Insurance is an important part of life and business. The impact of the EndSARS protests in October 2020, uncertainty in some parts of the country where farmers are no longer allowed to harvest, and the impact of climate change on business, especially micro, small and medium enterprises (SMEs), revived the importance of insurance as an option to protect the sector.
Experts say the need for insurance protection is very important given the role of MSMEs as key players in the economic development of any country, especially job creation.
According to the 2017 National Survey of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), there are about 41.5 million SMEs in Nigeria, and they represent companies with less than 100 million annual sales and less than 300 employees.
According to experts, it is detrimental to the general well-being of businesses not to recognize this important sector of the economy by exposing them to the different types of avoidable risks they face on a daily basis.
At a stakeholder seminar organized by the National Insurance Commission (NAICOM) on information on SME insurance in Lagos, Lagos Governor Babajide Sanwo-Olu said that MSMEs account for nearly 50 percent of nation’s GDP and contributes 80 percent of national employment.
Sanwo-Olu, represented by Lagos Finance Commissioner Rabiu Olowo, stated that the state government cannot ignore the challenges that MSMEs face and threaten their survival.
“That’s why we describe our MSMEs as very resilient. If you can do business in Nigeria and thrive, there’s nowhere you cannot survive,” he said.
“We have launched so many initiatives and strategies and are still working to create a conducive environment for MSMEs to not only thrive but succeed.”
As a guaranteed approach to protecting small businesses from unforeseen losses and circumstances that could jeopardize their activities, he believes that the provision of insurance should be encouraged.
Therefore, Sanwo-Olu assigned insurance companies to develop special products for MSMEs that are affordable and do not have technical features to ensure easy absorption while guaranteeing claim settlement.
However, he advises insurance companies to ensure that insurance policies for MSMEs must suit their needs as well as MSMEs specifics.
“There must be a specially designed product that fits the category, revenue, operation and process, and must be accessible and without technical features so that it can be understood safely and easily to resolve claims,” he said.
“I advise all MSMEs in Lagos to take insurance as a safety net against losses that may arise due to unforeseen circumstances,” he said.
Insurance Commissioner Thomas Sunday assured at the event that the commission is committed to its mandate to carefully monitor the insurance sector to ensure that real claims are handled quickly in the occurrence of an insured event.
“I dare say that the MSME sector is too important to ignore because it is very important for the country’s economic development and therefore needs to be managed and protected from failure.
“Encouraging responses confirm that the product meets a critical need and there is a great desire for continued success among participants in the MSME sector,” he said.
Muftau Oyegunle, President of the Chattered Insurance Institute of Nigeria, said MSMEs play a key role in the core areas of their operations that need to be expanded.
Yetunde Ilori, director general of the Insurance Association of Nigeria, urged MSMEs to link their businesses with insurance coverage. “Anything you can’t afford to lose should be insured.”
Regarding the benefits of insurance for MSMEs, Abdulrashid Babalola informed the audience that insurance coverage provides financial protection that stimulates production and facilitates access to finance.