Financial institution NIRSAL Plc has announced a shift towards yield-based insurance in the agricultural sector to drive economic growth.
This was revealed by the Principal Manager of Agribusiness Finance and Investment at NIRSAL Plc, Akinola Baiyewu, during the 2025 Annual Outlook Conference organized by Meristem in Lagos.
The National Bureau of Statistics’ third-quarter 2024 GDP report showed that the agriculture sector grew by 1.14% in real terms, slightly below the 1.30% growth recorded in Q3 2023.
Crop production remained the leading contributor, highlighting its essential role in food security and rural employment.
Speaking on the role of insurance in the sector, Baiyewu said, “There has been a lot of capacity development around that space in recent times to be able to find the right type of insurance for agriculture. The kind of insurance that we have now is just indemnity-based insurance, which is just the cost of input. At the end of the day, when you have to pay back a loan, it does not quite cut it. The kind of insurance that we are now looking at is yield-based insurance. It looks at your expected yields and insures for it. NIRSAL has worked on that with Polar Consulting, and we have been able to roll it out in five insurance companies. In that space as well, we are going to be looking at microinsurance to deal with the lower segment of the market.
“We are going to see more products in the insurance space to address specific issues and to redesign the way insurance is paid.
“If they can pay in bits and pieces and other innovative ways, build some credit around how their insurance is paid. So, product design is going to change. One of the major things that we are going to work on in the insurance space is trust; building trust. Self-regulation has to be ramped up, particularly private sector-driven self-regulation.”
In the panel discussion, Baiyewu emphasized the need to support larger farmers in Nigeria to enhance food production and expand exports.
“So, with the new land that will probably be opened up, and that will require significant private investments, there would be a plan for bigger farms. I don’t know many developed countries where it is smallholder farmers who are driving things. I don’t know many. So, if you look at the farms in Europe, you look at the farms in America; they are really large farms. So, it is time for us.
“Yes, we want to support these smallholder farmers. We want to help them, but it is time for us to look at larger farms that are able to scale, get quality inputs, negotiate, bring down prices, meet quality, improve yields, and all of that. So those are some of the ways I think we can deal with it,” he said.
Speaking on the role of brokers in strengthening insurance within the agriculture sector, Bàbàtunde Oguntade, President and Chairman of the Governing Board of the Nigerian Council of Registered Insurance Brokers, stated that ”
Brokers play in every sector of the economy, but you know agricultural insurance is not something that is very common. It is kind of specialised, but we have been involved severally. Some of us worked with the government on the Anchor Borrowers Scheme, on NIRSAL, among others.”
However, he revealed that many brokers are reluctant to engage with the Nigerian Agricultural Insurance Corporation due to the subsidized premium and reduced commission rates.
“But a lot of us still patronise underwriters who do that. As you know, what you have right now is subsistence farming; you don’t have commercial agriculture in the real sense. It is only in the north that you have that kind of high volume of farming, and it is mostly in the areas of livestock,” he said.
