Climate change and variability remain one of the main drivers of low agricultural productivity globally. Yet, only a paltry percentage of smallholder farmers in Nigeria have access to inclusive, transparent, and affordable agricultural insurance policies.
In recognition of these problems, Izanu Africa said it is solving the problem of the lack of inclusion of smallholder farmers in the design and distribution of agricultural insurance policies, as well as the lack of transparency, and delayed payout of claims to farmers.
In this interview, Comfort Onyaga, the founder and CEO of Izanu Africa explains how the platform is helping to change the narrative in agri-insurtech in Nigeria… Excerpts
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What is Izanu Africa and what problem does it look to solve in Africa?
Izanu Africa is an Agri-insurtech company that provides a warranty (and protection policies) to farmers in emerging and frontier markets. We do this by leveraging simple technology to distribute, customize and process claims for farmers. Izanu Africa distributes inclusive and climate-resilient agricultural risk mitigation and risk management plan that enables farmers to receive financial compensation or inputs in case of contingencies, and these insurance products cover crops, livestock, goods-in-transit, and machinery policies.
We customize fit-for-purpose warranty policies for farmers especially those at the bottom of the pyramid to increase their resilience to anthropogenic, naturally occurring incidents and increase the livelihood of smallholders.
What are the basic factors causing climate change and how best can the impact best be mitigated?
Climate change is caused by both human and non-human activities. Deforestation, the main cause of climate change is burning fossil fuels such as oil, gas, and coal. These fossil fuels cause the planet to heat up when burnt and release carbon dioxide into the air.
Climate risk can be mitigated through agricultural insurance, deliberate act of planting trees, and waste management.
What are the benefits of insuring farmlands and farm produce and why should farmers pay extra costs to have their farms insured?
Access to inclusive and climate-resilient agricultural insurance policies for farmlands and farm produce in Africa, especially Nigeria, will reduce the impact of climate change on farmers’ productivity, strengthen our food security and the livelihoods of farmers, and bolster relationships with input dealers and producers. It will also reduce the risk of giving loans to farmers by either Micro-Financial Institutions (MFIs) or commercial banks.
It has never been on record that farmers used the best seedlings and crop protection inputs without suffering losses from floods, natural disasters, pests, and disease outbreaks. Insurance is top on the list of crop protection inputs and farmers should gladly pay for it because when they suffer losses, they get so much value for their investment. It becomes as tangible as the other crop protection inputs such as herbicides, pesticides, and other agrochemicals they pay for during the production cycle.
Farmers’ perception of insurance should change and I hope with our value propositions, they see it as building a fence around their farmland against animal encroachment, and other naturally occurring perils on their investment. The amount paid on Premium should never be considered ‘extra’ because it is a guaranteed protection plan that gives farmers value for investment for livestock and crop producers, farm equipment owners as well as aggregators who offtake farm produce from the farmhouse to the market.
The concept of insurtech and digitization is fast gaining traction, how feasible is the use of USSD code to file for claims in Nigeria?
The traction is a result of the accessibility, seamlessness, and that’s being brought into the industry. It is gradually becoming out of fashion to give a policyholder 20 pages of a single policy document to read. The world is moving and people are no longer patient to read voluminous documents which is the origin of the lack of transparency.
USSD code promotes financial and digital inclusion. It is very feasible for agricultural insurance because the sector largely houses most farmers – smallholder farmers, who contribute to 80% of the food we consume globally. Given their context and level of digital literacy, it is easier for these farmers to file for claims using their mobile devices (feature phones) than to walk into a brick-and-mortar company where they have to bear the additional cost of transportation amidst their losses to file for claims.
To what extent can organisation cover farmers and does the cover also include cases such as floods and other disasters?
We distribute index and indemnity-based policies for crops and animals; implying that the policies cover climate risks such as flood, drought, windstorm, hailstorms, animal encroachment, goods-in-transit, and farm machinery. While we are not underwriters, we are an insuretech, structuring and distributing fit-for-purpose insurance policies to the right farmers, at the right time. With our underwriters, we analyse the pain points of farmers and come up with appealing and innovative products at prices that are incredibly affordable to even the smallest farmers.
What is Izanu Africa bringing on differently?
Personally, I would say value for investment. Having worked with farmers especially the smallholder for years, we understand their pain points and the variability of the different agricultural value chains, therefore we bring a unique value of product customization for underwriters and farmers. This is why we pride ourselves as the first Nigerian Agric-Insurtech co-creating inclusive and climate-resilient warranties, co-created with farmers, for farmers.
Izanu Africa is also reducing the claims processing turnaround period by at least 75%, with the overall goal of increasing the adoption of agricultural insurance as a climate risk mitigation and crop protection input.
We want to ensure there is transparency and product simplification by ensuring farmers understand the A-Z of the insurance policy they are paying for regardless of their level of digital literacy. We simplify the policies to ensure the details in the fine prints are understood from the point of purchase and a lot more which is more experiential for the farmers.
A lot of people say lack of awareness is the reason for the low insurance penetration amongst farmers. Do you agree with this perception?
No, because when you interact with people, you will find out people are aware of insurance. It is not new to them, but the lack of transparency and delayed payout experienced directly or indirectly by farmers and non-agricultural insurance users account for why there is a negative perception and a correspondingly low level of penetration amongst farmers.
NAICOM recently revoked the licenses of some insurance companies. What do you have to say about this?
It is a step in the right direction and we hope others will learn from this. The truth is that a lot of insurance companies make it difficult for farmers and customers generally to file and receive claims in event that they suffer genuine losses and they are the reason for the low level of insurance penetration, adoption, and negative perception by farmers.
What is the future of insurance in Nigeria?
With the National Insurance Commission (NAICOM) embracing innovation, emerging insurtech launching disruptive solutions and winning the trust of the masses by democratizing access to insurance and making the filing of claims seamless, it is easy to predict the future of insurance. Like the financial sector, the insurance industry is growing rapidly in the next two to three years I believe it will catch up with its sister sector.
Finally, a company is interested in helping farmers managed their business risks. I’m glad about this update.