By Jeph Ajobaju, Chief Copy Editor
Lagos State Governor Babajide Sawo-Olu has urged insurers to design friendly policies that aid the growth of Micro, Small, and Medium Enterprises (MSMEs) by taking note of the peculiarities of a sector that provides most employment in Nigeria.
In Nigeria, according to pwc.com, SMEs contribute 48 per cent of national Gross Domestic Product (GDP), account for 96 per cent of businesses, and 84 per cent of employment.
Data from the National Bureau of Statistics (NBS) shows that a total of about 17.4 million SMEs account for about 50 per cent of industrial jobs and nearly 90 per cent of the manufacturing sector, in terms of number of enterprises
PwC adds that despite the significant contribution of SMEs to the Nigerian economy, challenges still persist that hinder the growth and development of the sector.
Sanwo-Olu noted the challenges when gave his advice at a National Insurance Commission (NAICOM) workshop in Lagos.
Sanwo-olu, represented by Finance Commissioner Rabiu Olowo, commended NAICOM for organising the sensitisation workshop, which he said would aid the survival and growth of MSMEs and by extension the growth and development of the economy.
He urged practitioners at the event, which took place at Lagos Chamber of Commerce and Industry (LCCI) Conference Centre, Ikeja, to leverage on insurance to promote business and ensure the sustainability of small businesses in Lagos.
“It is essential to advise insurance companies to ensure that insurance policies for MSMEs are designed to meet the needs and also address the peculiarities of MSMEs.
“Such insurance policies must be affordable and free of technicalities so that they can be easily understood with reasonable assurance of prompt settlement of claims,” he said.
“Micro, Small and Medium Enterprise (MSMEs) make up the vast majority of enterprises and account for nearly 50 per cent of our Gross Domestic Product (GDP).
“[They] also contributes 80 per cent of the country’s employment. It is therefore apparent that supporting small businesses by creating opportunities for MSMEs to thrive is essential for increasing productivity and boosting the economy.
“Given the global recognition of MSMEs as major contributors to the economy in terms of wealth creation and employment generation, we cannot afford to ignore the challenges confronting MSMEs especially those that threaten their survival.”
Insurance cover for unforeseen events
Sanwo-olu reiterated that Lagos State with over three million MSMEs is the home of small businesses in Nigeria and a model of insurance best practices in the country.
Lagos has developed initiatives, among them the Lagos State Employment Trust Fund and Exclusive Fair organised for MSMEs to showcase their products and promote patronage, free training, and supply of startup kits to graduates of vocational skill acquisition centres.
Sanwo-Olu, however, insisted that the gains of all efforts from his administration in support of MSMEs, including those implemented at other levels of government, cannot be fully guaranteed without a safety net against unforeseen circumstances, hence, the importance of appropriate insurance cover for these businesses.
“Securing insurance cover or protection against unforeseen situations and losses that may threaten the going concern or operations must, therefore, be encouraged particularly for MSMEs, given their vulnerability and the likely impact on the prospects of the larger economy.”
He commended MSME proprietors, describing them as “very resilient business owners and practitioners.”
Relevance of insurance
Insurance Commissioner Olorundare Thomas said the workshop was aimed at creating an interactive forum where the importance of insurance in the Lagos business environment could be deliberated.
He said the forum would highlight the importance of insurance and how it can be used to mitigate the risk of businesses as happened in the destruction of properties during the 2020 EndSars protests in Lagos and fire outbreaks.
Thomas noted that successful workshops were held by regulators in Kano, Kaduna and Federal Capital Territory (FCT) and reiterated that the message remains the same – MSME stakeholders should subscribe to insurance products and services.
National Insurance Committee member representing Surulere Constituency, Darlington Nwakocha, highlighted the importance of insurance, disclosing that most people with businesses in Surulere had insurance cover during the EndSars crisis.
He said insurance is the bedrock of every economy and should be embraced by all, particularly at this time of unpredictable climate changes. Insurance is a fundamental issue that needs to be expanded, he said.
Chartered Institute of Insurance (CIIN) President Muftau Oyegunle said insurance remains the key factor in business that should not be neglected.
“Whatever you cannot afford to lose must be insured,” he advised, and commended the Lagos government for providing the platform.
