The Presidency, ministries of Agriculture and Rural Development and Finance, as well as police formations and commands, among others, are to spend the sum of N555.98m on financial expenses such as bank charges and insurance premium this year.
The amount is contained in the 2014 budget proposals for the affected agencies currently before the National Assembly.
An analysis of the fiscal document, which was submitted by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, to the National Assembly in December, showed that the police formations and commands, with a budget of N404.07m, have the highest figure for financial charges.
A breakdown of this amount shows that while about N402.98m will be spent on insurance premium, the balance of N1.09m is for bank charges.
Similarly, the budget details also indicate that the Ministry of Agriculture and its parastatals have earmarked the sum of N55.06m for financial charges, while the Presidency, Office of the Secretary to the Government of the Federation and its parastatals plan to spend N14.25m and N72.4m, respectively.
The Ministry of Finance has a budget of N2.55m for financial charges, while the Debt Management Office also has a provision of N1.6m for the same purpose.
Others are Budget Office of the Federation, N4.62m made up of bank charges (other than interest), N1.07m and insurance premium, N3.45m; and National Insurance Commission, N26.98m made up of bank charges, N3.52m, and insurance premium, N23.46m.
Similarly, the Office of the Accountant-General of the Federation has a provision of N1.73m for financial charges (general); while the Pension Transitional Arrangement Department has N41.4m budgeted for the same purpose.
The Commissioner for Insurance, Mr. Fola Daniel, had, while speaking at a national workshop for insurance desk officers of government Ministries, Departments and Agencies, frowned on the level of government’s indebtedness to insurance companies.
Daniel said, “We decided to have this forum with the insurance desk officers in the MDAs because the biggest debtors to the insurance companies are the government agencies.
“And of course, it follows from the fact that the biggest customer is also the government. So, what we are doing here is asking that we as government functionaries should show leadership; we cannot break the law by excusing ourselves on the grounds that we are government.”
The NAICOM boss said an analysis of the financial statements of most of the insurance companies indicated that 60 to 70 per cent of insurance premium had not been paid.
The development, he noted, was affecting the ability of the insurance companies to settle claims promptly.
Daniel had said, “If you do an analysis of the insurance balance sheet, you will find out that 60 to 70 per cent of insurance premium has not been collected and that is what we must arrest, and we must find a way of putting an end to it.
“One of the fallouts of this is the inability of some insurance companies to pay premium as when due because unless you have prepaid your premium, there is no way insurance companies can find a way to pay claims.”
He said the commission was working with the National Assembly to ensure that the insurance premiums of the MDAs were paid.
“We have extended this frontier of argument to the National Assembly to the extent that the MDAs are to submit their budgets this year and next year; the National Assembly will be specifically finding out how much is provided for insurance and what is the basis of this provision,” he said.
Daniel added that the commission had at different times and fora reminded the government of the need to show more commitment to the insurance of its assets by making adequate provisions for insurance in its annual budgets.
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