Tapping insurance for food security in Nigeria

By Zainab Iwayemi

Food remains the most efficient medicine to living a healthy life anywhere in the world. This underpins the need for the protection of agricultural products at all levels – planting, harvesting, post-harvest and storage as well as distribution.

While insurance in Nigeria still struggles to reach a vast majority of manufacturers, retailers and distributors, it is more disheartening for those at the primary production level who are prone to bigger crises in the cause of farming and are less captured in agricultural insurance schemes as a result of ignorance on the part of many farmers.

Speaking at the a workshop for insurers who underwrite agriculture insurance in Nigeria, organised in Abuja by Pula, insurance practitioners have lamented about the paltry 5 percent of smallholders who have access to agriculture insurance in Nigeria despite that about 98 percent of food eaten in the country is produced by smallholders in the crop value chain.

Sarfraz Shah, director, insurance operations, Pula, said the workshop was part of measures to revitalize agriculture insurance in Nigeria through collaboration with existing insurance companies as well as gaining active participation of smallholders.

“Insurance companies in Nigeria are used to the old ways of doing agriculture insurance. Pula has been designing and implementing innovative products around the world since 2015.

“We are not just here to help insurance firms to design these products, but we want to develop their capacities and the local market so as to create employment opportunities,” Shah said.

Similarly, Leo Akah, the director, policy and regulation, National Insurance Commission (NAICOM), pointed at the high level of ignorance on agricultural insurance which has rocked farmers over time. He noted that the government would need to invest more in the agriculture insurance sector so as to ensure its efficiency in Nigeria.

Recent crises in the country have revealed the porousness of Nigerian farmland to natural and manmade threat as the past few years has seen the country record a loss in farm product due to heavy rainfall sweeping away farm produce, in addition to farmer-herder conflicts, amongst other crises. In light of this, experts have called for the protection of farmers, especially the smallholder farmers who are more prone to risk due to problems associated with small-scale production.   

Ufedo Monday Shaibu, a researcher in agricultural economics, in a note to Business A.M., outlined the importance of agricultural insurance in the economy. “Insurance and specifically, agricultural insurance, will help improve agricultural production. It will consciously shift farming away from normal activity to a business enterprise. This is because; the agricultural sector is exposed to adverse natural events such as drought, flood, wind storm, pests and diseases.  There is also additional risk from the increasing incidence of conflicts – farmer-herder conflicts, banditry, insurgencies, communal clashes, cattle rustling, etc. These shocks and vulnerabilities illustrate the critical need for farmers to build resilience in response to the risk factors vis-à-vis, participate in agricultural insurance. Agricultural insurance can stabilize farm income and investments in the agricultural sector,” Shaibu said.

Meanwhile, there have been recent efforts by the Nigerian Agricultural Insurance Corporation (NAIC), alongside insurance companies and concerned entities to improve farmers’ participation in insurance. Part of this is the recent workshop organized in Abuja by Pula, an insurtech service provider that specializes in digital and agricultural insurance to smallholder farmers across Africa. 

Also, NAIC, in virtual webinars on AgriBusiness in Africa claimed that it has plans already in progress to reinforce awareness of agricultural insurance programmes for the benefits of farmers. Jerome Olowoyeye, who spoke on behalf of her principal said, “Since three to four years, we have started the farmers’ sensitization process where we select some states in Nigeria yearly to sensitize farmers on the importance of AgriIsurance”.

In a recent development, Folashade Joseph, managing director and chief executive officer, NAIC, has said it paid N848 million as insurance claims to its insured farmers in 2020. This amount is one percent lower than the N856 million paid in 2019.

In her words, “NAIC, since its establishment as an agricultural risk management agency of the federal government, has continued to deliver on its major mandates of providing succour to farmers and comfort to financial institutions which lend to participants in the primary agricultural production sector.

“To serve its clients who are located across the country, the corporation has very experienced and dedicated staff in every state of the federation and the Federal Capital Territory.”

Conspicuously, AgriInsurance still has a long way to go in Nigeria as many farmers do not yet have a clear understanding of the term. In lieu of this, it is expected that insurance firms, NAIC and regulatory bodies would continue to channel resources along the line through a partnership with appropriate organisations and bodies to ensure that every farmer finds it worthy to tap into the scheme so as to bolster penetration of insurance in Nigeria.