AIS Sudan

In Sudan, agricultural activities account for over 40% of GDP and 60% of employment. Agriculture-led growth and transformation are the most promising pathway to economic development in Sudan and much of Sub-Saharan Africa. Transformation of the agri-food systems comprising predominantly small-scale producers and small to medium-scale distribution and processing enterprises (SMEs) remains a priority. This transformation requires a massive infusion of new ideas from the public and the private sector, including micro commercial lenders.

Unfortunately, the Sudanese financial service and insurance industries are not ideally placed to support agriculture. They struggle to identify the risks that need to be addressed and corresponding solutions. Guarantee instruments have been mobilized to provide risk coverage for agricultural lending. However, this has not increased the capacity or motivation of financial institutions to facilitate access to credit for the agricultural value chain. Furthermore, such instruments only cover the risks of financial institutions. They do not protect the farmers, who are the most vulnerable and suffer the most when unexpected shocks occur.

SFSA and partners are therefore determined to put insurance and credit within smallholders’ reach.

The Syngenta Foundation is scaling up a multi-stakeholder crop insurance program in Sudan. Partners come from both the demand and supply sides of the private and public sectors. SFSA is taking the lead as a market facilitator, with funding support from the Swiss Capacity Building Fund (SCBF) and AgFund. The demand side is represented by Ebdaa Microfinance Institution, currently serving over 65,000 farmers. The risk is jointly underwritten by a public sector insurer, Sheikan, and the private United Insurance Company.

The project kicked off in October 2019 with field studies in Khartoum, North and West Kurdufan, and Jasira. The goal was to understand and analyze the insurance value chain, laws, distribution channels, smallholder risks and needs as well as the infrastructure that will support the implementation of crop insurance. In 2020 SFSA designed insurance for sorghum, sesame, and groundnuts. By using Ebdaa infrastructure in three states, the products reached over 2000 smallholders in the first season. Our aim is soon to reach many more.

The related Financial Education (FE) started in November 2019. Most Sudanese farmers lack basic knowledge of insurance. They also have a negative view of credit and borrowing. Financial literacy levels in rural areas are low, especially among women.

Our FE aims to improve understanding of credit, savings, and insurance, particularly credit-linked agricultural climate risk insurance. Greater knowledge should expand financial inclusion, increase uptake of insurance solutions and thus help smallholders to invest confidently in their farms and maintain their incomes.

In 2020, 31 loan officers were certified as FE Trainers-of-Trainers. They recruited more than 100 FE Village Champions. Trainers and Champions together increased the financial literacy of 10,000 smallholders in some 600 groups.

With an area of 1.88 million km2, Sudan has three ecological zones from north to south: desert, semi-desert, and low-rainfall savannah. The northern parts of the country are arid and semi-arid. The Nile runs through approximately half the states. Rural communities rely mainly on rainfed agriculture for crop and animal production. Livestock accounts for about 60% of the gross agricultural product. Cattle (31 million head), sheep (40 million), goats (32 million), and camels (almost five million) are pastoralist communities’ most important capital assets.

Climate change, resulting in rainfall and temperature variability, continues to pose a significant threat to agricultural production across the country. Pastoralists face severe shortages of forage and water. This scarcity leads to low productivity, high livestock mortality, and poverty. In the absence of suitable risk transfer mechanisms, mortality losses are ‘absorbed’ by the pastoralists, leaving them with fewer economic production options.

SFSA, in partnership with the International Livestock Research Institute and supported by SCBF, launched a feasibility study in 2020. The study aims to quantify climate risks faced by Sudanese pastoralists and to develop and test innovative insurance solutions. These will be based on satellite observation of forage scarcity. After the study, the partners intend to establish a business model with two distribution organizations and at least one insurer. 

The Syngenta Foundation, in collaboration with Ebdaa Microfinance Bank, has made remarkable strides in enhancing agricultural sustainability and financial inclusion in Sudan through the SASAS project. Throughout 2023, the initiative successfully provided crucial credit and insurance services to 2,000 smallholder farmers, despite challenges posed by war and market disruptions. The project also disseminated valuable agricultural advisory services to over 5,000 farmers, boosting their knowledge and decision-making abilities. Key accomplishments include establishing partnerships with insurance companies for crop and livestock insurance, and developing and translating vital financial literacy materials. The project's resilience in the face of political instability and operational challenges underscores its commitment to empowering Sudanese farmers with sustainable, innovative solutions.