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BY COBHAM NSA, ABUJA – The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) says its newly packaged insurance product will better safeguard farmers against risks along the agricultural value chain in the country.
Meant to enhance NIRSAL’s pioneering Area Yield Index Insurance (AYII) mechanism introduced last year, the new product, NIRSAL Comprehensive Index Insurance (NCII), specially targets small-holder farmers that constitute the most vulnerable segment in the agricultural sector and Nigerian population.
This is just as the Agency disclosed that leveraging on its $30m insurance facility, the target is to expand insurance products and coverage on for agricultural lending across the entire value chain by growing coverage from about 0.5 million to 3.8 million primary producers.
Managing Director of NIRSAL, Mr Aliyu Abdulhameed, who gave an insight on the development, described it as a proof of the Agency’s resolve and commitment to expand the frontiers of innovation in Nigerian agriculture towards practical and effective benefits for all stakeholders.
He said the NCIL seeks to moderate the impact and losses of both yield risk and market price risk, in relations to fundamental risks associated with possible production deficits and the uncertainties of the marketplace.
According to Mr Abdulhameed; “At NIRSAL, our focus is on making positive impact at key points of the agricultural value chain that can translate to significantly higher and sustained productivity and food security for the country. In line with our mandate to de-risk Nigerian agriculture, this innovative insurance product will help to secure farmers against key risks in order to make agriculture more attractive and more profitable.”
He explained that while the cover provided by the earlier product was limited to yield insurance, the new insurance product, NCII, is a combination of Yield Index, Price Index and Life Insurance.
Abdulhameed said as an innovative form of revenue insurance, the new product is unique in Africa, adding that it is also the first such product to be achieved without government subsidies on the premium.
He further stated that the product’s deployment begins immediately with a pilot phase as part of NIRSAL’s operations in the CBN’s Anchor Borrowers Programme (ABP).
The NIRSAL boss said outside its obvious benefits to Nigerian farmers, NCII’s comprehensive cover will also encourage financial institutions to lend more to primary production and ensure reduced premiums in comparison with the earlier version.
Mr Abdulhameed stated that the development is added value in eradicating premium subsidy to free up government funds for intervention in other areas, adding that NCII was developed in conjunction with key partners, including NAICOM (Regulator of the insurance industry), NAIC (lead of the consortium of insurance on NIRSAL Anchor Borrowers Program) and members of the consortium (Axa Mansard, IGI, Leadway, Royal Exchange) and Pula Advisors (Consultant to NIRSAL on Agricultural Insurance).
Meanwhile, a statement by Anne Ihugba, Head, Corporate Communications of NIRSAL said the Managing Director fully appreciates NAICOM, NAIC and all the insurance firms that collaborated with NIRSAL on fine-tuning the project.
The statement lauded NAICOM for supporting the licencing of key insurers to provide agricultural insurance services that would not only protect the farmers but also deepen the financial inclusion agenda of President Muhammadu Buhari-led administration.
It noted that NAICOM recently licenced Royal Exchange Assurance PLC, AIICO and other insurance firms to offer innovative index insurance products in Nigeria.