1mn Nigerian farmers targeted for insurance in Agritask, Royal Exchange partnership
The announcement of a collaboration between Agritask, a leading global developer of agronomic operations platforms, and Royal Exchange, General Insurance company limited, to launch a unique joint initiative digitizing crop and livestock insurance with a social KPI, aims to underwrite 1 million small holder farmers in Nigeria by 2025.
Insurance penetration in Nigeria’s agric sector has been limited over the years, contributing to the perception of high risk associated with it and the resulting investment limitations. According to a press statement, the initiative announced involves a variety of stakeholders in the agricultural sector and beyond, including banks, cooperatives, ag-consultants, input distributors, ag-buyers etc.
The statement emphasised that uninsured smallholder farmers can be severely impacted by variable forces of nature, with little financial means to manage such risks. This protection gap may potentially amplify poverty, hunger, enhance various forms of inequalities within societies and ultimately introduce a burden on the economy and challenge the stability of the country. Sustainable risk mitigation mechanisms and advanced technologies are required to tackle the preceding obstacles.
In a bid to achieve this, both companies say they have “embarked on a project to create a solid foundation for digital crop-insurance framework in Nigeria by utilizing Agritask’s well-structured and accurate data infrastructure facility”. The infrastructure, according to the press statement, is capable of combining diverse sources of data on one platform in an unprecedented resolution, including the mapping of farmers, their field locations, crop types, weather, soil and topography, among others. This foundations allow for accurate risk modeling and the design and pricing of suitable insurance policies.
“Farming in most of the world is comprised of small-scale farmers who face the very same risks and challenges large commercial operations do: Bad weather, low yields, and supply chain challenges,” said Ofir Ardon, Agritask CEO. “However, they do not have the resilience that larger commercial operations have; that’s why there is a huge need for greater risk management abilities in this segment.”.
On his part, Chukwuma Kalu, head of Agribusiness & Business Development, Royal Exchange General Insurance Company Ltd explained that while there are many regional impact projects in Nigeria, most of them struggle to reach hundreds or thousands of farmers, simply because they do not have the technology required to manage and optimize an operation of this scale. Therefore, many times, when the project funding ends, the impact vanishes.
“Working with Agritask, we have a great opportunity to develop a more sustainable model. We believe this kind of sustainability can, and should, become a reality across Africa,” he said, expressing hope that with Agritask’s technology, the playing field can be levelled to deliver operations of same resilience as larger commercial entities.
Importantly, it is also noted that the data infrastructure, once in place, can be utilized by a number of other stakeholders. Building on one database, each stakeholder can have customized tools tailoring to their positioning in the ecosystem. This creates new business opportunities as well as greater empowerment of smallholders, who will benefit from better reach and higher-quality products.