By David Akinmola
As Nigeria’s Micro, Small, and Medium Enterprises (MSMEs) grapple with the harsh realities of soaring inflation, naira depreciation, and limited access to financing, fresh industry insight is spotlighting insurance as an indispensable tool for business survival.
Despite accounting for nearly the country’s GDP and employing over 80 per cent of the workforce, millions of MSMEs remain vulnerable to financial shocks, yet data shows that insurance acceptance could provide the safety net needed to sustain operations and support long-term growth.
According to figures from the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Nigeria is home to over 39 million MSMEs, contributing over 48 per cent to GDP and accounting for more than 80 per cent of total employment. Yet, less than 1.5 per cent of these businesses are insured, exposing a critical vulnerability in the face of operational risks, asset losses, and natural disasters.
Insurance stakeholders who gathered at the ongoing Insurance Week yesterday said that the underinsurance leaves a significant chunk of Nigeria’s entrepreneurial backbone exposed to collapse at the first sign of disruption from fire outbreaks to market shutdowns, theft, or flood damage.
“The survival of MSMEs in today’s volatile climate depends heavily on how well risks are managed. Insurance offers a safety net that can prevent a temporary setback from becoming a terminal event,” said the Commissioner for Insurance, Olusegun Ayo Omosehin, in a recent industry dialogue.
Data from the Nigerian Insurers Association (NIA) indicates that while MSMEs account for the majority of informal economic activity, they represent less than two per cent of total gross premiums written in 2024. This low penetration persists despite the sector suffering an estimated N2.8 trillion in cumulative losses over the past five years due to fire, theft, and flood-related incidents.
Stakeholders blame the gap on poor awareness, distrust in claims settlement processes, and the lack of tailor-made products designed for small business risks.
However, recent moves by insurers to develop simplified, tech-driven micro insurance offerings are beginning to shift the tide.
Operators like Leadway Assurance, AllCO Insurance, and Mutual Benefits Assurance have launched low-cost business protection plans targeting market women, artisans, and informal sector entrepreneurs, with premiums as low as N1,000 monthly.
“The insurance industry is turning towards inclusive growth. Microinsurance, when properly distributed, can play a transformative role in stabilising the MSME segment,” said the NIA chairman, Kunle Ahmed.
NAICOM has also mandated underwriting firms to deepen financial inclusion by embedding insurance in MSME financing schemes and digital lending platforms.
As Nigeria strives to rebuild its economy through SME driven growth, industry practitioners said the integration of insurance into small business ecosystems will not just mitigate losses but unlock investor confidence, credit access, and long-term sustainability for the nation’s entrepreneurs.
