Nigeria’s farmers gamble with climate chaos as agric insurance falls short
Joy Agwunobi
As Nigeria enters another rainy season, the nation’s smallholder farmers are once again left vulnerable to the environmental shocks that accompany it, including floods, droughts, pest outbreaks, and fires. These risks, heightened by the accelerating impacts of climate change, threaten not just their crops and livestock, but the very foundation of rural livelihoods across the country. Yet, as millions brace for the worst, insurance protection remains virtually nonexistent for the majority of those who feed the nation.
Climate-induced disasters are no longer anomalies but annual realities for Nigeria’s agricultural sector. The unpredictability and growing intensity of rainfall patterns have shifted the focus for farmers and stakeholders alike. It is no longer a question of “if” damage will occur, but “how much” more loss Nigeria’s agricultural economy will suffer.
Despite the central role agriculture plays in feeding the nation and sustaining rural economies, Nigeria’s insurance industry remains largely unresponsive to the growing climate risks that threaten food production. The industry’s response to these threats has been tepid at best, with agricultural insurance remaining largely sidelined in both public policy and private sector agendas.
At the time of filing this report, a visit to the Nigerian Agricultural Insurance Corporation (NAIC) website revealed limited availability of updated data, reports, or detailed resources on coverage levels, claims paid, or recent innovations in agricultural risk protection.
While this may not fully reflect the scope of NAIC’s internal efforts, the absence of publicly accessible and current information underscores the need for greater visibility, transparency, and proactive engagement—especially as climate risks continue to mount. Strengthening communication and demonstrating active responsiveness could go a long way in reassuring stakeholders and supporting the resilience of Nigeria’s agricultural sector.
Agriculture’s contribution to Nigeria’s economy is substantial. According to the National Bureau of Statistics (NBS) Q3 2024 Gross Domestic Product (GDP) report, the sector accounted for 28.65 per cent of national GDP, with crop production alone contributing 26.51 per cent . Beyond its economic value, agriculture supports over 70 per cent of Nigeria’s rural population. Yet, insurance penetration within the sector remains dismal. Current industry estimates suggest that less than 1 per cent of Nigerians hold any form of insurance, a figure that reflects the near-total exclusion of farmers from risk protection mechanisms.
This lack of coverage leaves millions of rural producers at the mercy of nature, facing yearly cycles of devastation. From pest infestations to flash floods and droughts, the financial impact on farming communities is often crippling—forcing families to rebuild from scratch without any safety nets.
The stakes are becoming even higher. Farming in Nigeria is more than a profession—it is a lifeline for entire communities. But the dual pressures of climate volatility and economic instability are placing unprecedented burdens on smallholder farmers, threatening not only food production but the survival of rural economies.
The urgency of the situation is further illustrated by Nigeria’s climate resilience profile. According to the 2022 Notre Dame Global Adaptation Index (ND-GAIN), Nigeria ranked 64th in vulnerability and 180th in readiness—an indication that the country faces considerable challenges in adapting to climate-induced disruptions. While these figures may not capture ongoing government and sectoral efforts, they highlight the pressing need for more strategic investments and policy interventions aimed at enhancing agricultural resilience—particularly through improved insurance coverage.
Flooding in Nigeria is no longer a once-in-a-decade phenomenon. According to reports, Since 2022, the country has witnessed record-breaking floods that have affected millions and destroyed agricultural assets on a massive scale. Over 1.3 million hectares of farmland have been submerged, translating into billions of naira in damages—largely uninsured.
One of the most destructive recent events was the 2024 collapse of the Alau Dam in Borno State, which displaced more than 419,000 people and obliterated significant portions of arable land. In early 2025, Kwara State reported the loss of approximately 5,000 hectares of rice farms, valued at ₦11.5 billion, to severe flooding. Projections from the Nigerian Meteorological Agency (NiMet) suggest that this year could bring even more widespread flash floods across key agricultural regions—an ominous warning for farmers still reeling from previous disasters.
Despite these looming threats, the role of the insurance industry becomes increasingly critical. While NAIC, under the Federal Ministry of Agriculture, continues to play a central role in agricultural insurance.Alongside NAIC, the National Insurance Commission (NAICOM), the industry regulator, has reportedly made attempts to stimulate interest in agricultural insurance. However, despite these initiatives, the level of engagement across the broader insurance sector remains low.
Although a few private insurers like AIICO Insurance Plc, Anchor Insurance Limited, Leadway Assurance, Linkage Assurance, among others have begun exploring the space, participation and innovation have been relatively limited.
The industry’s predominant focus still leans toward conventional sectors such as motor, health, education, and life insurance. Expanding attention to agriculture especially through tailored solutions for smallholder farmers—could significantly bolster the country’s ability to absorb and recover from climate shocks.
This continued inertia is unfolding against a backdrop of growing concern from international bodies. The United Nations, in a recent projection, warned that more than 82 million Nigerians—around 64 per cent of the population—could face food insecurity by 2030. The report cited climate change, pest infestations, poor investment in agricultural resilience, and fragmented market systems as key drivers of this looming crisis.
Experts are also not blind to these challenges. At a 2024 forum themed “Revisiting Agriculture Insurance in Solving Nigeria’s Current Food Crisis,” Abdulazeez Ajibola, head of Agribusiness at Royal Exchange General Insurance Company, acknowledged that Nigeria’s agricultural insurance landscape holds tremendous untapped potential.
He noted that, with the right reforms and strategic market expansion, the sector could generate over $600 million in annual premiums—unlocking financial protection for millions of rural households.
However, Ajibola also identified a host of structural and operational barriers that must be addressed to realise this potential. These include limited public awareness and trust in insurance products, inadequate data infrastructure, high administrative costs, low technical capacity, and regulatory challenges. Systemic issues such as moral hazard, basis risk, and adverse selection further complicate the business case for insurers, deterring investment and slowing the development of scalable solutions.
“The agricultural insurance market in Nigeria is still at an early stage,” he stated. “But it can become a vital tool for improving food security, encouraging agricultural finance, and enabling resilience against climate shocks.”
Ajibola further explained that agricultural insurance, as a risk-transfer mechanism, not only protects farmers from climate, pest, and disease-related losses, but also boosts their access to credit.
According to him,by de-risking agricultural lending, insurance allows financial institutions to provide funding more confidently. This ripple effect can accelerate the adoption of modern farming techniques, improve yields, stabilise food prices, and enhance the efficiency of Nigeria’s agricultural value chain.
He stressed the importance of multisector collaboration—among insurers, government agencies, research institutions, and farmers’ associations—to develop and deploy inclusive insurance products. “It is only through joint efforts that we can expand access to insurance and promote sustainable agriculture in Nigeria,” he added.