The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending has developed a new insurance cover for farmers under the 2018 farming season.
The insurance cover would improve on its pioneering Area Yield Index Insurance mechanism introduced last year.
The product is said to target small-holder farmers who are the most vulnerable segment in the agricultural sector and the Nigerian population as a whole.
The new insurance cover is designed to mitigate the impact and losses of both yield risk and market price risk associated with possible production shortfalls and the uncertainties of the marketplace.
The deployment of the product begins immediately with a pilot phase as part of NIRSAL’s operations in the Central Bank of Nigeria Anchor Borrowers Programme.
A statement on Sunday by NIRSAL said that beyond the benefits to farmers, the comprehensive cover would also encourage financial institutions to lend more to primary production and ensure reduced premiums.
It read in part, “This will also lead to an additional benefit – the eradication of premium subsidy, to free up government funds for intervention in other areas.
“Leveraging its $30m insurance facility, NIRSAL’s 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.”
The statement also quoted the Managing Director of NIRSAL, Mr Aliyu Abdulhameed, to have stated that the new insurance product was 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,” he added.