By Abdullahi Lukman
NIRSAL Plc is leading a transformative shift in agricultural insurance by embracing yield-based models to support Nigeria’s farming sector and drive economic growth.
This comes amid modest growth in the sector, which recorded a 1.14 percent increase in GDP for Q3 2024, according to the National Bureau of Statistics.
At the 2025 Annual Outlook Conference held in Lagos, Akinola Baiyewu, Principal Manager of Agribusiness Finance and Investment at NIRSAL, revealed the institution’s move toward yield-based insurance as a solution to long-standing challenges in the agricultural sector.
He pointed out that the current system of indemnity-based insurance—focused on reimbursing the cost of inputs—has proven inadequate in addressing the risks farmers face, particularly in terms of loan repayment and unpredictable yields.
“The type of insurance we have now, indemnity-based insurance, mainly covers the cost of input,” Baiyewu explained.
“However, it doesn’t quite meet the needs when it comes to paying back loans or insuring against the full spectrum of risks,” he went further, adding, ” “The new model we are introducing looks at expected yields and insures for them, providing better coverage for farmers.”
NIRSAL has already rolled out yield-based insurance in collaboration with Polar Consulting, working with five major insurance companies to ensure broader access to this innovative product.
Baiyewu mentioned that the organization is exploring microinsurance options tailored to the lower-income segment of the agricultural market, ensuring that even the smallest players in the sector can access coverage.
“Insurance product design is undergoing significant changes,” Baiyewu continued.
“We are working on designing more flexible payment models, such as pay-as-you-go, which will make it easier for farmers to access and pay for insurance in smaller, more manageable amounts.
We also plan to build credit around how insurance is paid, ensuring that farmers can rely on insurance without the burden of large upfront payments,” he disclosed.
While Baiyewu acknowledged that the uptake of yield-based insurance has been slow, he expressed optimism about the direction the market is moving.
“It’s a positive trend, though progress has been slower than expected; but we are confident that as more products and payment models are developed, we will see a faster uptake,” he added.
However, Baiyewu underscored the need for a shift in the structure of Nigerian farming, advocating for larger farms capable of scaling operations, improving yields, and reducing production costs.
“With the possibility of new lands being opened up, we need significant private investments to develop larger, more efficient farms,” Baiyewu said, adding, “Most developed countries rely on large-scale farms to drive agricultural productivity.”
He expressed the need for Nigerian farmers to adopt similar practices, supporting smallholder farmers but also focusing on larger farms that can meet global standards, produce high-quality inputs, and improve yields.
Baiyewu’s comments align with the broader goal of transforming Nigerian agriculture from subsistence farming to a more commercial, export-oriented industry.
Larger farms, he noted, could help reduce input costs, negotiate better prices, and ultimately improve food security and the nation’s competitiveness in the global agricultural market.
The initiatives outlined by NIRSAL, along with support from the private sector, are expected to help reshape the agricultural sector into a more modern and competitive industry capable of meeting the challenges of both domestic and international markets.
With innovations like yield-based insurance and the development of larger farms, Nigeria has the potential to elevate its agricultural sector and strengthen its position in the global agricultural economy.