Govt Procures a US$3m Drought Insurance

Government has purchased a drought insurance policy from the African Risk Capacity Limited with a premium of US$3 million, partly been supported by the African Development Bank (AfDB) to cushion farmers.

Ministry of Agriculture Principal Secretary, Dickxie Kampani, has told Zodiak Online Saturday that government continues to take risk transfer tools such as, the sovereign parametric insurance under the ARC Group as one of the effective mitigating factors against the impact of harsh weather occurrences.

"This year, government has again purchased a drought insurance policy from the African Risk Capacity Limited with a premium of US$3 million which has been partly supported by the African Development Bank and the Government of Malawi," he said.

He added: "The pay-outs from the purchased drought insurance policy are aimed at sustaining the gains that farming households may have attained overtime".

Kampani has however indicated that just like any other insurance product, it is not any disaster or dry spell that the policy compensates but rather government retains some risk of a minimum threshold before the policy triggers.

Last year, the two entities made a US$14.2 million drought recovery insurance pay-out to government which was used to compensate the farmers who were affected by drought by supporting them with immediate needs that helped to prevent them from negative food security coping mechanisms such as, sale of assets.

An agriculture expert, Leonard Chimwaza says the country needs to do more in embracing the initiative fully like elsewhere in Kenya by engaging many local insurance companies to make huge investments in crop insurance.

"It is an area even most smallholder and commercial farmers have not started thinking of insuring their crops and livestock. Suffice to say that, we have seen that other countries for example Kenya, already started crop insurance and they have completely advanced," he said.

Meanwhile, according to Kampani, NICO Insurance in collaboration with PULA is also offering the area yield index in some districts in the country, whereas government and World Food Programme (WFP) under the Adaptation Fund Project are also supporting some farmers in Balaka, Zomba and Machinga with access to micro-level insurance.

This year, the country has also experienced some pockets of dry spells in the Lower Shire districts, fall army worm attacks and flush floods where hectares of crops have been washed away.

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