The National Agricultural Development Fund (NADF) has received a surplus of N3.4 million from Jaiz Takaful Insurance Limited. This payment is the result of a Takaful insurance policy taken by NADF to cover agricultural and investment risks. The policy, which relates to the 2024 financial year, allows for surplus sharing when no claims are made and the participating portfolio makes a profit.
The Managing Director/CEO of Jaiz Takaful Insurance Limited, Ibrahim Shehu, presented the confirmation of NADF's entitlement to the Executive Secretary/CEO of NADF, Mohammed Abu Ibrahim. Shehu stated that the payment fulfills an agreement reached with NADF when the Fund took the Takaful cover. He explained that under the Takaful arrangement, eligible participants can receive a share of the surplus if no claims are made during the period.
The Takaful arrangement offers more than protection against losses; it also provides for surplus sharing where the conditions of the scheme are met. Shehu noted that while insurance is meant to indemnify customers in the event of loss, Takaful has an additional value proposition. If the customer did not have a claim and the portfolio they participated in made profits, they shall receive a share of that profit as surplus.
NADF is currently developing its approach to non-interest finance as part of efforts to widen financing options within the agricultural sector. The Executive Secretary/CEO of NADF, Mohammed Abu Ibrahim, stated that the Fund is validating its Non-Interest Finance Framework and Guidelines. This framework will provide a structured approach to working with licensed non-interest financial institutions.
The Non-Interest Finance Framework and Guidelines aim to provide financing options that respond to the different needs of farmers and businesses across the agricultural value chain. Ibrahim noted that the Fund is exploring non-interest finance as another avenue for addressing financing constraints in agriculture and expanding options available to farmers and agribusinesses.
The payment from Jaiz Takaful Insurance Limited demonstrates the practical application of non-interest finance instruments. It shows how such instruments can provide both protection and potential financial returns within the terms of the arrangement. This development aligns with NADF's ongoing work on non-interest finance.
The National Agricultural Development Fund's receipt of the Takaful surplus highlights the potential benefits of Takaful arrangements in the agricultural sector. It underscores the importance of innovative financial solutions in addressing the unique needs of farmers and agribusinesses in Nigeria.
Key points
- NADF receives N3.4 million surplus from Jaiz Takaful Insurance Limited.
- The surplus arises from a Takaful insurance policy covering agricultural and investment risks.
- NADF is developing its approach to non-interest finance to widen financing options in the agricultural sector.
