• Friday, March 01, 2024
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Africa Re, IFC strengthen Nigeria’s capacity for food security

Africa Re records $806m gross premium in nine-month result

…seeks to reduce $10bn annual food imports

Africa Reinsurance Corporation (Africa Re), a leading reinsurance company in partnership with International Finance Corporation (IFC) is strengthening Nigeria’s capacity to attain food security.

The partnership initiative is the third Africa Re Agriculture Insurance Workshop for Nigeria themed ‘Uniting Industry Leaders for Agricultural Insurance Advancement’

Ken Aghoghovbia, DMD and COO of Africa Re, in his opening remarks, said agriculture in any country is an important pillar in attaining food security.

Aghoghovbia noted that in the second quarter of 2023, agriculture accounted for about 21 percent of the country’s GDP and accounts for over 36 percent of Nigeria’s labour force, with 70 percent of this proportion being smallholder farmers.

Read also: Africa Re gets AM Best financial rating (A)

He explained that despite the level of contribution to Nigeria’s economic growth, the agricultural sector is being “hurt by several shocks such as flooding, desertification of crop and grazing land, conflicts between herdsmen and local farmers, inadequate access to financing, and low use of modern technology.”

Aghoghovbia said these challenges have stifled the sector’s productivity, and created demand-supply gaps in most crops, leading to increased food imports

Siting an International Trade Administration estimate, he said Nigeria relies on about $10 billion of imports to meet its food production shortfalls.

He said agriculture insurance holds great promise in turning around the fortunes of Nigeria’s agricultural sector. He stated that in the last five years, agriculture insurance has received considerable attention from investors who have been attracted by the opportunities that stem from the need to commercialise and modernise food production and the quest of the government to diversify the economy.

Read also: How Africa Re, IFC intervention in agric-insurance is supporting small holder farmers

“With approximately 70 million hectares of agricultural land and diversity of agriculture enterprises, Nigeria’s agriculture insurance market has the potential to generate a premium of over $600 million,” he said.

“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.”

He however blamed the dismal performance on several factors including 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 stakeholders design and develop agriculture insurance products that respond to the needs of farmers and realities of Nigeria’s agriculture landscape.

Aghoghovbia, therefore, emphasised that Africa Re is committed to taking the leadership role in developing agriculture insurance in Nigeria, hence the need to engage valued and likeminded partners including the International Finance Corporation- IFC, various insurance companies, finance institutions, and banks, insurance technology providers, key government agencies, farmer representatives and our esteemed service providers.

Read also: Smallholder farmers see better insurance protection on Africa Re, IFC’s intervention

Speaking also, Mohammed Aliyu, IFC’s country officer for Nigeria said agriculture is becoming increasingly critical to the Nigerian economy, contributing a substantial 20 percent of GDP.

However, Aliyu noted that the challenges of climate change and other associated risks pose a significant threat to Nigeria’s pursuit of self-sufficiency, import substitution, and development of a competitive agricultural sector.

“The central objective of the Nigeria project is to enhance the resilience of at least 300,000 smallholder farmers through expanded access to climate and agricultural-focused inclusive insurance products,” he said.

Read also: Industry excited as Africa Re, IFC agric financing deal drives uptake for insurance

“This endeavour is achieved by providing support to insurers in the development of innovative products and establishing distribution partnerships through IFC’s engagement with Africa Re,” he added.

He noted that the IFC’s Nigeria inclusive insurance project is a significant component of the institution’s Africa inclusive insurance programme launched in 2022.

“This initiative is part of IFC’s comprehensive suite of solutions designed to support Nigeria’s agricultural sector.”