Africa Re, IFC harp on potentials of agriculture insurance to foster growth

WITH the potential of generating a premium of $600 million in the nation’s agriculture sector, Africa Reinsurance Corporation and IFC have reemphasied the need for agriculture insurance.

At the third Africa Re Agriculture Insurance Workshop for Nigeria, it was noted that the agriculture sector, despite accounting for 21 percent of the Nigeria’s GDP in the second quarter of 2023, is faced with challenges that had stifled it’s productivity.

In his opening remarks, Mr Ken Aghoghovbia, Deputy Managing Director/Chief Operating Officer of African Reinsurance Corporation (Africa Re), said with approximately 70 million hectares of agricultural land and a diversity of agriculture enterprises, Nigeria’s agriculture insurance market “has the potential to generate a premium of over $600 million.

“However, the current market reality paints a different picture. While gross market agriculture insurance premium grew to a peak of $15 million in 2021, this figure has declined significantly,” Aghoghovbia said.

“This dismal performance is attributed to several factors that include, non-renewal of the government supported Anchor Borrowers Program, the misalignment of business goals between various industry players and the lack of investment needed to help industry players design and develop agriculture insurance products that respond to the needs of farmers and realities of Nigeria’s agriculture landscape,” he added.

Aghoghovbia observed that the agricultural sector has been hurt by several shocks such as flooding, desertification of crop and land grazing, conflicts between herdsmen and local farmers, inadequate access to financing and low use of modern technology.

The challenges, he noted, have stifled the sector’s productivity and created a huge gap between local food supply and demand, leading to increased food imports.

“The International Trade Administration estimates that Nigeria relies on about $10 billion of imports to meet its food and agricultural production shortfalls,” the Africa Re boss said.

“Agriculture Insurance, you would agree, holds great promise in turning around the fortunes of Nigeria’s agriculture sector,” he added.

In his remark, Mohammad Aliyu, IFC’s Country Officer for Nigeria, noted that agriculture insurance played a crucial role in bolstering food security by enhancing the resilience of agriculture SMEs, adding that integrating insurance into agric finance channels facilitates farmers’ access to the necessary financing needed to expand their production and enabling banks to manage the inherent risks in agricultural lending.

Aliyu explained that IFC, through its participation at the workshop, aimed to glean valuable insights to effectively collaborate with stakeholders to ensure the sustainable expansion of the agricultural insurance market in Nigeria.

He recalled that IFC’s Nigeria Inclusive insurance project, launched in May 2022, was a part of IFC’s comprehensive site of solutions designed to support Nigeria’s agricultural sector.

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