NIGERIA- Insurers are
calling for the breaking of the monoploly being enjoyed by the government’s
Nigerian Agricultural Insurance Corporation (NAIC) as well as expansion of
subsidy for the nation’s thriving agric sector which had enjoyed
investments estimated at $15 billion in the last three years.
The insurers argue that
the current revolution in the agricultural sector calls for diversification to
accommodate other insurers, adding that this would provide new growth
opportunities which would grow the sector’s revenue and impact the nation’s
poor masses.
They are also asking for
an expanded subsidy band to spur competition among operators and create better
value for Nigerian farmers who have suffered untold losses as a result of
environmental and natural disasters, as well as poor infrastructure.
Analysts who spoke to
BusinessDay are of the view that the sector has to be liberalised to achieve
geometric growth in size and coverage, to support the government’s
transformation progrmme which has created over two million jobs under the present
administration.
Rotimi Fashola, group
managing director, Industrial and General Insurance plc, said to enhance the
development of this form of insurance, laws need to be enacted to guarantee
government subsidy because the covers are for the benefit of the poor who
cannot afford conventional insurance.
“Without government
subsidy, agricultural insurance would be unable to play its role in the
development of farming, Fashola said.
At the moment, there is
only one insurance company, the Nigerian Agricultural Insurance Corporation
(NAIC) that is providing risk management for the country’s crop and livestock
farmers.
Being a government owned
insurance company, it is enjoying government subsidy, which enables it support
small holder famers across the country. But analysts say that liberalising the
sector will encourage other players that have requisite skills for agric
insurance to invest and expand to the grassroots, where most farmers are
concentrated.
Wale Onaolapo, managing
director, Sovereign Trust Insurance plc said he does not think it is proper to
have just only NAIC providing cover for farmers, given the population of
Nigeria and the size of the agricultural sector.
Onaolapo further said
tremendous amount of premium income will be generated if the sector is
liberalised and all players have a level playing field to exercise their
capacity.
“I would wish that
government, through the National Insurance Commission (NAICOM) would liberalise the
licensing of agric insurance for operators, as this would deepen insurance
penetration and increase industry revenue and add value to the large population of
Nigerian farmers”, Onaolapo observed.
Insurers at the
International Congress on insurance and reinsurance of agricultural risks, held
recently in Morocco, agreed that one of the hardest jobs was to convince farmers
that spending money on premiums was a worthwhile investment, explaining why
government subsidy is the only way to drive mass participation.
John Chikwendu, general
manager, Premium Debate, supporting the congress position, observed that this
was why most farmers complained that they had spent money on premiums and seen
no benefit, particularly when there was no loss.
“They don’t appreciate
how useful insurance is as a risk management measure, Chikwendu observed.
Experts say farming in
developing countries is exposed to a variety of uncertainties, ranging from
fluctuation of prices and unpredictable weather patterns, which hold back
efforts to lift people out of poverty.
It is well known that
such uncertainties induce substantial income risks, and these can be
detrimental to small or poor producers.
“Lenders have
traditionally regarded agriculture as being too risky, said Israel Kamuzora,
the Commissioner of Insurance and chief executive officer of the Tanzania
Insurance Regulatory Authority (TIRA), at the inauguration of the Regional
Certificate in Agriculture insurance programme recently. Kamuzora said the
absence of crop production credit is a bottleneck to access and adoption of
improved farming technology, certified seeds, and fertilizer and plant protection
chemicals.
“Agriculture insurance is
still the main solution to the risk and uncertainties to the farmers,” he
added.
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