IFC, a member of the World Bank Group, has signed an agreement with Africa Reinsurance Corporation, Africa Re, to help thousands of small holder Nigerian farmers to access insurance more easily to protect their crops and livelihoods.
Under the agreement, Africa Re, a pan-African reinsurance company headquartered in Nigeria, and IFC’s Global Index Insurance Facility will help Nigerian insurance companies 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.
The Index-based agricultural insurance pays out claims based on transparent parameters like rainfall and does not require costly field visits to verify losses, which is an innovative and efficient way for farmers to protect themselves against losses.
Speaking at the signing ceremony in Lagos on Tuesday, Deputy Managing Director/Chief Operating Officer of Africa Re, Mr. 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 the National Insurance Commission, NAICOM, who 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.
“IFC’s and Africa Re’s specific support to insurance companies will include helping them design specialized insurance products and develop digital platforms so farmers can easily view and compare index insurance offerings from various providers. IFC and Africa Re aim to provide thousands of farmers with access to insurance by the end of 2020,” Essien said.