The nationwide looting of shops and violence that erupted after the #EndSARS protests left the survival of many businesses shaky, worsened by many Nigerians’ poor attitude to insurance.
Distraught Emeka Alum sat in his new, empty shop, his head resting on the wall and his eyes half closed.
His sorrowful mien was grippingly realistic of someone overwhelmed by a recent tragic incident. Indeed, since the events of October 21, 2020, when hoodlums went on the rampage in Lagos and other parts of the country, mercilessly looting shops, including his two shops in the Fagba area of Lagos, Alum has been downcast, struggling to gather the pieces of his trade.
Not only were Alum’s shops looted, alongside 42 other shops in the premises – all comprising expensive but sought-after vehicle spare parts – the hoodlums in their numbers razed the building to the ground, leaving the traders and the property owner in bitter tears.
Weeks have mounted up since the incident, but Alum has yet to overcome the shock, neither has he found it easy to start afresh. Only a handful of items that he collected from his suppliers on credit sparsely decorated his new shop. “This is what two full shops have been reduced to,” he said slowly, pointing descriptively at different corners of the empty shop he had just rented.
“I lost goods worth over N20m, because my two shops were looted and burnt down by the hoodlums,” he muted, pronouncing each word with so much strength. “I had many KYB shock absorbers, a very expensive brand. I had top gaskets of different types and several other items.”
Sadly, it might take Alum some time to get back fully into business; with a family to cater to, and the poor state of the economy that has seen people’s disposable income depleted and their purchasing power severely eroded.
“It’s not easy to start again, having nurtured the business to profitability over the years, but I have to thank God for life. The next thing is to look at how to start again,” he said.
Meanwhile, if Alum had insured his business, he would have been less traumatised and his loss minimal. Arson and theft being insurable risks, his business would have kicked off much easily. Sadly, that’s not the case. “I didn’t have insurance,” he said with a subtle feeling of regret.
Alum is not the only affected business owner who is struggling to start again because they didn’t insure their business. All the other 46 business owners on the premises are suffering the same fate. None of them has insurance.
Mr Chukwuemeka Nwabuike, who also owned a shop on the premises, was busy attending to customers from his new shop when our correspondent visited. His shop was relatively full, giving an impression that unlike others, he had moved on after losing all he had to the attack. But it wasn’t exactly the way it seemed.
“I lost my two shops to the attack, so I had to beg our suppliers to give me goods on credit so I don’t stay idle,” he said. “We are begging people in authority to do something to help us.”
Nwabuike wouldn’t have found himself in such a precarious situation if he had followed through with the insurance cover he was planning to procure for the business before the incident.
He added, “A good friend of mine came to me about a month before this incident and suggested that I should insure my business. We even initiated the process and went to their office to make further enquiries. What was left for me was to fill the form and make payment, but because of business engagements here and there, I was not able to make any payment. That was why I was really pained when this incident happened.”
“I don’t think any of our members insured their business here, including me,” said Mr Chinedu Ugbogu, the chairman of business owners on the premises, as he took our correspondent round the new building their landlady hurriedly put up as a replacement.
As of the time of our correspondent’s visit, all the 40 new shops had been rented by the same old tenants, but more than half remained empty. “That is because the owners are still going round, looking for help,” Ugbogu explained.
Ugbogu, who also lost the about N10m worth of the goods in his two shops, said he did not insure his business because “the process is ambiguous.”
He said, “After the incident, it was not easy to move on. But with the help of friends and kind-hearted people, I’m picking up gradually. I have five children in school, what would I have done? I’m pleading with the government to help us.”
Asked why he didn’t insure the business, he said, “It was because of the ambiguity. Insurance companies will ask you to bring your money but when you need to make claims, they come up with different clauses and excuses. They need to be more transparent.”
But these auto parts dealers are also not alone, sadly. From densely populated Fagba to the Admiralty Way in highbrow area of Lekki Phase I, some other malls in the Lekki-Ajah axis, the popular Adeniran Ogunsanya Mall housing about 150 shops and many shops on Bode Thomas Street in Surulere, an upper middle-class neighbourhood in Lagos, some parts of the Federal Capital Territory and Kwara and Rivers states – all touched by the hoodlums, it’s been a harvest of grief. Most of the shop owners told Sunday PUNCH they didn’t insured their business.
According to findings, these are a microcosm of the poor attitude of Nigerians towards insurance.
The avoidable tragedy
The violence that pushed many of these business owners out of job in October was an aftermath of the avoidable chaos that greeted the #EndSARS protests, the biggest protest in Nigeria in recent history.
Many young Nigerians, joined by some older citizens, had thronged the streets day after day to protest against police brutality in the country and demand the scrapping of the Special Anti-Robbery Squad; a unit in the Nigeria Police Force.
As hoodlums began disrupting the peaceful protest in some places, the Lagos State Government imposed a 24-hour curfew on October 20, 2020, following which the state deployed soldiers in the Lekki Tollgate, a major converging point for the protesters, later in the evening to enforce the curfew. The soldiers allegedly ended up killing some protesters and injuring some others in the process.
This triggered a string of attacks in different parts of the country. While innocent persons stayed indoors in compliance with the curfew, hoodlums and robbers took to the streets unrestrained, setting public and private property ablaze, vandalising property and looting shops unhindered, especially since there were no security agents to stop them.
By the following morning, the premises of most of the shops looted bore a semblance of an emerging rubbish dump as wraps of goods stolen from different shops and all kinds of disposables from the different shops littered everywhere.
But like an untreated wound that would ultimately spread, the looting spread to other parts of the country. The Minister of Information and Culture, Alhaji Lai Mohammed, later told journalists that apart from the lives that were lost, most of whom had no life insurance, 269 private/corporate facilities were burnt/looted/vandalised, 243 government facilities were burnt/vandalised while 81 government warehouses were looted.”
In Nigeria’s recent history, the violence and losses incurred by both private individuals and public institutions were unlike no other. The extent of damage made the Senate to propose that one per cent of money generated from Value Added Tax be channelled towards rebuilding the affected infrastructure and to support the affected states.
The looting spree
Though both arson and theft are insurable risks, investigations revealed that most of the victims didn’t have insurance. Government institutions might have funds or receive donations to rebuild, but private business owners who mostly don’t have insurance and hardly have the wherewithal to take bank loans because of the high interest rate might be forced out of business.
For instance, while Alum, Ugbogu and all the auto spare parts dealers at Fagba and many others across the country are depending on help to revive their business, the Nigerian Ports Authority, also attacked by the hoodlums, said all its property were insured.
NPA Managing Director, Mrs Hadiza Bala Usman, said, “All our property are fully insured, so we had to call on our insurers.” She said the cost of replacing the burnt and vandalised items would be above N1bn.
The Lagos State Government also said it would cost about N1tn to rebuild the damaged property, noting that people had started asking how they could help. To augment what it receives as donation, the property not insured might be rebuilt from the money meant for fresh capital projects, which is a setback to the state.
But for the private business owners, most of who are in the Micro, Small and Medium-sized Enterprises category, some have been forced out of business already, and for others, the road to recovery is uncertain.
Prior to the attacks, Frank Ezeocha, who trades in sandals and sneakers of all kinds at Fagba, Lagos, would never have imagined that his booming business would be reduced to a scanty-looking kiosk. As of the time our correspondent visited, Ezeocha, who didn’t insure his business, barely found any reason to smile.
“I was away for two weeks after the incident because there was nothing to sell,” he added. “But if I can get N300,000 to buy goods, my life will be transformed. The location of my shop makes patronage easier, but if there are no goods to sell, people would simply pass by.”
In Port Harcourt, Rivers State, the impact of the looting was no less heartbreaking.
“This incident affected me a lot and I don’t even know where to start from,” lamented Mr Dickson Benson, a trader whose shop was looted at the Laptops and Accessories Dealers Market at Eleme Junction.
According to him, the shops of all the 280 traders in their association were emptied by the hoodlums. “The goods we lost were worth N350m and most of our members were wholesalers of expensive phones but all the phones were stolen,” he stated.
Since he didn’t insure the business, Benson had been constrained to appeal to the government for help as a last resort. “We are appealing to the government and Nigerians to come to our aid, because we don’t know what to do or where to go,” he cried out.
In the same shop, Mr Jeffery Onwuekwe’s loss is no less distressing, more so that he watched helplessly as the hoodlums plundered their shops. But with burning tyres and barricades everywhere, he knew it was suicidal to move close.
In a rather somber mood, Onwuekwe, who had no insurance, said, “I lost my goods and the N100,000 cash I left in my shop. I have to start from the scratch because I have to survive.”
In Ilorin, Kwara State, apart from rummaging and plundering the Shoprite Mall and several other shops, they left the shops in total disarray.
Mr Ahmad Lawal, who owns Hairsense Unisex Saloon, a large shop that housed over 20 barbers and female hair stylists, claimed that the worth of what he lost was between N30m and N50m.
“It was a colossal loss. The hoodlums took everything meaningful and damaged the things they couldn’t take, like our ceiling, closed-circuit television cameras,” he added.
Like several others, Lawal, who is also the spokesperson for owners of businesses at the mall, had no insurance. He said, “I didn’t insure the business and I’m not aware that any of the indigenous business owners (in the mall) have too, except the foreign business owners operating in the mall.”
While the hoodlums looted Glorious Evidence Salon and Spa, a classy place with state-of-the-art equipment for sauna bath and other body treatments in Surulere, stealing equipment they probably didn’t know about, some other miscreants emptied five truckloads of beans and four truckloads of rice, estimated to be over N140m, at a rice mill at the Idu Industrial Area of Abuja.
Sadly, the former said he didn’t insure the business. When our correspondent visited the shop, he spoke few words but his prolonged silence was almost deafening.
Clearly, the attackers spared no one, as they also looted the shops of some celebrities.
For example, the shop of Nollywood actress, Uche Elendu, in Lekki, Lagos was emptied to the point that only the shelves were left behind.
In a rather emotive message that suggests that she also has to look for means to start afresh, Elendu said, “My hard work and investment are gone; looted by the same people we were fighting for. O Lord, strengthen me.”
For actress Joke Jigan, it took donations from friends and colleagues to start again, even as she appealed to the Lagos State Government to assist them with some money as promised.
Celebrities such as Lilian Bach and Taiwo Adepeko also fell victims. Bach, whose shop at Adeniran Ogunsanya Mall was looted, said, “These hoodlums have put a lot of people into huge debts as a result of the vandalisation, looting and burning of innocent people’s years of hard work.”
For Adepeko, it was more. With tearful eyes and justified apprehension about how to start again, she called on the government to help, adding, “We are orphans and this happened to us, it’s not easy to get money to start a business and everything was gone in just one night. Shattered is an understatement.”
Nigeria’s record low insurance penetration
Interestingly, the below-average disposition towards insurance as captured above is simply an archetype of what happens in the larger Nigerian society. Despite being the largest economy and most populous country in Africa, Nigeria has one of the lowest insurance penetrations in the Sub-Saharan Africa, with the insurance penetration hovering around 0.3 per cent.
Seasoned economist and Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, pointed out that most business owners and citizens had little appreciation of the value of insurance, noting that the situation was worse with the MSMEs.
He explained that investment is about risk taking and that the culture of insurance encourages and predisposes investors to broaden their risk horizon.
Yusuf said, “Insurance penetration in Nigeria is one of the lowest in Sub-Saharan Africa. There is an issue with both the appreciation and the awareness of insurance. Some perceive insurance as a manifestation of negative thinking or expectations. There is also the perception of the industry, especially as it affects the issue of settlements of claims when insured risk crystallises. This has some reputational implications.”
Yusuf explained that there were also inadequacies around policy, regulations and enforcement and that even for some aspects of insurance mandatory for corporate establishments and government agencies, compliance was weak because there was no framework for effective enforcement.
Regarding its impact on the economy, Yusuf said, “As investment grows, the economy also progresses correspondingly. Besides, a robust insurance industry offers a good source for funding of long-term projects in the economy.”
Similarly, a Manager, Management Consulting at KPMG Nigeria, Mr Aghogho Sam-Umurhurhu, pointed out that Nigeria’s insurance penetration stood at about 0.3 per cent during their last analysis, and that the figure was lower than Kenya’s 2.8 per cent and South Africa’s 12 per cent.
He said, “In the Sub-Saharan Africa, Nigeria has the least penetration. If you want to compare based on the percentage of premiums to Gross Domestic Product, it’s about 0.3 per cent, and that is one of the measures of the penetration. Using the percentage of the population that has insurance might be a difficult approach due to the dearth of data.’’
Also, in a report by Statista, while Nigeria, Africa’s biggest economy, had 0.3 per cent penetration, Namibia had 6.69 per cent; Lesotho, 4.76 per cent; Mauritius, 4.18 per cent; Zimbabwe, 4.09 per cent; Kenya, 2.83 per cent; Swaziland, 2.44 per cent and Togo, 1.98 per cent.
In the African Insurance Barometer 2019 published by the African Insurance Organisation, Nigeria accounted for only five per cent of the total African insurance premiums in 2017. This fell far below South Africa’s share, Morocco’s 20 per cent and Kenya’s 11 per cent.
The report further showed that Nigeria accounted for only four per cent of African life insurance premiums, far below Morocco’s 23 per cent and Kenya’s 12 per cent, while it accounted for three per cent of African non-life insurance premium for the same year, far below South Africa’s 44 per cent, Morocco’s 10 per cent and Kenya’s five per cent.
Meanwhile, PricewaterhouseCoopers, in a report titled, ‘Africa’s Insurance Trends’ noted that as of 2015, only about 1.5 per cent of all Nigerian adults were covered by insurance.
The below-average attitude of Nigerians towards insurance is not hidden. Perhaps, it informed why the governors of Lagos and Kwara states promised to provide intervention funds to help the owners of looted businesses in their respective states.
While Governor AbdulRahman AbdulRazaq of Kwara State announced the release of N500m barely a week after the incident to save businesses from total collapse, his Lagos State counterpart, Mr Babajide Sanwo-Olu, said the state would also assist affected business owners. While Lagos State has yet to fulfill the promise, many business owners who depend on the support have remained stuck.
Governors in the South-East geopolitical zone also resolved to set up funds to help the victims of the looting and violence.
Why Nigerians don’t embrace insurance
According to experts, many factors could be adduced for Nigerians’ poor disposition towards insurance.
The Executive Secretary, Nigerian Council of Registered Insurance Brokers, Mr Fatai Adegbenro, linked it to attitude, adding that instead of understanding that they could be exposed to risk at any time, many Nigerians become religious, often saying “God forbid.”
“Our disposition to insurance is poor,” he said. “With insurance penetration that is less than one per cent, it is very poor. You would find that many of those who complain about the insurance process have never had any direct dealing with any insurance company; they rely on hearsay. But to justify their unwillingness to take up insurance, they run down the companies, shooting themselves in the foot.
“In Nigeria, we can use N2m to buy a car but to use about N150,000 to protect the car is a problem. If you mention insurance to such a person, you would hear ‘where do you want me to get the money or God forbid.’
“Incidentally, those who need insurance most are the poor people and small business owners because if they suffer this kind of loss, they oftentimes don’t have anything to fall back on whereas the rich could still have something to start with.”
He said that the poor attitude towards insurance was why people always relied on bailout from the government after such incidents. He said, “If somebody lost goods worth N2m and government could only give you N50,000. To what extent would that help?.”
Similarly, Sam-Umurhurhu agreed that the state of the economy might be a factor, since insurance may not be the first item on the priority list of underprivileged persons. However, he also identified ignorance, lack of awareness and attitude as other critical factors.
It is noteworthy that a huge percentage of Nigerians are deemed poor, as the National Bureau of Statistics in its 2019 Poverty and Inequality in Nigeria report revealed that 40 per cent of the total population, or almost 83 million people, live below the country’s poverty line of N137,430 ($381.75) per year.
Sam-Umurhurhu added, “It might have to do with our culture. If you say to an average person on the street ‘bring your money and in case you have an accident, I will pay you back.’ The first thing you would hear is ‘God forbid; I will not have accident’. So, I think it’s our attitude towards risk as a people.”
He said apart from these, some insurance products are not very attractive, pointing out that in countries where penetration is relatively high, they have innovative products that appeal to people.
He added, “What Nigerians know about insurance is that if I want to insure my vehicle, I have to put money down for one year and if there is no accident, that money is gone. But in other climes, there is what they call on-demand insurance. If I live on Lagos Mainland and I want to visit you on Lagos Island, I could insure the trip alone. You find that when you have such flexible products, even young people would want to get it.”
He said the use of technology is another factor, adding that with the dearth in the number of underwriters, it could impact on the kind of innovations insurance companies could come up with.
Since MSMEs are an integral part of the Nigerian economy, numbering about 41.5 million, their inability to function maximally might impact on the economy negatively.
Asked if low insurance penetration among small businesses could affect the growth of the informal sector and the economy at large, Sam-Umurhurhu said, “Definitely, it can. If you look at the case of #EndSARS, the majority of the businesses affected were MSMEs and in Nigeria, MSMEs are the major employers of labour.
The Insurance Barometer also noted that lack of insurance awareness, affordability and some insurance products’ lack of appeal to the consumers are some of the reasons for the low penetration.
Also, PwC in its report said the low insurance penetration in Nigeria is, in part, a consequence of the lack of trust and confidence in insurance companies. It added that a contributor to this perception of the market is the limited knowledge of insurance amongst the public.
It appears that the only insurance products that have enjoyed robust patronage are the six made compulsory by the Insurance Act 2003, like motor third party insurance.
But, sadly, even that is flawed. PwC in its report said it is a commonly held belief that up to 60 per cent of all compulsory motor vehicle insurance could be fake; issued by unregistered insurance or sold at below market price.
It noted that a joint exercise by National Insurance Commission and the Nigerian Insurance Association in 2011 revealed that about 10 million vehicles were operating with either fake insurance cover or none at all.
Meanwhile, NAICOM and NIA did not oblige our correspondent’s several requests for their perspectives and data on the insurance penetration in the country vis-a-vis MSMEs.
Insurance companies in the capital market
Speaking to how the low insurance penetration affects the performance of insurance companies in the capital market, Sam-Umurhurhu said investor’s confidence was key and that more people were likely to invest in banks than in insurance companies because people would always use banking services.
He stressed that insurance companies need to roll out more innovative products in the market, which would ultimately make them perform better and bring more returns to investors.
The crawling growth of insurance in Africa
While countries like South Africa are said to be doing well on the continent, the PwC report noted that the insurance penetration, measured as a percentage of premiums to GDP, was three per cent for Africa, relatively higher than the average emerging markets average of 2.65 per cent, but much lower than the advanced markets of 8.07 per cent and a global average of 6.13 per cent.
“The above numbers indicate the low level of development in the African insurance market, but also the immense potential to grow the market as Africa’s affluence and financial literacy increase,” the report noted.
The tough task of increasing penetration
Experts noted that the task of increasing penetration didn’t entirely rest with people and business owners, Sam-Umurhurhu said both the insurance companies and the National Insurance Commission, being the regulator, have huge roles to play.
He said insurance companies needed to make their products innovative and attractive, adding that they ought to also leverage on digital tools, like mobile Apps the way the banks had successfully done.
He added, “Looking at the retail side, if you want to attract young persons, for example, you don’t expect them to just lock a huge amount of premium with you, and at the end of the day, nothing happens. Insurers need to be innovative. They need innovative products that would attract people.”
For the regulator, he said the ongoing recapitalisation would help the industry upon conclusion of the exercise, noting that much needed to be done in terms of transparency.
Also, Adegbenro of NCRIB said people should understand the concept behind insurance to appreciate it better, adding that people appreciate insurance after losing what they had.
He said, “If you insure a house against fire, you pay 0.25 per cent of the value, meaning it will take you 400 years to cover that value. How many people live for 400 years? People also don’t pay attention to the psychological relief insurance gives. Why should you put yourself in a situation you would go cap in hand to beg people for help when there is loss?”
When told that some people weren’t interested in insurance because they feel they lose the money paid as premium if they don’t suffer any loss, Adegbenro said, “If my vehicle is N10m and I pay five per cent N500,000 as premium. Let’s say the vehicle gets burnt, what is N500,000 to N10m? If the vehicle does not get burnt, it’s part of life experiences, but what if it does. It depends on how you value your peace and life itself.”
He said there was need to increase public awareness on the need to embrace insurance.
Adegbenro stated, “If the business is insurable, why can’t you transfer the risk at a reasonable premium? It’s a way to take responsibility for their responsibility.”
PwC also noted, “High growth in GDP together with the large population and improved insurance penetration could result in Nigeria becoming the biggest insurance growth market on the continent.”