agencies, who made outstanding contributions in reshaping the growth and fortunes of Nigeria and indeed the whole world in 2019. We took extra care in sorting out these individuals and organisations as our Board of Editors was painstaking in voting for the right candidates.
“It is our own little way of encouraging Nigerians to strive towards excellence in all their endeavours. We should have the people that we should look up to and emulate at all times. The award ceremony is Champion Newspaper’s own way of fostering a better society. We are looking forward to hosting no fewer than 500 dignitaries at the event”, she explained.
Already, the governor of Lagos Mr. Babajide Sanwo-Olu has accepted the role of the Chief Host at the March 20, 2020 event which will be presided over by Minister of the Niger Delta Affairs, Senator Godswill Apkabio. Senator Akpabio is a two- term governor of oil rich Akwa Ibom State. The charismatic Senate Minority Leader, Senator Enyinnaya Abaribe will be the Special Guest of Honour.
No fewer than 10 serving senators and House of Representatives members have confirmed their attendance at the event. Also expected in attendance is the Speaker of the Lagos State House of Assembly, Rt. Hon. Mudashiru Obasa. Imo State Governor, Senator Hope Uzodinma is expected to make a special appearance at the event.
Giving an insight into what promises to be an award like no other, Dr. Iheakanwa revealed that it took the in-depth analysis of the profiles and contributions of so many nominees for the selection committee to announce the Air Peace Chief Executive Officer, Mr. Allen Onyema as the 2019 Champion Newspapers Man of the Year.
According to Dr. Nwadiuto, Cross River State Governor, Prof. Ben Ayade will be on the podium on March 20 to receive the Governor of the Year award while his counterpart in Enugu, Governor Ifeanyi Ugwuanyi is the Best Governor of the Year on Security.
Speaker of the Ebonyi State House of Assembly Rt. Hon. Ogbonnaya Nwifuru got the highest votes to emerge as the Best Assembly Speaker of the Year.
The roll of honour at this year’s annual Champion Newspapers Awards includes Zenith Bank Plc GMD/Chief Executive Officer, Mr. Ebenezer Onyeagwu who is the Bank Chief Executive Officer of the Year, Globacom Limited as Telecommunication Company of the Year, Fidelity Bank Plc as Bank of the Year, Sovereign Trust Insurance Plc emerged as Insurance Company of the year just as Access Bank Plc’s Public and Media Relations Manager, Mr. Abdul Imoyo will be honoured as the Best Media Manager of the Year.
The stars to be celebrated will also include, Universal Insurance Plc, as the Most Innovative Company of the Year, Dr. Dakuku Adol Peterside who is the out-going Director General of NIMASA will be honoured as the Best Public Agency Manager of the Year. Greenwhich Trust Limited is the Corporate Leader of the Year just as Seplat Oil and Gas Plc was voted Oil and Gas Company of the Year.
Other awardees are: Senator Annie Okonkwo who emerged Democracy Icon of the Year, God is Good Logistics will mount the podium as Logistics Company of the Year and Dr. (Mrs) Asabe Shehu Yar’ Adua Foundation who will be decorated as the Non Governmental Organisation (NGO) of the Year.
The Group Managing Director of Champion Newspapers further assured on capitalizing on the award series in encouraging the culture of excellence in both the private and public sectors of the nation’s economy in order to challenge the ingenuity of Nigerians.
“I am confident that with the appropriate policies and business environments, Nigeria will get her crop of managers to exhibit better work culture. That is why the whole nation will have to keep encouraging those who are known to be doing the right things. The reward for hard work is more work. Champion Newspapers will continue to partner with groups and individuals including corporate organisations in promoting the good values of Nigerians. This is part of the objectives behind the annual Champion Newspaper’s Awards ceremony”, she explained.
Meanwhile, letters of commendations have continued to trail the release of the list of this year’s awardees just as the recipients have confirmed their acceptance of the awards, thereby setting the tone for the hosting of the landmark event on March 20, 2020.
Yesterday, the International Olympic Committee (IOC) met with all stakeholders of the Olympic Games Tokyo 2020 and issued the communiqué below:
This is an unprecedented situation for the whole world, and our thoughts are with all those affected by this crisis. We are in solidarity with the whole of society to do everything to contain the virus.
The situation around the COVID-19 virus is also impacting the preparations for the Olympic Games Tokyo 2020, and is changing day by day.
The IOC remains fully committed to the Olympic Games Tokyo 2020, and with more than four months to go before the Games there is no need for any drastic decisions at this stage; and any speculation at this moment would be counter-productive.
The IOC encourages all athletes to continue to prepare for the Olympic Games Tokyo 2020 as best they can. We will keep supporting the athletes by consulting with them and their respective NOCs, and by providing them with the latest information and developments, which are accessible for athletes worldwide on the Athlete365 website and via their respective NOCs and IFs.
The IOC has confidence that the many measures being taken by many authorities around the world will help contain the situation of the COVID-19 virus. In this context, the IOC welcomes the support of the G7 leaders as expressed by Japanese Prime Minister Abe Shinzo, who said: “I want to hold the Olympics and Paralympics perfectly, as proof that the human race will conquer the new coronavirus, and I gained support for that from the G-7 leaders.”
We will continue to act in a responsible way and have agreed the following overriding principles about the staging of the Olympic Games Tokyo 2020:
The IOC will continue to monitor the situation 24/7. Already in mid-February, a task force was set up consisting of the IOC, the World Health Organization (WHO), the Tokyo 2020 Organising Committee, the Japanese authorities and the Tokyo Metropolitan Government.
The purpose of the task force is to ensure coordinated actions by all stakeholders. It has the mission to keep a constant appraisal of the situation to form the basis for the ongoing operational planning and necessary adaptations. The task force also monitors the implementation of the various actions decided. The IOC will continue to follow the guidance of this task force. The IOC’s decision will not be determined by financial interests, because thanks to its risk management policies and insurance it will in any case be able to continue its operations and accomplish its mission to organise the Olympic Games.
Mr. Tope Smart
Chairman
Nigerian Insurers Association
Lloyd’s of London has asked its member firms to provide estimates of their potential current and final losses from coronaviru to help the insurance market understand its possible overall losses from the impact of the pandemic.
Lloyd’s was working with British and overseas regulators to formulate its response to the spread of the virus, using its experience of previous catastrophes, the spokesman said in an emailed statement.
“The situation is fast-moving and changing daily, leading to a high degree of uncertainty about the eventual type and scale of losses that may emerge,” the spokesman said.
Lloyd’s would ask its managing agents the same question in a month’s time, the spokesman said, and could ask for the information more frequently, as it expected “the loss estimates to move over time as the situation and our understanding develops.”
Lloyd’s of London chief executive, John Neal said last week that the impact for the 330-year old commercial insurance market was likely to be felt through claims for supply chain disruption.
Lloyd’s closed its “underwriting room” in its City of London tower – where insurance deals take place face-to-face – for the first time for a day on Friday last week to see if the market was able to operate without it. The test was successful, the spokesman said.
Risk modeling firms say they are not yet able to provide estimates of the global insurance losses from the virus.
Lloyd’s made pre-tax losses of $2 billion in 2017 following large hurricanes and other natural disasters.
Allianz Nigeria makes good her promise to settle motor claims within 60 minutes.
The nationwide campaign to settle motor claims within 60 minutes which was launched on February 17, 2020 has seen a total of 53 claims to the tune of N2, 784, 225 settled in less than an hour.
Allianz Nigeria expresses gratitude to the numerous customers that have benefited from the 60 minutes campaign.
The company has also committed to continue to provide excellent service delivery of the highest standards.
Nigeria’s smartphone market grew 5.3% quarter on quarter (QoQ) in Q4 2019, according to the latest figures from global technology and consulting services firm International Data Corporation (IDC).
This growth comes on the back of a 3.2% QoQ increase in Q3 2019 after the market suffered a slow H1 2019, which translated into a 3.5% year-on-year (YoY) decline for 2019 as a whole.
The decline in Nigeria in H1 2019 was caused by the closure of airports February, which led to a considerable slowdown in imports. The extended campaigns for the 2020 general elections also impacted the market, while the dollar was also unstable during this same period, which had the effect of reducing smartphone shipments to the country.
Together, Transsion brands (i.e., Tecno, itel, and Infinix) held the biggest market share in 2019 as they launched a number of successful models with big screen sizes and mid-range prices, including the Spark 4, Phantom 8, and Camon 12, among others.
In addition, Transsion experienced strong demand for its wide range of models in low price bands ($0<$100). Huawei had a major comeback to the market, benefiting from an increased marketing budget and the launch of new products in the mid-range price bands.
Samsung benefited from its A series models, which had a wide market audience due to the affordability and rich features of these devices.
The Nigerian government raised VAT from 5% to 7.5% effective from February 1st, 2020. This new regulation is likely to lead to an increase in smartphone prices, leading to slower smartphone adoption in the market. With VAT averaging 5% in the markets directly neighboring Nigeria, gray market re-exports of smartphones into the country are likely to increase.
As per the most recent Situation Report (#56) from the World Health Organisation, there are now 167,511 confirmed cases of the COVID-19 virus worldwide, with 6,606 deaths. In response to the pandemic, IDC has developed three possible scenarios – Optimistic, Probabilistic, and Pessimistic – and currently believes that the Probabilistic scenario is the most likely to occur, with both supply- and demand-side concerns alleviating by the second half of 2020.
Under this Probabilistic scenario for Nigeria and Ghana combined, IDC expects smartphone shipments to decline 15.4% in QoQ in Q1 2020 and 3.9% in Q2 2020.
As most consumer devices in West Africa are imported from China, the disruption to supply chains caused by the COVID-19 outbreak will have a particularly severe impact on this sub-region. Most of the major smartphone brands (i.e., Tecno, Itel, Infinix, Xiaomi, Huawei, Oppo, and Vivo) are of Chinese origin and they control over 85% of the regional market. Other brands such as Nokia and Samsung, with their partial production outside China, cannot fill the gap as they also source parts and components from China.
The impact of the COVID-19 outbreak on Nigeria is double sided. While the supply of smartphones will inevitably be restricted on the Chinese side, Nigeria’s oil revenues are also likely to suffer as China is Nigeria’s the largest customer for crude oil and other raw materials.
“While the spread of COVID-19 presents a significant threat to Nigeria, a country with insufficient health infrastructure, the negative impact on oil revenues poses a larger threat in the short to medium term, and this will negatively impact the country’s fragile economic development and the purchasing power of consumers,” says Dr. Ramazan Yavuz, a Senior Research Manager at IDC.
“While the impact of the spread of the virus is expected to lessen and a return to normalcy is awaited in H2 2020, the volatility and uncertainty in oil markets will continue to take a bigger toll on the Nigerian economy, which will subsequently stifle demand for consumer devices, including smartphones.”
IDC expects that the shortage of smartphone supply will drive an increase in gray market imports from other markets. “If the supply chain is not back to normal and distributors run out of stocks, the average selling prices for smartphones are likely to go up because of the shortage in supply,” says George Mbuthia, a Research Analyst at IDC. “The increase of VAT to 7.5% in Nigeria will push costs further upwards, slowing smartphone penetration in the short term.”
The Consumer Price Index report released yesterday shows that headline inflation increased to a 22-month high of 12.2% Y-o-Y in February 2020, from 12.1% in the previous month.
A report by Afrinvest Research says the marginal rise in inflation suggests that the recent VAT increase is yet to be fully captured.
Similarly, core inflation rose to 9.4% from 9.3% and food inflation was higher at 14.9% from 14.85%. The broad-based rise in inflation was despite a general moderation on M-o-M basis for the first time since August 2019.
Afrinvest says the M-o-M moderation in consumer prices in February reflects the thinning-out effect of festive season purchases and land border closure. However, we believe this would be short-lived once consumer prices fully reflect the recent VAT increase.
‘In addition, as a fallout from the effects of the COVID-19 pandemic, we expect exchange rate pressures and supply chain disruptions with trade partners to impact domestic consumer prices in the coming months.’
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