By LOVETH AZODO, Lagos
In a groundbreaking webinar hosted by Olamide Olajolo, the Managing Director of Coronation Insurance Plc, the pivotal role of insurance in driving financial inclusion and safeguarding businesses and individuals’ financial well-being took center stage.
Moderated by CNBC Africa Anchor Wole Famurewa, the discussion featured a distinguished panel of experts, including Adedeji Olowe, Founder and CEO of Lendsqr; Babatunde Akin Moses, CEO of Sycamore.ng; and Yemisi Isidi, CEO of Triift Africa.
The event attracted a vibrant audience of webinar participants eager to explore the transformational potential of insurance. In a volatile market where a single unexpected event could erase a lifetime’s worth of work, insurance emerged as a critical lifeline for both personal and business survival.
By creating a financial safety net where the collective prosperity of many shielded the few who encountered misfortune, insurance played an indispensable role in ensuring that Nigerians did not have to deplete their savings or assets to cover losses. In an economy where more than 40 million small businesses contribute to approximately 84% of employment and 50% of GDP, Nigeria’s low insurance penetration rates meant that most small businesses and individuals were relying on cash to mitigate daily risks.
Even thriving enterprises with substantial assets and secure cash flow found it impossible to allocate enough resources to cover their entire risk portfolio. Such financial vulnerability posed a significant challenge to the ability of Nigeria’s small business sector to sustain growth and long-term prosperity. For example, just N250,000 in coverage could secure over N1 billion in risk – a staggering sum that most businesses couldn’t afford to set aside.
The panelists were unanimous in their belief that the perception of insurance in Nigeria needed to be transformed. They emphasized the need to provide practical examples illustrating how simple insurance products could foster financial inclusion by safeguarding income and investments.
In particular, affordable products like health and life insurance for business owners could prevent the complete financial ruin of families and small business owners when faced with health-related issues. Access to credit was identified as a critical driver of success for businesses across Nigeria.
However, small businesses often faced difficulties in securing credit. Insurance played a vital role in this context. Small businesses equipped with adequate insurance coverage represented a more secure credit proposition to reputable financial institutions and lenders, including banks.
Consequently, businesses with basic insurance coverage were in a better position to access credit on more favorable terms. Furthermore, with most insurance providers offering tailored advice on the specific risks faced by individuals or businesses, the process of purchasing insurance served as a potent force for financial education in Nigeria. In essence, by enhancing financial literacy, Nigeria’s insurance sector was not only ensuring the survival of more businesses but also promoting the prosperity of countless families.
Especially during challenging times and amid volatile exchange rates, insuring assets acquired at favorable US dollar values emerged as a critical practice for businesses reliant on imported equipment, insights, or services.
The advent of technology has made accessing insurance in Nigeria more accessible and cost-effective. Many insurers now offer simple yet effective risk products that can be easily acquired by downloading mobile apps onto handheld devices.
As insurance becomes more widespread among individuals and small businesses, it is poised to assume a more significant role in driving financial inclusion, preserving wealth, and bolstering long-term prosperity in Nigeria. The transformative power of insurance is set to redefine the financial landscape in the nation, offering a brighter and more secure future for all.
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