Joseph Inokotong, Abuja
International Finance Corporation (IFC), a member of the World Bank Group, has signed an agreement with Africa RE, a pan-African reinsurance company, to help small holder Nigerian farmers have easy access to insurance to protect their crops and livelihoods.
Under the agreement, Africa RE and IFC’s Global Index Insurance Facility will help Nigerian insurance companies licensed by Nigeria’s insurance regulator, National Insurance Commission (NAICOM) to develop agricultural insurance products, and deepen their index insurance business lines. These index insurance products will help protect farmers against environmental risks such as drought, floods, erratic rainfall, and other natural hazards.
In a statement, the IFC said 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.
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.”
IFC Country Manager for Nigeria, Eme Essien said, “IFC’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, that embrace innovation to help farmers manage their risks.”
Farmers with crop insurance are also more likely to access other financial products, including credit, and to invest in higher quality production inputs.
However, the traditional insurance market has largely failed to meet smallholder Nigerian farmers’ demand for affordable insurance with its high premiums and transaction costs.
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