Africa-Press – Liberia. The Deputy Governor for Economic Policy at the Central Bank of Liberia (CBL) has challenged insurance companies in the country to double up their efforts if they wish to move the Liberian economy forward.
According to Dr. Musa Dukuly, the insurance sector of Liberia needs to do a lot to explore opportunities and mobilize the necessary resources to ensure that they mitigate the risk in the sector.
The CBL is the regulator and supervisor of financial (banking) and non-financial institutions, such as insurance companies.
Dukuly, who represented the Executive Governor of the CBL recently at the induction ceremony of elected officials of the Liberia Insurance Association, claimed that the future for the sector is bright, provided they can put themselves in the right position to leverage the opportunity from the outskirts of the population, the potential in the economy and global opportunity will be on the right trajectory.
The Deputy Governor meanwhile congratulates the Liberian insurance industry for being the “safety net” in terms of insurance, and for showing signs of growth and development, but wants them to strive more to address the financial risks of the country.
“The economy has expanded US$1.5 billion to $3.4 billion,” Dukuly said. “This is a manifestation that we need a sector to accommodate the risks in order to mitigate any financial crisis or instability. The economy is carrying more risks. We need institutions to mitigate the risks.”
He maintained that the insurance industry of Liberia has played a very important role in terms of supporting critical sectors, especially medical for trips, and even at the level of the CBL in terms of exportation of the country’s currency, but urged them to double-up if “our economy needs to move forward in terms of its action in the economy.”
Dukuly revealed that in the insurance sector, “when you look at the penetration rate, it is still less than one percent, and their focus on the penetration rate is still more than 3.4 percent of GDP. So, if you look at the overall insurance capital in the sector last year, it was 22 percent.”
The CBL Deputy Governor said during a recent WAICA meeting that he told insurers that the only way for the economy to move forward is for them to have vibrant insurance stakeholders to create an opportunity that will mitigate the risk the economy is confronted with.
“Our deposit in the financial sector has increased to more than one hundred and thirty billion Liberian dollars. We also see that the loan portfolio sector is currently around 92 billion Liberian dollars.
“And so, if you try to look at the correlation with respect to the expansion in the banking sector, how do you correlate with respect to the insurance sector performance? You will see that there is a mismatch,” he affirmed.
However, Dukuly added, having an insurance sector with an overall capital portfolio of not less than US$40 million tells one that there is a risk in the sector.
“So, if you have a sector in an economy that has a capital level of US$100 million, it tells you that that sector is lacking in terms of being in a position to be able to provide the necessary service that will give insurance to those other investors that are coming into the economy,” he said. “The future is bright; provided you can put yourself in the right position to leverage the opportunity from the outskirts of the population, potential in the economy, and global opportunity, we’ll get there.”
He, however, provided that Liberia is on the path of establishing a relationship with Guinea — it has established a railway line from Guinea to the port of Buchanan, so you will need a sector that will provide an opportunity to mitigate that risk, and that investment will cost more than US$2 billion.
The Deputy CBL Governor for Economic Policy revealed further that there are opportunities in the economy looking at the mining sector, which is on an expansionary trend, especially gold production and iron ore.
He added that the insurance sector is very relevant, and “we have seen that over a short period of time, the economy is on an expansionary trend.”
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