Maximising CBN-NIRSAL’s, NAIC’s agric insurance schemes

• NAIC offers 50% subsidy on food crop insurance premiums
• NIRSAL guarantees up to 75% of CBN-facilitated loans

Farmers in Nigeria have been urged to take advantage of insurance guarantee and subsidy regimes in agro-industrial value chains emplaced by the Central Bank of Nigeria (CBN), its offshoot, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), and the Nigerian Agricultural Insurance Corporation (NAIC).

NIRSAL guarantees loans facilitated by the CBN through commercial banks for agro-industrial businesses, especially in the Anchor Borrowers’ Programme.

NAIC also offers a 50-per cent subsidy on food crops but the subsidy does not apply to cash crops such as cashew, cocoa, and palm oil insurance.

According to the Managing Director of NAIC, Mrs Folashade Joseph, NAIC runs a subsidy regime on insured crops such as “rice, maize, yam, cassava, sorghum, guinea corn, beans, soya beans and indeed, all food crops. 

“Subsidised livestock include poultry, cattle, goats and sheep, rabbits and fishery, among others. Dogs, camels, donkeys, and horses are on a commercial basis,” she said.

Also, Managing Director/CEO, NIRSAL Plc, Abdulhameed Aliyu, disclosed recently to The Guardian that the agency’s guarantee cover on bank loans ranges from 30 to 75 per cent.

This implies that after all due diligence, if an agricultural loan becomes bad, NIRSAL will refund the facilities up to the tune of 75 per cent, assuring commercial and micro-finance banks participating in the agricultural loan schemes of the Federal Government through the CBN.

AlIyu added that over the years, the risk management institution had facilitated the flow of more than N150 billion into agriculture from multiple sources.

“At least, N124 billion of that sum came from commercial banks who leveraged NIRSAL’s Credit Risk Guarantee (CRG) facility in addition to investing in de-risked, structured, and well-monitored projects to make high investment returns.

“While NIRSAL Plc relies on the high level of control afforded it by its innovative value chain solutions as a safeguard for its risk exposure, the banks rely on same, in addition to the CRG facility for the safety of their financial investments,” he had said in a statement.

He added: “We are happy to yet again demonstrate our willingness and capability to support agro-allied companies across the country to grow their businesses, engage smallholder farmers, and earn foreign exchange for the Nigerian economy.”

To minimize the apathy of farmers over agricultural insurance and boost credit facilities for food production and agro-industrial development, several efforts have been made to deepen participation.

Credit facilities and insurance coverage are Siamese twins often demanded together, but most Nigerian farmers have reservations over insurance and explore alternatives to insurance.

An insurance expert, Olajide Aladesanmi, said such alternatives include cooperative thrifts, government intervention after disasters and others.

Also, without financial resources, farm operations are limited to subsistence farm, which breeds poverty among farmers and cyclic food shortage in the country. Fixing the lack of enthusiasm for insurance among farmers as one of the major obstacles to agricultural credit facilities was the aim of the Central Bank of Nigeria (CBN) when it established NIRSAL Plc.

Hence, specialists have said encouraging farmers and agro-investors to embrace insurance through NIRSAL and NAIC windows of guarantee and subsidy on premiums payables respectively is desirable.

An agricultural insurance specialist with Leadway Assurance, Mr Ayo Fatona, said a 50-per cent subsidy is not only encouraging but also attractive, and large-scale crop farmers should take advantage of the scheme.

The CBN-NIRSAL guarantee of agricultural loans, he added, is one of the best incentives to deepen insurance in agriculture and ensure food security as the population increases rapidly and economic downturn escalates.

Guaranteeing a credit facility to the tune of 75 per cent, he explained, would go in assuring lenders and the safety and recovery of financial facilities in cases of business failure, bad debt, and the eventual inability of borrowers to repay loans.

NAIC said it had paid out about N2.0 billion in about the last five years as compensation to various categories of insured farmers across the country.

This, the NAIC boss added, was in line with the corporation’s policy of “prompt settlement of claims within a maximum of 14 days to pay genuine claims if complete documents are made available to NAIC by farmers or their agents.”

President of the All Farmers’ Association of Nigeria (AFAN), Ibrahim Kabir, said there were many challenges confronting small-scale farmers, including security, poor and inadequate inputs as well as lack of financial resources. These challenges, he said, becloud them from making the right decisions, including insurance coverage.

He urged members to embrace agricultural insurance to protect their meagre resources in case of insurable disasters.

Despite the available windows, most farmers suffered devastations from floods, drought, and pest infestation in the last few years, as climate change heightened the risk exposure of Nigerian farmers.

Hence, farmers’ associations, the government at all levels, and non-governmental organisations have also been called upon to mobilise farmers to see insurance coverage as a necessary part of their businesses to ensure stability and sustainable food production.