PHILLIMON MHLANGA
Zimbabwe’s insurance companies should seriously consider developing relevant agriculture insurance products to protect farmers against the adverse bad weather conditions and other natural events, experts have said.
The call comes at a time when the government has identified the agriculture sector as one of the major economic segments to anchor the recovery of the ailing economy.
However, the agriculture sector is particularly exposed to adverse natural events, such as droughts and floods. Given the prevalence of climate change, it may render more frequent and more severe agricultural disasters in the future.
Insurance and Pensions Commission (IPEC) commissioner Grace Muradzikwa said it is now important for insurance companies to develop agriculture insurance products, which is part of a comprehensive agricultural risk management framework, which can contribute to the modernisation of agriculture sector.
“Zimbabwe is an agricultural economy. So, there is no way that we can’t pay attention to the (agriculture) sector. We need to develop products for this industry,” Muradzikwa said.
IPEC is working with the World Bank to develop a framework for weather-based index insurance aimed at capacitating and increasing financial inclusion.
Government has in the past been alleviating the effects of crop failures and other disasters by providing ‘post disaster relief’ measures, a move experts equate to a ‘Samaritan dilemma’.
“Such post-disaster measures (by the government) discourage penetration of insurance programmes into the agriculture sector, which in my view provides more efficient financial solutions and deal with the magnitude of losses from future events,” insurance expert Mtandazo Sibanda told Business Times this week.
“Agriculture insurance is key in assisting farmers and government in lessening the negative financial impact of adverse natural events.”
Zimbabwe Farmers Union secretary general, Paul Zakariya said farmers have shown little interest in agricultural insurance as there were many impediments including trust issues for farmers to complement their risk management activities with cost effective financial tools such as agriculture insurance.
