by - Obinna Chima
The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, has
reiterated his concern over the country’s position as a net importer of
agricultural produce with import above N630 billion.
The country imports food products such as wheat, rice, flour, fish,
tomato paste, textile and sugar in large quantities annually.
Emefiele, stated this in a keynote address presented at a training
workshop on innovative agricultural insurance products held in Lagos
Thursday. The forum was to activate the insurance pillar of the Nigeria
Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL).
He pointed out that Nigeria is currently confronted with a wide range
of development challenges, especially with the dwindling global crude
oil prices and the nation’s dependence on it as its major source of
revenue. To this end, he stressed the need to diversify the
mono-cultural tendencies of the Nigerian economy by developing other
sectors of the economy especially agriculture.
He recalled that before the oil boom, the Nigerian economy was mainly
sustained by agriculture. In the 1960s the agricultural sector
contributed up to 60 per cent of the total Gross Domestic Product (GDP)
and was the most important in terms of contribution to domestic
production, employment and foreign exchange earnings.
The country was then known to be exporters of cocoa beans, gum Arabic,
groundnuts, cotton, palm oil and many other agricultural commodities.
“But now, we import most of the agricultural commodities that we can
produce because of the neglect of the sector in addition to rural
migration to cities in search of white collar jobs. The agricultural
sector provides up to 70 per cent of employment in Nigeria and accounts
for about 42 per cent of the country’s GDP.
“In Nigeria today, rural farmers contribute to about 70 per cent of the
food produced which they do mainly by subsistence farming. These
farmers with their small land holdings of 1 to 3 hectares are producing
sub-optimally due to lack of adequate inputs, insufficient exposure to
good agronomic practices and limited access to finance and credit.
“It is due to this subsistent level of farming that farmers do not see
the importance of insuring their farming activities. Currently,
Nigeria’s formal financial system is lending about four per cent of all
formal credit to the agricultural sector compared to three years ago
when only about one per cent of all credit went to agriculture. Lending
is still low because of the lingering perception by banks that
agriculture is highly risky,” the governor who was represented at the
workshop by the acting Managing Director, NIRSAL, Mr. Edwin Nzelu, said.
According to him, the development and expansion of the agricultural
insurance sub-sector would go a long way in mitigating against natural
disasters and eventually encouraging banks to lend to agriculture.
He added that agricultural insurance had been proven to be instrumental
in transferring risks and stabilising farmers' income, noting that in
Nigeria, it remains one of the less developed line of business.
“Therefore, there is need for insurance companies in collaboration with
relevant stakeholders to develop innovative products that will carter
for the needs of farmers in their provision of agricultural insurance.
“Over the years, only the Nigeria Agricultural Insurance Corporation
(NAIC) was licensed to underwrite Agriculture insurance in the country,
until two years ago when NAICOM liberalised the insurance subsector for
conventional insurers to underwrite.
“I urge Private insurance companies to take advantage of this
opportunity and consider extending insurance cover to the agricultural
sector to create a competitive market which will eventually increase
insurance penetration to rural areas,” he said.
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