Africa Re identifies potential for agriculture insurance market to hit $600 million in premiums

Joy Agwunobi

African Reinsurance Corporation (Africa Re), said that the agricultural insurance market has the potential to generate over $600 million in premiums.

Ken Aghoghovbia, deputy managing director and chief operating officer of the reinsurance company stated this during the just concluded  third Africa Re-Agriculture Insurance Workshop for Nigeria themed “Uniting industry leaders for agricultural insurance advancement”.

The workshop, held in Lagos, brought together industry leaders and stakeholders to discuss the challenges and opportunities in the agricultural insurance sector, with a focus on increasing insurance penetration in the agriculture sector.

Aghoghovbia explained that despite the agricultural insurance market reaching a peak of $15 million in gross premiums in 2021, this figure has declined significantly in recent years.

He listed several factors that have contributed to this underperformance, including the non-renewal of the government-sponsored anchor borrowers program, the lack of alignment between various industry players, and the absence of investments needed to help industry players design and develop agricultural insurance products that meet the needs of farmers and the realities of the agricultural landscape.

According to Aghoghovbia, agriculture accounted for about 21 per cent of Nigeria’s gross domestic product (GDP) and employed over 36 per cent of the country’s labor force in the first quarter of the year, with over 70% of this workforce being smallholder farmers.

 “In spite of this level of contribution to the GDP, the agricultural sector has been hurt by  flooding, desertification of crop and grazing land, conflicts between herdsmen and local farmers, inadequate access to financing and low use of modern technology,” he said.

The insurance expert explained that these shortcomings have placed productivity on hold  in the sector and affected the food supply chain and demand which has led to increased food imports.

Aghoghovbia noted that the International Trade Administration estimates that Nigeria spends about $10 billion annually on food and agricultural imports to make up for its production shortfalls. He added that agriculture insurance holds great promise in turning around the fortunes of Nigeria’s agriculture sector.

“In the last five years, agriculture insurance has attracted the attention of insurance market players in Nigeria who see opportunities in commercialising and modernising agriculture production and diversifying the economy, ” he said.

Aghoghovbia reaffirmed Africa Reinsurance’s commitment to taking the lead in developing agriculture insurance in Nigeria. He called on partners like the International Finance Corporation (IFC), insurance companies, financial institutions, insurance technology providers, government agencies, farmer representatives, and other service providers to lend their support.