The International Finance Corporation, IFC, a member of the World Bank Group, and Africa RE, a pan-African reinsurance company, have agreed to help thousands of small holder farmers in Nigeria access insurance to protect their crops and livelihoods.
Under the agreement, Africa RE and IFC’s Global Index Insurance Facility will help licensed Nigerian insurance companies to develop agricultural insurance products, and deepen their index insurance business lines.
Specifically, the partners’ specific support to insurance companies will include helping them design specialized insurance products and develop digital platforms so farmers can easily view and compare index insurance offerings from various providers.
According to them, the index insurance products will also help protect farmers against environmental risks such as drought, floods, erratic rainfall, and other natural hazards.
Index-based agricultural insurance, which pays out based on transparent parameters like rainfall and does not require costly field visits to verify losses, is an innovative and efficient way for farmers to protect themselves against losses.
Commenting on the latest initiative, Africa RE’s Deputy Managing Director/Chief Operating Officer, Ken Aghoghovbia, said: “We are excited to be partnering with IFC in assisting Nigerian insurers develop appropriate insurance products for small holder farmers.
“This initiative will certainly help move Nigeria towards its goal of food security and it is in line with Africa RE’s mission to support African economic development”, he assured.
Similarly, the IFC Country Manager for Nigeria, Eme Essien, pointed out that the corporation’s “support for affordable and accessible agricultural insurance will help Nigeria’s farmers mitigate the effects of climate-related shocks, protecting them against catastrophic losses and unlocking access to finance.
“Developing a sustainable agricultural insurance industry also requires a strong commitment from regulators, such as NAICOM, who embrace innovation to help farmers manage their risks”, he added
Farmers with crop insurance are also more likely to access other financial products, including credit, and to invest in higher quality production inputs.
Over the years, the traditional insurance market has largely failed to meet smallholder farmers’ demand for affordable insurance with its high premiums and transaction costs.
