The interplay between governance, compliance, and the national budget is fundamental to the stability, integrity and growth of the financial industry, insurance and the broader economy, says experts.
The experts, who spoke at the 2024 Chartered Insurance Institute of Nigeria(CIIN) Business Outlook held in Victoria Island, Lagos, over the weekend, noted that, governance frameworks establish the rules, practices, and structures that guide decision-making, ensure accountability and promote transparency within financial institutions, hence, compliance with laws, regulations, and ethical standards is essential to uphold market growth and sanity.
On his part, the commissioner for insurance/CEO, the National Insurance Commission(NAICOM), Mr. Sunday Olorundare Thomas, said the interconnection between governance, compliance, and the national budget also carries significant implications for economic growth, influencing the pace, sustainability, and inclusiveness of economic development.
While sound governance practices and compliance with regulatory frameworks create a favourable investment climate, attracting domestic and foreign investment, he added that, investors are more likely to commit capital to economies with transparent and accountable governance structures, leading to increased investment in infrastructure, technology, and productive assets, which are essential drivers of economic growth.
Stating that upholding governance practices promotes access to finance, Thomas, who was represented at the event by the deputy commissioner for Insurance (Finance & Administration) Olufemi Oba said, effective governance and compliance mechanisms enhance access to finance for businesses, entrepreneurs, and households, adding that, “A well-regulated financial system, supported by prudent fiscal policies, promotes financial inclusion, fosters competition among financial institutions, and encourages lending to productive sectors of the economy, fuelling investment, innovation, and entrepreneurship.”
On infrastructure development, he said, the national budget plays a crucial role in financing infrastructure development, such as transportation, energy, water, and telecommunications.
“Adequate budget allocations for infrastructure projects, combined with transparent procurement processes and efficient project management, support economic growth by reducing transportation costs, enhancing productivity, and attracting private investment in infrastructure,” he pointed out.
Earlier, the president, CIIN, Mr. Edwin Igbiti had said, governance, in its essence, forms the bedrock of any successful enterprise as it is about establishing a framework that promotes accountability, fosters a culture of integrity, and aligns the interests of all stakeholders.
“As we navigate through an era of increasing complexity, with myriad challenges and opportunities, sound governance practices should be the compass guiding us to sustainable success through adhering to the rules and regulations that govern our industry.
“In an ever-evolving regulatory landscape, where changes are frequent and often unpredictable, our ability to navigate these waters with agility and precision is paramount. It is not merely about meeting the minimum requirements but striving for excellence in ethical conduct and regulatory adherence,” he said.
Similarly, the chairman, Mandatory Continuous Professional Development(MCPD) Committee, Lady Isioma Chukwuma said, it is imperative that insurance operators place a strong emphasis on governance and compliance as the cornerstones of their operations, stressing that, in the complex landscape of insurance, effective governance is essential for ensuring that organisations are managed responsibly and ethically.
This, she said, involves establishing clear lines of accountability, robust decision-making processes, and a culture of transparency, adding that, it is the duty of all insurance businesses to operate with integrity and in the best interests of their policyholders and stakeholders.
“Furthermore, compliance plays a vital role in upholding the trust and credibility of the insurance industry. Adhering to regulatory frameworks, laws, and industry standards is non-negotiable. As such, insurance businesses must prioritise compliance as a means of protecting the rights of their customers, maintaining financial stability, and mitigating risks,” she stated.
In today’s rapidly changing environment, she said, the need for strong governance and compliance within the insurance sector has never been more pressing, noting that, the evolving regulatory landscape, technological advancements, and shifting consumer expectations demand that organisations stay agile and proactive in their approach to governance and compliance.
To achieve this, she said, insurance businesses must invest in robust governance structures, cultivate a culture of compliance at all levels of the organisation, and leverage technology to streamline regulatory processes.
“By doing so, we can ensure that our industry remains resilient, trustworthy, and well-positioned for sustainable growth. As we look to the future, let us recommit ourselves to the highest standards of governance and compliance. By doing so, we can build a stronger, more resilient insurance industry that serves the needs of our customers, fosters trust, and contributes positively to the broader economy,” she pointed out.
