New insurance industry data indicates that the survival of about 36 million small businesses in the country is in danger, as most of them operate without adequate insurance protection against fire, flood, theft and other risks.
The new finding, contained in data from the Insurance Sector Strengthening Programme (ISSP), shows that only 3.17 million, representing about eight per cent, of Nigeria’s estimated 39.65 million Micro, Small and Medium Enterprises (MSMEs) have insurance coverage, leaving about 36.4 million businesses exposed to potentially crippling losses.
The scale of the protection gap has renewed concerns among insurance stakeholders over the vulnerability of the country’s small business ecosystem, particularly at a time when rising operating costs, economic volatility, climate-related disasters and other business risks are putting pressure on already fragile enterprises.
The exposure is significant because MSMEs remain the backbone of Nigeria’s productive economy, accounting for 96.7 per cent of businesses and contributing 46.31 per cent to Gross Domestic Product (GDP), according to the joint national survey by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS).
The sector also provides more than 84 per cent of total employment in the country, while micro-enterprises alone account for over 98 per cent of the 36.65 million registered and informal businesses.
Yet, despite their enormous contribution to economic activity and employment, insurance remains largely absent from the risk-management plans of small business owners.
Players in the insurance sector have attributed the low uptake to poor awareness of insurance, the cost of premiums relative to the scale of many businesses, concerns over claims settlement and the limited availability of simple, affordable products designed around the realities of informal operators.
The situation has now placed greater pressure on regulators and insurers to close the protection gap, particularly as the Federal Government and other stakeholders seek to use MSMEs as a major driver of economic growth and job creation.
It was against this backdrop that the National Insurance Commission (NAICOM) unveiled the ISSP, a strategic blueprint designed to deepen insurance penetration and expand coverage across critical segments of the economy.
Launching the initiative, the Commissioner for Insurance, Olusegun Omosehin, said financial inclusion and protection of small businesses were central to the commission’s strategic vision.
According to him, the programme provides a structured framework for moving insurance beyond regulatory compliance to make it an accessible financial safety net for vulnerable economic units.
Under the ISSP, NAICOM plans to raise Nigeria’s overall insurance penetration from about 0.5 per cent of GDP to 1.5 per cent by 2028, with a longer-term target of 10 per cent by 2031.
