Farmers, Floods and Climate Insurance: Missing Links in Nigeria’s First Line of Defence

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Edited by Oke Epia, E-mail: sostainability01@gmail.com  | WhatsApp: +234 8034000706

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By Augustina Augustine

Nigeria has spent decades building the machinery to insure its farmers against climate disasters. So why, when the water rises, does the whole country still behave as though no such machinery exists?

What would it take for Nigeria to stop being surprised by the weather? This question is not a rhetorical flourish. It is a question disaster managers, insurance regulators and agriculture ministries have never had to answer under real pressure, because every year, the pressure gets absorbed the same way: relief bags, tarpaulins, a presidential condolence statement, and a promise to “build back better” before the next rainy season arrives to prove that nothing was built at all. Nigeria floods on a predictable cycle. Its droughts creep across the north with equal predictability. And yet the country’s primary financial defence against climate events remains, for the overwhelming majority of farmers, a policy that exists largely on paper rather than in reality.

What is Climate Insurance?

Climate insurance, sometimes called agricultural or weather-index insurance, is not complicated once the jargon is removed. A farmer, a cooperative, a lender, or a state government pays a premium, often a small fraction of the value of a farm’s expected output, before the planting season begins. In exchange, if a defined climate event occurs- a flood submerges the field, rainfall falls below a set threshold during a critical growing window, or a storm destroys stored produce- the insurer pays out. Traditionally, that meant sending an assessor to inspect the damage, a process that could take months and invited disputes over how much was actually lost. Modern index-based insurance, the kind now spreading rapidly across Africa and Asia, removes that bottleneck almost entirely: satellites and weather stations track rainfall or vegetation health against a pre-agreed index, and once the index crosses the danger threshold, payment is automatic- no assessor, no argument, no months of waiting. This matters enormously for a country like Nigeria, where the state’s capacity to physically reach every flooded village with an assessor, let alone a relief convoy, has never been reliable. Index insurance does not ask the government to find the farmer. It asks the data to find him.

Consequences of Climate Events

Here is the part that should unsettle anyone still treating climate insurance as a fringe policy issue. Nigeria is not choosing between paying for climate disasters and not paying for them. It is only choosing how badly it pays, and when. The 2022 floods, the worst in a decade, swept through 36 states and the Federal Capital Territory, killed more than 600 people, displaced roughly 1.4 million people, and destroyed or damaged over 200,000 homes, according to federal disaster figures. The World Bank’s post-disaster damage assessment, using its Global Rapid Damage Estimation methodology, put the median direct economic loss at $6.68 billion with a plausible range stretching as high as $9.12 billion. The Ministry of Humanitarian Affairs said roughly $1.8 billion worth of losses fell squarely on agriculture. NEMA’s own tally recorded 332,327 hectares of farmland affected that year alone.

In 2012, the country absorbed more than N2.6 trillion in flood losses. In 2024, the National Emergency Management Agency (NEMA) reported that flooding killed at least 179 people across 15 states, displaced over 208,000 people, and destroyed more than 107,000 hectares of farmland and 80,000 houses. Three major flood events within twelve years, each one measured in the hundreds of billions or trillions of naira, and each one met almost entirely with post-disaster relief rather than pre-disaster risk transfer. Climate insurance exists precisely to interrupt this cycle: to convert an unpredictable, catastrophic loss into a predictable, budgeted cost. Nigeria has chosen, year after year, not to use it at scale.

Hard Questions for the Insurance Industry

Part of the explanation lies in how thin Nigeria’s entire insurance industry remains. Despite being Africa’s most populous nation and one of its largest economies, insurance penetration total premiums as a share of GDP has stayed below 1 percent for years, among the weakest rates on the continent, according to figures tracked by NAICOM and independent industry analysts. Executives within the sector routinely cite low financial literacy, weak enforcement of existing insurance laws, distrust from disputed claims, and limited reach into rural areas as the core reasons. If that is the state of general insurance covering cars, homes, businesses, and lives, it should not surprise anyone that agricultural and climate-specific cover, aimed at Nigeria’s poorest, vulnerable, and most geographically dispersed population, sits even further behind.

This is where the polite version of this conversation has to end, and the hard questions go to the institutions responsible for closing this gap. The Nigerian Agricultural Insurance Corporation (NAIC), the federal agency established in 1987 and given legal backing by Decree No. 37 of 1993, sits at the centre of this conversation. NAIC recently reported that it has extended roughly N1.014 trillion in coverage over the past five years, reaching an estimated 1.25 million farmers across more than half a million communities. On face value, that is progress that deserves acknowledgment. But how does that figure hold up against Nigeria’s actual farming population, estimated at well over 30 million agricultural households, with agriculture employing somewhere between a third and 70 percent of the national workforce depending on the measure used? Even on a conservative reading, NAIC’s own numbers suggest that a large majority of Nigerian farmers remain completely uninsured. What is NAIC’s actual target for farmers reached by the end of this decade? What is the funded and costed plan to get there?

There is the question of lack of awareness where it matters. NAIC was created because private insurers considered agricultural risk too dangerous to underwrite on their own. But nearly forty years after NAIC came into being, farmers in flood-prone states like Kogi, Benue, Jigawa, Adamawa, and Delta, the very states that keep appearing in NEMA’s disaster bulletins year after year, still report never having heard of agricultural insurance, let alone knowing how to buy it. This is despite having a plethora of state organs and agencies, including NAIC, state ministries of agriculture, and the National Insurance Commission (NAICOM), whose mandate includes advising government and protecting policyholders across the entire industry value chain.

There is also the credit trap. NAIC’s original mandate tied much of its agricultural cover to farmers who had already secured formal credit- insurance as a condition of the loan, not a product available on its own. That model made sense for large commercial farms borrowing from banks. It makes far less sense for the millions of Nigerian smallholders who plant with savings, family support, and informal credit. Have NAIC and its private-sector partners built standalone, loan-independent products that an uncredited smallholder can walk in and buy directly? And if such products exist on paper, why do they remain functionally invisible in the communities that need them most?

Another important point is what happens after a claim is filed? Relief distribution in Nigeria has repeatedly drawn public criticism over delays, uneven reach, and allegations of mismanagement in how materials reach disaster victims. Insurance is supposed to be the disciplined, contractual alternative to exactly that kind of uncertainty and/or haphazardness. A farmer should not need political connections to be paid what a policy promises. So: how many agricultural insurance claims has NAIC settled since the 2022 floods, within what timeframe, and using what published payout methodology? Public confidence in insurance will not be built by advertising campaigns. It will be built the day a farmer in Ibaji or Numan can point to a neighbour who filed a claim and was paid, promptly and in full, without a phone call to Abuja.

There are also questions for the states given that agriculture is a concurrent responsibility in Nigeria’s federal structure. Yet climate insurance uptake is rarely treated as a state-level policy priority, in the way fertiliser subsidies or seed distribution routinely are. Why have Kogi, Benue, Jigawa and other repeatedly flood-hit states not made insurance enrolment a standard part of their own agricultural extension and disaster-preparedness programmes, the way some have done with fertiliser input schemes?

Climate Insurance in Other Countries

Nigeria does not need to invent a workable model. It needs to copy what is already working elsewhere in the developing world. In Kenya, the Kenya Agricultural Insurance Programme has, as of early 2025, trained more than 3.5 million farmers and provided actual coverage to 1.6 million of them across 38 counties, with the government subsidising up to half the premium cost for smallholders farming under 20 acres. This is a direct, deliberate policy choice to make the product affordable rather than aspirational. The regional ACRE Africa initiative, spanning Kenya, Rwanda and Tanzania, has scaled to reach nearly 200,000 farmers by bundling index insurance with credit, farm inputs and mobile money payment systems. In Ethiopia and Senegal, the World Food Programme and Oxfam’s R4 Rural Resilience Initiative have extended unsubsidised index insurance to smallholders whom insurers had previously written off as too poor and too remote to cover profitably, and in a severe drought year, triggered the single largest payout in the programme’s history, worth $1.5 million, to farmers across five African countries within weeks of the loss. And in India, national index insurance schemes, tied to a mandatory link with agricultural credit and backed by sustained government support, now reach more than 30 million farmers.

The common thread across every one of these programmes is not sophisticated technology alone. It is sustained public subsidy, deliberate rural distribution, and a stubborn insistence on paying claims fast enough that farmers actually trust the product the second time around. Nigeria has the technical building blocks: NAIC, NAICOM, a functioning mobile money ecosystem, satellite data providers already active in the market. What it has not yet supplied is the sustained political will and rural distribution effort that turned these programmes elsewhere from pilots into safety nets.

Relief is a bandage. Insurance is a shield.

Nigeria cannot keep budgeting for disaster response while treating disaster prevention as an option. Every naira spent on relief after a flood is a naira that could have gone further, spent earlier, protecting a livelihood before it was destroyed rather than consoling a family after. Climate change will not slow down to let Nigeria’s institutions catch up at their own pace, and the floods will return next rainy season as they always do. The only real question is whether the coming months will be spent building a shield that ordinary farmers can actually reach, or whether Nigeria will, once again, be counting its losses in trillions and handing out relief bags as though no one had seen the water coming.