Agriculture in Nigeria: diversify growth for resilience

Nigeria has made large strides to wean its economy from oil. But real growth in employment depends on agriculture, according to our latest fact sheet Agro insurance hotspot: Nigeria.

Nigeria's oil industry is the backbone of the economy. It generates 90% of all export income and finances 70 % of the state budget. Still, fluctuating oil prices have it made clear that relying on this natural resource alone makes the country vulnerable to external shocks.

The country has recognized this. Through economic diversification measures only 15% of the GDP now depends on oil, while manufacturing and services make up over half. The agriculture sector, which constitutes 30% of the GDP is the country's major employer, according to our new fact sheet, Agro insurance hotspot: Nigeria.

Farming: underfunded but huge growth potential

Developing Nigeria's agriculture sector will help balance the economy and make it more resilient, and there's great potential. As Agro insurance hotspot: Nigeria shows, 40 % of the land is arable though a large part is not utilized.  So instead of feeding itself, Nigeria imports food from abroad for USD 2.3 billion per year.

To develop the potential, investments are needed. Currently Nigeria invests only 2% of its budget to support farming. In the rest of Sub-Saharan Africa, it's on average 6% and the African Union recommends 10%.  

Money alone isn't enough

More funding is necessary but it can't turn the sector around on its own: technical know-how for farming, machinery, seeds, fertilizers, distribution - and credit - are also needed. This is where insurance comes into play.

Banks hesitate lending to farmers if income is not assured. But the harvests which generate farmers' income are under threat. Nigeria has been hit 42 times by natural catastrophes in the last 33 years. Drought has had the most impact but floods also swept away harvests 35 times in the country.

Here insurance can help: it keeps farmers in business if disaster strikes. Products are available for all types of farming from small holder to commercial as our study "Sub-Saharan Africa – breadbasket for a growing population" shows. Having insurance in place gives banks the peace of mind to finance the investments necessary to grow crops in Africa.

Scaling up what has successfully been done

"The insurance products we have serve already many farmers in Africa" says Swiss Re's Lovemore Forichi. "Applying them to Nigeria is possible and bring what's normal in developed countries – to have crop loss insurance in place – to the developing markets in Africa" he continued. If governments, banks, insurance and farmers work together we can grow farming in Nigeria.

Published 5 June 2015

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Posted by samson nwankwo on 13 Jun 2016

the write up on agriculture is not only educative but instructional as agriculture had unfortunately being relegated to the detriment of everyone to the least of our priorities and we all need food to be able to live.i will advise that a full edition of sigma can be devoted to discuss agricultural insurance as it is a new line of business for us now in Nigeria

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