Zim engages ARC Group to expand agriculture insurance

25 Nov, 2021 - 00:11 0 Views
Zim engages ARC Group  to expand agriculture insurance Dr Grace Muradzikwa

The Chronicle

Enacy Mapakame in Victoria Falls

ZIMBABWE is engaging with the African Risk Capacity (ARC) Group to help it increase coverage of agriculture insurance, amid concern over low uptake despite the sector’s strategic importance to the economy.

ARC Group is a specialised agency of the African Union established to help African governments improve their capacities to better plan, prepare, and respond to extreme weather events and natural disasters.

Agriculture insurance is still low in the country accounting for an estimated 5 percent of gross premium income of insurance firms although Zimbabwe is an agro-based economy.

The sector employs over two thirds of the country’s employable population as well as providing about 70 percent of the raw materials required in the manufacturing sector.

Responding to questions on the sidelines of the ARC retreat in the resort town of Victoria Falls, IPEC commissioner general Dr Grace Muradzikwa said agriculture insurance offset risks associated with weather fluctuations especially now with climate change induced disasters frequently being experienced in the region.

“Indeed, Zimbabwe being an agro-based economy, we are concerned that uptake of agriculture insurance is still low. The sector’s contribution to premiums is only five percent and discussions are ongoing with the ARC to expand the scope of coverage to the agriculture sector,” she said.

Dr Muradzikwa said the discussions were looking at how ARC could help complement efforts being made locally while also capacitating farmers in risk aversion.

“As the insurance sector regulator in Zimbabwe, we are grateful to the ARC for extending an invitation to the local insurance industry to partner the ARC Ltd in the development of drought risk insurance products,” she said.

“We also welcome the development of flood risk insurance and epidemics insurance cover by the ARC Ltd, and are looking forward to more initiatives that support our vulnerable population and important sectors such as agriculture.”

According to the Food and Agriculture Organisation (FAO) natural disasters hit the agriculture sector. But insurance can assist in managing these losses, and crop insurance is that branch of this financial mechanism that is especially geared to covering losses from adverse weather and similar events beyond the control of growers.

At continental level, FAO says the penetration of agricultural insurance in Africa is very low with many of the African countries either not having it or experiencing it only at pilot stage.

ARC chief executive officer Lesley Ndlovu said the formation of the organization under the African Union was inspired by the need to help member states better prepare for natural disasters and its impacts.

“Climate change is one of the major challenges affecting the developing world and the impacts of such are disproportionately felt in these countries because they don’t always have the means to mitigate its effects,” he said.

“We are seeing the severity of climate change induced disasters and as part of the response to limit its negative impact the AU created ARC Group in 2012.

“This works with governments understanding their risk profile, capacity building, and providing the risk transfer mechanisms,” he said.

Since becoming a member, Zimbabwe has already benefited from ARC pool. During the 2019/2020 agricultural season, the country received a US$1,4 million payout, complemented by a US$290 000, which was extended to the WFP and supported over 180,000 households in the highly vulnerable districts of Buhera, UMP, Chivi, Binga and Bulilima.

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