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The Place Of The Nigerian Agricultural Insurance Corporation In The Economic Transformation And Development Of Nigeria By Otunba Olajide One of the cardinal programmes of the Obasanjo led administration when it came on board in 1999 was the radical development of agriculture in all its ramifications, not only as a veritable way of bringing about the all-round development of the Nigerian state, but also as propitious channel of systematically diversifying the mono-cultural tendencies of the Nigerian economy. And, one of the institutions through which this can achieved is the Nigerian Agricultural Insurance Scheme (NAIS) which was set-up to enhance and sustain food production in Nigeria. It was discovered that over the years, the concerted efforts to attain the laudable level in food production has been hindered by plethora of factors, especially inclement weather conditions and the effects of natural hazards like floods, drought, pests, diseases, fire e.t.c., to therefore address these problems which as more or less become a recurring decimal, the Nigerian Agricultural Insurance Scheme was put in place to provide protection to farmers from the effects of such natural risks. Hence, the exigent need for a specialized Agricultural company to provide insurance cover to farmers was informed by government’s concern over the vacuum created due to the unwillingness of conventional insurers to accept agricultural risks, which they considered too risky. The implementation of the scheme was thus initially vested in the Nigerian Agricultural Insurance Company limited, which later turned into a corporation in 1993 by enabling decree no. 37 of 1993. The categorical imperatives of the scheme were and are still to provide financial support to farmers, where losses to crops and livestock arise from natural hazards. It is to induce provision of credit by financial institutions, as the insurance cover is an added collateral. Again, it is to promote agricultural production by giving farmers confidence to accept new as well as modern innovations and inputs. It is also to minimize or eliminate the need for government to provide assistance to farmers during agricultural disasters. From the very beginning, the scheme provided cover to only two crop items namely, maize and rice, two livestock items namely cattle and poultry and some commercial businesses like farm building, machinery and equipment. The cover has since been extended to cover more items namely; 21 crop items, nine items of livestock and 12 types of commercial business. And at the present; efforts are being intensified to increase the number of items under cover to include fisheries, perishable vegetables and more horticultural products. It equally designs specific covers to suit peculiar customer needs. For example, it has designed and implemented a special type of cover for agriculture or produce marketing loans as follows. Fire and special perils cover for property used as collateral security for marketing loans. Others are the burglary insurance cover for produce in storage; fire and special perils cover for produce, goods or other materials in storage, warehouses etc. Again, there are goods in transit policy and cash in transit. Also, a special insurance package has been prepared for the beneficiaries of the National Poverty Eradication Programme (NAPEP). Therefore, prospective clients can always approach any NAIC office, for the possibility of arranging special types of covers to meet their needs. NAIC has operational presence in the 36 states of the federation and FCT. There are five zonal offices to supervise these state offices. Plans are in the pipeline to open more field offices in the local government areas and districts. This was established for all categories of farmers. The scheme operates a mandatory cover which applies to the following, one, all agricultural loans from banks taken for all items insurable by NAIC, two, all agricultural and agro-related projects which are assisted, supported or fully funded from public funds, all direct and on-lending loans taken by all tiers of government for disbursement to farmers and agriculture projects for implementation; all forms of loans for agricultural marketing purposes, by all banks and non-bank lending agencies, and all direct on-lending and investment loans disbursed by the Nigerian Agricultural Co-operative and Rural Development Bank (NACRDB). The perils under cover for the crop sub-sector are drought, flood, windstorm, fire, pests and diseases. For livestock, the perils covered are death and injuries due to accident, disease, fire, lightening and other forms of natural disasters. However, it very important to note that, losses caused by negligence or willful damages are not covered. In the case of crops, the duration of cover ranges from germination to physiological maturity. However, tree crops such as cocoa and rubber are covered for one year at a time. Livestock, cattle and small ruminants are covered for one year at a time. In the case of poultry, however, the duration of cover is from one-day old to 52 weeks for layers and breeding birds extendable 72 weeks and from day old to 10 weeks for boilers. The duration of all other cover is one year except where specified. The approved premium rate for the scheme ranges between five per cent and eight per cent of the sum insured for crops and 3.5 per cent to 7.5 per cent for livestock. The applicable rating varies with the agro-ecological zone of the country. The Nigerian Agricultural Insurance Scheme is subsidized to the tune of 50 per cent by the federal and state government in the proportion of 37.5 per cent and 12.5 per cent of the premium payable. This subsidy is applicable only on food crop and livestock items while commercial rates are charge for non-food items. Claim payment is one of the most important functions of any insurance outfit. In NAIC, claims are treated and paid with dispatch. Insured are always encouraged to report claim incidence promptly to enable verification and commencement of processing. The indemnity for crops is based on the approved input costs, less the value of the crops harvested if any. For the livestock indemnity is the value of the animal, at the commencement of the policy, plus the approved inputs costs. NAIC offices nationwide are the main reporting point of claims. The scheme continues to gain acceptance as evidenced by the increasing number of new participating farmers and most of them that suffered losses have been indemnified. The value of risk taken by NAIC since inception as at the end of 2003 was N80 billion, which were adequately covered by local and international Re-insurance treaties. The vast scope of coverage, the huge volume of risk taken up by NAIC and the 50 per cent subsidy given by the Nigerian government makes the Nigerian Agricultural Scheme recognized by many countries and the Food and Agricultural Organization (FAO) of the United Nations as a major contribution towards self-sufficiency in food production and as a scheme to be replaced in other parts of the world. The Nigerian Agricultural Insurance Corporation is different from others and is always there for the farmer, NAIC, unlike other conventional insurance must within reasonable time pay the appropriate compensation sufficient to keep the farmer in business after suffering a loss. Any delay could force the farmer out of business in no time. According to the Managing Director, Mr. Kwatri Yusuf, NAIC is living up to its responsibilities, he always emphasizes that the prompt payment of claims is always the cardinal philosophy of the corporation.
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