The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) says it has created a new insurance product aimed at safeguarding farmers against risks along the agricultural value chain.
A statement issued by the Head of Corporate Communications at NIRSAL, Anne Ihugba, disclosed that the new product, NIRSAL Comprehensive Index Insurance (NCII), is mainly targeted at small-holder farmers who are the most vulnerable segment in the agricultural sector.
It explained that NCII is an improvement on the agency’s pioneering Area Yield Index Insurance (AYII) mechanism introduced last year.
NCII was developed by the corporation in conjunction with key partners including National Insurance Commission (NAICOM), Nigerian Agricultural Insurance Corporation (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).
Ihugba pointed out that while the cover provided by the earlier product was limited to yield insurance, NCII is a combination of Yield Index, Price Index and Life Insurance.
Leveraging on its $30 million insurance facility, NIRSAL says its goal is to expand insurance products and coverage for agricultural lending across the entire value chain by growing coverage from about 0.5 million to 3.8 million primary producers.
NIRSAL noted that the deployment of the new insurance product begins immediately with a pilot phase as part of its operations in the Central Bank of Nigeria (CBN)’s Anchor Borrowers Programme (ABP).
“[The new product is designed to mitigate the impact and losses of both yield risk and market price risk fundamental risks associated with possible production shortfalls and the uncertainties of the marketplace.
“The new insurance product, an innovative form of revenue insurance, is unique in Africa. It is also the first such product to be achieved without government subsidies on the premium,” the statement said.
“Beyond the benefits to 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.
“This will also lead to an additional benefit – the eradication of premium subsidy, to free up government funds for intervention in other areas,” it added.
Managing Director of NIRSAL, Mr Aliyu Abdulhameed, while speaking on the new product, said the new insurance product is a testament to NIRSAL’s focus on expanding the frontiers of innovation in Nigerian agriculture in pursuit of practical and effective benefits.
“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.”
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