Yes, Agriculture Insurance Works!

Over the past two years, ACRE Africa has collaborated with NBC Tanzania and Jubilee Allianz General Insurance Company of Tanzania to develop a robust agriculture insurance product to ensure the long-term viability of the Agriculture financing portfolio. Leveraging our Weather Index Insurance product, we are transforming agriculture in Africa!

Last week, the program, in conjunction with NBC Bank compensated farmers with a claims payout of an amount totaling to USD 33,537.88. This was channelled into the repayment of loans that were offered to the farmers earlier in the year by the bank. Most of the farming communities in Africa generally operate on thin margins and lack access to bankable assets that can serve as collateral to access finance for their farming. By leveraging the insurance policy as collateral, farmers can access the finance they need, source the right inputs on time and be more productive per unit area, thereby contributing to the food security of their country, apart from also creating their margins. Insurance serves as a vital safety net for both farmers and other participants within the agricultural value chain. It also enables access to credit and hence is an integral part of financial inclusion.

“With our vision of making sure Agriculture Insurance is integrated into Government Agriculture projects to ensure its sustainability, we are working closely with the government through the Ministry of Agriculture and other stakeholders to create a collaborative and enabling environment with proper frameworks that will propel awareness creation, innovation and drive uptake of agricultural insurance.” Says Christopher Mazali, Country Manager, ACRE Tanzania.

Since 2021, our efforts have been focused on offering Weather Index Insurance alongside agricultural loans provided by NBC Tanzania. This initiative has successfully reached out to more than 1,280 tobacco farmers across Tabora, Kigoma, Geita, and Shinyanga. As a result of our program, there has been a noticeable surge in the adoption of insurance among these farmers. Moving forward, the program looks to expand to other regions in Tanzania and improve the product to cover more perils.

The agricultural sector holds significant socio-economic importance within Africa, playing a pivotal role in contributing to the GDP of economies. Nevertheless, the sector faces exposure to natural vulnerabilities, including drought, excessive rainfall, floods, and other catastrophic events, leading to a decline in food security across the continent.

At the national scale, these disasters lead to diminished income and impact economic growth. Furthermore, governments are compelled to redirect public funds away from essential national programs to address emergencies such as food shortages.

At the farmer level, these perils contribute to production failure, and households are often forced to adopt short-term survival strategies in the face of such climate-related shocks that can undermine their long-term resilience, food security, and economic capacity. Farmers wanting to invest in their farms for the next year are constrained in their access to finance and better-yielding inputs and technologies as lenders limit their exposure to potentially risky clients.