Insurance is a critical component of living and doing business. The aftermath of the EndSARS protest in October 2020, insecurity in parts of the country that no longer allow farmers to go for harvest, and impacts of climate change on businesses, particularly Micro, Small & Medium Scale Enterprises (MSMEs) have reignited the importance of insurance as protection option for the sector.
The need for insurance protection experts say has become very critical given the role of MSMEs as major actors in the economic development of any nation particularly job creation.
According to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) National Survey of 2017, there are around 41.5 million SMEs in Nigeria, and they represent businesses with less than N100 million in annual turnovers and have less than 300 employees.
According to experts, not recognizing this important sector of the economy by allowing them exposed to various kinds of avoidable risks that confront them on day to day basis is a disservice to the general well being of the economy.
At a stakeholders workshop organized by the National Insurance Commission (NAICOM) for sensitization on insurance for MSMES held in Lagos, the Governor of Lagos state, Babajide Sanwo-Olu said MSMEs account for nearly 50percent of the nation’s GDP and contributes 80 percent of the nation’s employment.
Sanwo-Olu who was represented by the commissioner for Finance, Lagos state, Rabiu Olowo noted that the state government cannot afford to ignore the challenges confronting MSMEs and threatening their survival.
“That is why we describe our MSMEs as very resilient, if you can do business in Nigeria and thrive, there is nowhere you cannot thrive,” he said.
“We have launched so many initiatives and strategies and are still being implemented towards providing an enabling environment for MSMEs to not only thrive but to succeed.”
According to him, as a guaranteed approach to protecting small businesses against unforeseen losses and circumstances that may threaten their operations securing insurance cover must be encouraged.
Sanwo-Olu, therefore, tasked insurers to create special products for MSMEs, that is affordable and free from technicalities for easy assimilation with the assurance of settlement of claims.
However, he advised insurance companies to ensure that insurance policies designed for MSMEs must meet their needs and also address the peculiarities of MSMEs.
“There should be specially designed products that will meet their category, income, operations and processes such must be affordable and free of technicalities so that it can be easily understood with assurance of settlement of claims,” he said.
“I enjoin all MSMEs in Lagos State to embrace insurance as a safety net against losses that might be suffered as a result of unforeseen circumstances,” he urged.
Sunday Thomas, commissioner for Insurance speaking at the event assured that the commission is committed to its mandate of providing diligent oversight to the insurance sector towards ensuring prompt settlement of genuine claims when an insured event occurs.
“I dare say that the MSMEs sector is too important to be neglected as it is key to the economic development of the nation and thus, must be guided and protected against failure.
“The encouraging responses validate that the products meet a critical need also that the appetite for players in the MSMEs sector to succeed sustainably is high,” he said.
Muftau Oyegunle, president of, Chartered Insurance Institute of Nigeria said that the MSMEs are fundamental at core areas of its operation that it needs to expand.
Yetunde Ilori, director-general of the Nigerian Insurance Association urged the MSMEs to link their businesses with insurance protection. “Whatever you cannot afford to lose should be insured.”
Abdulrasheed Babalola speaking on the benefits of Insurance to MSMEs informed the attendees that insurance protection offers financial protection, boosting production and facilitating access to finance.