Partners offer farmers both safety net and springboard
A Memorandum of Understanding (MoU) signed this month aims to protect thousands of African smallholders against a range of farm risks. As well as tackling vulnerability, the partners also want farmers to benefit from better access to high-quality inputs.
Agriculture is a crucial driver of economic growth in Sub-Saharan Africa. At present, the region’s food production, processing and distribution are mainly ensured by small-scale growers and small to medium-scale enterprises. The smallholders on whom production depends face many challenges. One of the largest is their exposure to risks, notably those related to weather. Successful rural development requires tools to address these risks. Today’s MoU focuses on risk-management solutions for macro-resilience*. The signatories are Africa Risk Capacity (ARC) Ltd., ACRE Africa, ZEP-RE, Syngenta Crop Protection and our Foundation.
The partners will jointly make a crop insurance solution available to smallholders purchasing relevant farm inputs from selected local agro-shops. The insurance covers farmers against crop losses to drought, flooding, diseases and insects. In particular, the insect cover is for losses caused by Fall Army Worm, a devastating pest across much of Sub-Saharan Africa. Payout calculations are based on rainfall and vegetation data. The partners aim to reach more than 200’000 smallholders with this insurance by 2023.
“By taking out such cover, smallholders gain both a safety net and a springboard”, declares Hope Murera, CEO and Managing Director of ZEP-RE. “Insurance opens the door for them to increase investment in their crops. Financial institutions can offer credit without worrying about weather-related repayment issues. By combining insurance with farm inputs and credit, we enable smallholders to expand their production and earn more reliable incomes.”
“Smallholders’ crops are among their most crucial assets”, emphasizes Olga Speckhardt, our Foundation's Head of Global Insurance Solutions. “Farm families’ production and income are highly vulnerable to bad weather and pests. The MoU partners acknowledge the huge responsibility on us all to develop resilience tools that cushion rural communities against this vulnerability.”
“This program is a great example of how we are partnering for impact to help smallholders fight climate change, which is increasingly affecting their ability to grow food”, says Sam Muturi, Strategic Partnerships Lead for Sub-Saharan Africa at Syngenta Crop Protection. “Through this program, we look forward to helping farmers become more resilient to climate change."
David Maslo, ARC Ltd’s Head of Business Development, adds: “We are delighted to join a partnership of key regional stakeholders motivated to improve the resilience of African populations most vulnerable to the climate. This collaboration is an important step forward in the development of systemic, sustainable, and market-driven solutions at various levels. These solutions complement the efforts of ARC and our Member States to alleviate the burden of disaster risk financing placed on their governments.”
*Increasing ‘macro-resilience’ involves protecting a cluster of farms that face similar risks. Insurance experts call such a cluster a ‘macro-unit’. The insurance offered is based on long-term rainfall data and on vegetation health averaged across the farms.