The government of Zimbabwe is mooting for compulsory insurance for small scale farmers. According to Agricultural Finance Corporation (AFC) Holdings acting chief executive, Francis Macheka, agriculture financiers need security on investment in agricultural activities of small-holder farmers in light of various climate-induced disasters.
“Insurance against the vagaries of inclement weather gives financiers a guarantee of recouping their investment in times of calamities, particularly for small-holder farmers considered “high risk.” It is the intention of the government to introduce compulsory insurance. We acknowledge the risk of climate change and threats to national food security. There is no doubt insurance has a role for financiers to feel safer,” said Macheka.
“It is true that smallholders are the main players since time immemorial, contributing about 60% of output. However, you will find out that financial institutions are not motivated to finance these. Despite the immense contributions to the national grain reserves, smallholder farmers remain uninsured, a development that calls for compulsory insurance schemes before they are eligible for agricultural inputs loans such as Pfumvudza/Intwasa,” he added.
Communal farmers
Considered high risk, due to their sparse geographical locations which increase transaction costs and small hectarages put under crops, private insurance companies shun dealing with communal farmers.
However, Macheka highlighted insurance enabled farmers to venture into high-risk cropping enterprises with huge potential to enhance agricultural productivity. The government, through the AFC’s insurance department, is putting mechanisms to rope in private insurers to hedge agriculture activities against losses due to hailstorms, droughts, floods, and pests.
“AFC cannot take this giant proposal alone. It’s a new baby that needs the experience of old insurance firms, therefore, there would be partnerships. AFC is going to enter deals and be able to connect with private sector companies with these tailored products,” noted Macheka.
