Following a comprehensive consultative process that commenced three years ago as a result of a market development and financial inclusion thrust by IPEC who went on to engage key stakeholders such as the International Finance Corporation (IFC) and Access to Insurance Initiative a decision was reached to develop an Agricultural Insurance Index product. This initiative aimed to protect smallholder farmers from climate-related risks, thereby enhancing resilience and ensuring food security. As a result of this initiative by IPEC, the Agro Insurance Pool was established under the Insurance Council of Zimbabwe’s Special Risks Consortium (SRIC), with plans for a pilot project designed for the 2023/2024 rainy season. AFC Insurance Company was appointed as the lead insurer for the Goromonzi pilot project.

Government dignitaries from left to right, Honourable Dr. Anxious Jongwe Masuka, Minister of Lands, Agriculture, Fisheries, Water, and Rural Development, Honourable Professor Mthuli Ncube, Minister of Finance, Economic Development & Investment Promotion and Honourable Aplonia Munzverengwi, Minister of State for Provincial Affairs and Devolution

The pilot program aimed to cover approximately 4,000 farmers with a total sum insured of roughly US$1.2 million. However, due to various factors, only 1,800 farmers ultimately signed up and paid the required premiums. The insurance product was a hybrid model, combining weather index insurance with area yield index insurance to provide comprehensive protection against a range of perils, including drought, excessive rain, pests, and diseases.

The 2023-24 season was significantly affected by the El Niño phenomenon, resulting in delayed rains and uneven distribution, accompanied by higher- than-average temperatures that adversely impacted crop yields. These conditions negatively impacted crop performance, particularly during the crucial vegetation and flowering phases, despite decent rainfall during germination. As a result, losses ranging from 5.7% to 10.4% of the sum insured were triggered.

Losses associated with the weather index were calculated based on rainfall deviations, with an agreed excess of 10% of the sum insured. To evaluate the Area Yield Component, a crop-cutting exercise was conducted across sampled farmers in the wards. This assessment helped quantify crop damage, determine actual yields, and facilitate loss calculations.

Handover of the payout check to farmers

 

The final combined loss was approximately 19.4% of the sum insured which translates to US$232,996.75. This translated to an average pay out of US$65.00 for each small-scale farmer.

A payout ceremony was held in Goromonzi and attended by high- ranking Government officials, who included:

• Guest of Honour: Minister of Finance, Economic Development & Investment Promotion, Honourable Professor Mthuli Ncube

• Minister of State for Provincial Affairs and Devolution: Hon. Aplonia Munzverengwi

• Minister of Lands, Agriculture, Fisheries, Water, and Rural Development: Hon. Dr. Anxious Jongwe Masuka

Following the success of this pilot project, there are plans to expand the rollout to other provinces. The Government of Zimbabwe, through the Ministry of Finance, Investment Promotion, and Economic Development, is committed to supporting such initiatives that promote financial inclusion, empower farmers, and ensure national food security. The success of this pilot demonstrates the potential for scaling agricultural insurance, which can enhance the economic stability of rural communities nationwide. The Government has pledged to aid this expansion by subsidizing premiums for farmers.