Micro, Small and Medium-scale enterprises (MSMEs) must take advantage of the benefits of insurance to grow their businesses and the economy, the Commissioner for Insurance and Chief Executive Officer, National Insurance Commission (NAICOM), Olorundare Thomas, has said.
Thomas spoke in Lagos at the workshop organised by NAICOM to educate and enlighten the MSMEs on the benefits of insurance and its strategic importance to national development.
Describing insurance as the fulcrum of a nation’s growth and development, Sunday said MSMEs form the superstructure to stimulate mass enterprise growth and source of livelihood for the base of the pyramid population across all economies.
In Nigeria, he said all development interventions have components focused on enabling these MSMEs sprout and flourish.
However, he said these MSMEs have little or no insurance content to deal with associated risks and ensure sustainability and guarding them against failure.
Citing statistics from the National Bureau of Statistics, the Commissioner said in 2019, MSMEs in Nigeria accounted for about 48 percent – on average – to the national Gross Domestic Product (GDP) in the last five years, from about 17.4 million Enterprises.
He said they account for about 50 percent| of industrial jobs and nearly 90 percent of activities in the manufacturing sector.
While some challenges still abound from infrastructure to funding, he said it was encouraging that the Federal Government, through its deliberate policy of removing 100million Nigerians from poverty in the next ten years, was taking on the challenges, to build businesses and leverage them to create prosperity.
Beyond the efforts of the government at all levels, the Commissioner said the spirit of entrepreneurship of Nigerians was also driving creativity and productivity.
He expressed concern that without insurance, whatever gain or progress made in the insurance sector could be halted abruptly in the face of a natural or man-made disaster.
This, he said, could prove daunting to surmount without any support from. insurance.
In particular, he said 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 these vulnerabilities may not be within the scope of human control, what is within human reach is a deliberate risk management plan through insurance cover, which gives confidence to venture.
He defined insurance as that product one buys when one thinks one does not need it, adding that it may be too late to buy it when the need for it indeed arises.
Notwithstanding the importance of Insurance to lives and property, the Commissioner noted that adoption and penetration of insurance have been low in Nigeria owing largely to a lots of challenges.
These include inadequate product offerings that meet the needs of the consumers, including the MSMEs.
He identified two insurance offerings – the MicroInsurance and Takaful – that are designed for affordability and inclusiveness, to bring Insurance within the reach of the MSMEs, which constitute the nations most valued contributors to the economy.
This support to the MSMEs, he said, would support the sector for speedy recovery when unforeseen situations occur.
He said the sensitization workshop was organised by NAICOM to educate the MSMEs and drive their enrollment for these products .
The workshop has so far been held in Kano, Kaduna and Abuja, pulling MSMEs from these cities and their environs.
“At all locations, we received overwhelming responses in terms of attendance, engagement and enrollment.
“The average attendance per location has 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 said.
He identified Lagos state as a key city, apart from being Nigeria’s nerve centre of commerce, but also for playing host to the single largest number of MSMEs in the country, put at about 11.5 percent.
Also, the current and past administrations Lagos state have demonstrated a continuous commitment to sustaining MSME growth.
Specifically, he said the state has deliberate polices, special programmes and projects, in collaboration with various agencies to boost capacity, access credit, and enable trade.
Some of the State efforts that have been supportive of the Federal Government include the Lagos State MSMEs Exclusive Fairs; the N220 billion Micro and Medium Enterprises Development Fund (MSMEDF) to cushion the impact of COVID 19, and other State intervention programmes to engender MSME growth.
On the level of vulnerability of MSMEs to extinction by likely disasters – both natural and man-made, he said, is very high, citing the example of the losses and destruction of life and property witnessed during the #ENDSARS protest.
He said crisis may have resulted in the untimely death of some MSMEs, while driving some other persons further down the poverty line.
“The good thing, which is our message, is that insurance will provide you the shock-absorber to withstand any of these unforeseen calamities when they do occur and help your reinstatement in business,” the Commissioner said.
He reiterated NAICOM’s commitment to its mandate to provide diligent oversight to the insurance sector towards ensuring prompt settlement of genuine claims when insured events occur.
The MSMEs sector, he said, is too important to be neglected, as it is key to economic development of the nation and therefore, must be guided and protected against failure.
To ensure proper guidance of the use of insurance, the Commissioner told MSMEs that 59 insurance companies, 510 insurance brokers, four Microinsurance companies and four Takaful companies have been licensed by NAICOM to operate.