The National Insurance Commission, NAICOM, is the view that the MicroInsurance and Takaful are two critical insurance offerings carefully designed for affordability and inclusiveness to bring Insurance within the reach of one of the nations most valued contributors to the economy like the Micro, Small and Medium Enterprises MSMEs, in Nigeria.
According to the insurance regulator, this will support the sector for speedy recovery when unforeseen situations occur.
Speaking at a sensitization workshop for MSME’s and other stakeholders in Lagos, Commissioner for Insurance and Chief Executive Officer, CEO, of NAICOM, Sunday Thomas, said that NAICOM has undertaken to educate and drive enrollment for these products through this sensitization workshop.
According to Thomas, MSMEs form the superstructure to stimulate mass enterprise growth and serve as a source of livelihood for the base of the pyramid population across all economies be it underdeveloped, emerging or frontier marketers.
In Nigeria, he continued, all development interventions of the current administration have had components focused on enabling these MSMEs sprout and flourish but unfortunately, with little or no insurance content to deal with associated risks and ensure sustainability and guarding them against failure.
Citing data from the National Bureau of Statistics, the Commissioner said, Micro, Small and Medium Enterprises (MSMEs) in Nigeria have contributed about 48 per cent on average to the national Gross Domestic Product (GDP) in the last five years from a total of about 17.4 million enterprises (NBS 2019).
They account for about 50 per cent of industrial jobs and nearly 90 per cent of activities in the manufacturing sector.
“While some challenges still abound from infrastructure to funding, it is encouraging that the Federal Government through its deliberate policy of removing 100million Nigerians from poverty in the next ten years is taking on the challenges to build businesses and leverage them to create prosperity.
In addition to the efforts of the government at all levels, the spirit of entrepreneurship of Nigerians is driving creativity and productivity.” he said.
However, Thomas observed that the concern is that whatever gain or progress made in this sector can be halted abruptly in the face of a natural or man-made disaster which can often prove daunting to surmount without any support. In particular, when MSMEs are affected by any mishap, the disruption produces not only direct business losses, but also indirect losses and economic ripple effects. The range of impact include job losses, debt overhang, and a relapse of households into extreme poverty.
“While the risks that expose MSMEs to this type of vulnerability may not be within the scope of human control, what is within human reach is a deliberate risk management plan through Insurance. It gives you confidence to venture
Insurance is that product you buy when you think you do not need it because it may be too late to buy it when the need for it arises.
Notwithstanding the importance of Insurance to lives and property, adoption and penetration have been low in Nigeria owing largely to a lot of challenges principal of which may be the inadequate product offerings that meet the needs of the consumers including the MSMEs.” he stated.
He noted that the workshop has so far made stops at three cities in Nigeria; Kano, Kaduna and Abuja pulling MSMEs from these cities and their environs adding that all locations, NAICOM received overwhelming responses in terms of attendance, engagement and enrollment.
“The average attendance per location have been over 1000 MSMEs. However, due to the prevailing pandemic and the need to adhere to the protocols, the number allowed in the hall today is restricted to 300 MSMEs.” he added.