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I'll Deploy ICT to Drive Agric Insurance - NAIC MD

13 July, 2014

Source: Daily Independent


An exclusive interview with the Managing Director of Nigerian Agricultural Insurance Corporation (NAIC), Bode Opadokun, identified challenges confronting the organisation, his new road map, top priorities and plans to turn around the fortunes of the only Federal Government owned agricultural insurance company which had become almost "moribund" prior to his assumption of office. Excerpts.

What were some of the problems you met on assuming office four months ago?

I will not call them problems. I will prefer to call them challenges. The challenges have to do with the level of performance of the organisation, when we look at the opportunities that really exist in the sector that we are practising. Yes, it is an insurance sector. We are established to focus more on agricultural insurance. When you look at our level of penetration, prior to my assumption of office, we are still scratching the ground. That really confirms that a lot of opportunities are still untapped. So what I can say is that we have not done as much as we ought to be doing, as at the time of assuming office. That is a major challenge.

And we are addressing that gradually, one of the ways we have been able to address that is through giving my colleagues a sort of re-orientation, making them to understand the primary objectives of setting up the corporation and to think out of the box. This attitude of 'government thing' should cease from our way of doing things. Even the Steve Oronsanye Report recommended that we should be commercialised, whether we are fully commercialised or not, it is better that we start thinking and working as if we were, so that it will not be a shock to us by the time we are finally told that we have to run this place as a commercial outfit. So we are carrying out re-orientation and a little bit of internal restructuring in terms of putting the right staff on the right job so that we will be able to have better results for ourselves.

There is this report that says that out of 20 million farmers in Nigeria, only about 35 per cent of them have access to agricultural insurance. I don't know whether this figure is correct?

Which report is that, what is the source?

I read it from one of the national dailies. I don't know whether you have the percentage of farmers that have access to agricultural insurance in Nigeria.

Like I said, in terms of level of penetration, it is very low. I think from the World Bank Report published late last year and early part of this year, which took a survey of our activities... If we are going to rely on their report, it said that there is only five per cent level of penetration. That is what has been achieved. When you look at the number of farmers we have registered, we have over 200,000 farmers in Nigeria. We have even exceeded that because when we are counting farmers, we do not have enough statistics to back up some of these things. It is a big challenge. But under the platform of the e-wallet system, they said they have registered 10.5 million farmers. But today we are re-registering those farmers. Part of those people that formed the number, we discovered that some cannot be identified. It is through the telephone numbers that some of them were registered. Even some numbers are not functioning again.

In a family, we can see the husband that will put his own number, his wife and children. Is it true that all of them are farmers? So we just started verification of registered farmers, we are doing that in conjunction with the Federal Ministry of Agriculture and Rural Development, the Cellulant Company as well as the Rural and Urban Department of the Ministry. Here we are going to use their biometrics, passports and get the detailed locations of famers, so that we can actually know the statistics of farmers that exist.

It is when we have such information that we can be more factual about the percentage of penetration. We must know the registered farmers before we determine those that are insured and those that are uninsured. So we are still working in the areas of collation of information of the actual farmers in Nigeria.

The Agric Minister Dr. Akinwumi Adesina, directed that a Weather Index Insurance be developed for eight million farmers registered under the Growth Enhancement Support Scheme, how have you gone?

You see, the Weather Index Insurance... they say if wishes were horses, beggars will ride on them. That is the wish because it is really what the farmers have been demanding. But the challenge that we are faced with has to do with getting the actual statistics from the Nigerian Meteorological Agency in the area of rainfall. Before you can determine the pricing, you need to have a clear understanding of the actuarial, using the past statistics, before you can project into the future on the area of rainfall. The challenge we have before now is not having adequate information to be able to go into that line of business. But the recent development has also confirmed that satellite can be used for measuring data, which is the outcome of what we gathered at the last conference we held in Kigali (capital of Rwanda), that is, the African Insurance Organisation, where one of the speakers mentioned to us that satellite has now become a device that can be used to do that. We have contacted the speaker and we have opened up discussions with his company, which is based in the United Kingdom. We will see how we can explore that, even though the Federal Ministry of Agriculture has set up a committee which will be transformed into a department that has the climate title, it has to do with the climate. There will be a conference that will be coming up in Addis Abba (Ethiopia), sometimes in November regarding that. We are exploring different areas to see how we can come up with something. But it is not something that can see the light of the day this year, because it needs a lot of paper work and historical data that must be put together for us succeed in that area.

NAIC Chairman, Mrs Chioma Ohakim, said between 2012 and 2013, farmers who were flood victims, claimed about N500 million from NAIC. How prompt were the claims settled?

I will tell you that it was paid promptly. The best persons that can tell you how promptly it was paid or not, are the customers. It is just like somebody selling food, he said that his food is the best. He will not tell you that his food is sour. So the best person that will tell whether it was prompt or not, is the customer. But really, in terms of promptness, I think we have done well. We have put machinery in place to ensure that we improve on our turnaround time. Not that anybody has come to tell us that it was delayed, but looking at the way things are, if there is any way we can have edge over our competitors, it is to ensure that you try to surpass the expectation of the customers by meeting your claims settlements as soon as possible. And one of the means we have tried to put in place is to review our business process. That we have done and now we are using Information and Communication Technology (ICT) to deliver that. We have put it fully in place. We have just employed an ICT consultant. We started to look at the level of our ICT status. That is the first phase of the project which we have started. The next phase will be to review the business process. That is, to understand the process and see how we can marry it with the ICT. That we believe by the time we are able to do that, we will get better software. I can tell you that the board has approved the implementation of the ICT project. Looking at the budget that we have set, I believe there is going to be a positive change in terms of our deliverables.

What about your financial base, is the corporation strong to pay claims?

The financial base of the corporation as of February this year... in terms of solvency margin, we exceeded N5 billion, shareholders fund is about N7 billion. If you see our last audited account of 2012, at least, part of our financial base... we have what is more than the minimal as required by law.

What is the agenda of your management team, are there innovations, fresh ideas you are bringing on board, in view of your being tagged 'moribund' over the years?

Of course, if you have been following my discussions, part of the things that we have said is the issue of training and re-training of staff, because you cannot give what you don't have. In the service industry, it is the people that are the machines, when compared to what is used in the manufacturing sector. It is only when the internal customer is satisfied and knowledgeable, that the external customer can be happy. So, clearly, what we are trying to do is that we want to make sure that we do more for our staff in terms of welfare, motivation and training. I believe that will translate to a better service delivery which of course will bring good premium returns for the corporation and at the same time, satisfy our customers.

Also as I have mentioned, we are going to improve our services through the use of the ICT. We are going to drive our business more through the use of technology. The reason being that when we look at the number of farmers, we cannot say we will successfully do one-on-one marketing with them. It is not doable. What we need to do is to come up with different means of distributing insurance through the use of technology and also through partnership with cooperatives. The good news is that we have already started work here. The platform we are using to distribute fertilizer, which is e-wallet system, we are partnering with ICT company, along with the Federal Ministry of Agriculture on how we are going to distribute insurance along with bags of fertilizers given to farmers. It has been approved by the Federal Ministry of Agriculture. We are working on the implementation.

How is the distribution of insurance using fertilizers going to be done?

All we are going to do is that a bag of fertilizer has been confirmed to serve one acre of land. We are going to package it in terms of cost of input of crops. Farmers will pay between N300 to N400, as premium when they are buying a bag of fertilizer and as a guarantee sum assured of N20,000 for an acre of land. If a farmer buys two bags, he would have successfully paid N800 and he will have a sum assured of N40, 000. So with that, we will be able to achieve three main objectives. One, to grow the general income, secondly, we would have been able to reach out to the small scale farmers. We will do well in the area of micro-insurance practice which is part of the NAIC's primary objective. So we are working seriously on that. We believe in God, with the level we are going, because we have started sensitising farmers.

I was in Ilorin few days ago to have a meeting with the State Governor as well as the Commissioner for Agriculture. Kwara State happens to be one of the States that is so active in the area of agriculture. We also discovered that there is a scheme that they have just started. They call it Off-takers Scheme. It has to do with revolving loan scheme given to the youths in that scheme. I think about N250 million is set aside for the programme. So we were able to meet with the coordinator of the scheme and educate him on the need for insurance.

Eventually, we want it to move round the 36 States of the Federation. We are starting with just three states as a pilot scheme. By dry season, we are going to increase the number of States we are going to reach out to. By the end of next year, we would have reached so many states. We are also partnering with these States, if they buy in based on the understanding of what we are trying to do. It is going to be an easy sail by the time they are relating with their farmers in their states.

From my interactions with so many farmers across the country, many of them don't know the existence of NAIC? What are the communications strategies you have developed to reach them?

Yes, it is true that many farmers do not know of our existence. Part of the programme is to do more in the area of workshops to sensitise farmers. We are also to do what is called branding of our programmes. As you rightly said, many farmers are not aware of our existence. If you do not know about our existence, you equally cannot know the benefits or support we can provide for your business. All of these, we are trying to work out. When you look at the volume of business that comes from Lagos, as a State in terms of premium, not only in agriculture but in general business, the volume is so high. Part of the problem is that our Lagos office was being run like a branch in Jigawa State, which of course, does not portray a good representation for us. Today, we have just secured a building on the Ikorodu Road; it is our regional office. We are going to move some of our staff from here. We are going to recruit locally and make it a full -fledged regional office where our impact is going to be felt and drive both the agriculture and general business side effectively.

So we are doing in Lagos, we are going to do in other two commercial areas such as Port Harcourt, Kano. Actually, we have not agreed whether it is going to be located in Kano or Kaduna, because as we are thinking of the business, we are also thinking of the security and safety of our staff. Because today, our office is not operating in Yobe, Borno too, we are providing a skeletal operation. It is the same with Adamawa State. We are on today, and tomorrow, we are off, due to security situation in these States. So we are taking security of our staff into consideration to determine where to channel our resources.

What would you like to be remembered of, at the end of your four year tenure?

Yes, it is very simple, by the time I am done here in four years, my pray would have been to lift the corporation far higher than I met it. I would have been able to reach out to so many customers. When you look at the Act that established NAIC, the primary responsibility of NAIC is to minimize, if not eliminate, the involvement of government in the area of providing financial relief to farmers in the event of catastrophe. This responsibility I pray, we would have achieved at the end of my tenure. One of the means of achieving that is through ICT-driven sales in terms of selling insurance to small scale farmers. You would remember the flood that took place in 2012. The government had to come in to provide a relief of N7 billion.

We said to ourselves that the objective of setting up the scheme is to minimise or eliminate government's involvement in providing this kind of relief in the event of disaster. That means we have not met the objective. And that is what informed this new scheme, we just came up with. Like I just said, it gladdens me that within the four months of getting to this place, we have been able to come up with idea supported by the Federal Ministry of Agriculture and Rural Development. In fact, a memo has just been done through the Federal Ministry of Agriculture to the Federal Executive Council, seeking approval for the full implementation in all States of the Federation. What it means is that we have to use this approach (because) we are going to make government to understand that we have started to implement the objectives for setting us up. Secondly, we have been able to look at the price of fertilizer, because the price of the fertilizer was approved by FEC. So if there is going to be any change in the area of price, we also need to inform them and get their approval. It is good for them to know that if NAIC has been able to provide that, they will be able to concentrate in doing other things, rather than make provision for such in the time of budgeting because flood is not something that can be pre-determined. We are sure that an insurance company is there to take care of sure unforeseen incidence, and then they can go to bed.

We did not stop there. To further support the financial status of NAIC, what we have also done is to work in conjunction with Reinsurance Company, Swiss Re, in Zurich. It is to provide support in the event of catastrophic losses. What that means, is that we will be liable for the payment of claims to up to certain threshold. Anything above that threshold, they would take over. They call it Stock Loss Reinsurance. It is just to secure the funds. For example, if a farmer pays us N300 for the sum assured of N20, 000, and there is a serious disaster that affected like 100, 000 farmers, That means, we are expected to pay about N2 billion to farmers as claims. The premium we realise may not be more than one billion. If it will have a stretch on our financial standing, we will fall back on this Reinsurance. What we are saying is that we will be willing to pay claims up to N500million, but anything above, our Reinsurance will come in. So we have been able to secure the financial standing of the corporation, though at a cost to us because we have to pay premium for reinsurance.

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