How to make new national agro-insurance scheme work for all

Government launched the national livestock insurance scheme to help safeguard farmers against losses in case of natural calamities or disease outbreak in livestock.
The livestock insurance scheme seeks to protect farmers against losses and also help make the sector more competitive. / File
The livestock insurance scheme seeks to protect farmers against losses and also help make the sector more competitive. / File

Government launched the national livestock insurance scheme to help safeguard farmers against losses in case of natural calamities or disease outbreak in livestock. Previously, livestock insurance in Rwanda was being largely provided by a few private firms on a very limited scale with low success levels. This was due to lack of awareness about its benefits among the public, as well as poor infrastructure, capacity and imperfect system for identification of insured animals.

Ayandev Saha, the KMD Reinsurance Brokers general manager, is the architect of the national livestock insurance scheme. In an exclusive interview with Business Times’ Peterson Tumwebaze, Saha said adopting livestock and crop insurance will help link farmers to financial institutions for development finance that will boost productivity and make the sector more sustainable.

Excerpts:

How can farmers leverage the new national agriculture scheme to mitigate some of sector risks?

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Ayandev Saha. / P. Tumwebaze. 

First of all, we need to understand that the untimely death of livestock or crop destruction have a devastating impact on farmers’ income, be it a small farmer, landless labourer or a big dairy farmer.

Therefore, to help manage such risks and losses among smallholder and big farmers, the need for a strong national agriculture insurance scheme cannot be understated. Such a scheme would help provide financial support to the farmers in the event of death of livestock or crop destruction.

The scheme would, in this case, act as a protection mechanism for farmers against any eventual loss. Livestock, particularly cattle, has historically been an integral part of the production systems in Rwanda.

So, the implementation of the new agriculture scheme will safeguard players and make the sector more competitive.

Since the banks are still reluctant to fund farming activities, what should be done to encourage financial institutions to invest into the sector?

It is important to improve access to finance and ensure the agriculture sector gets the money it needs to invest and develop the sector.

When this happens, it will encourage more farmers to adopt innovative and modern agricultural practices, thus boost production. Agro-insurance also attracts banks to increase lending to the sector as it reduces risk.

How can the scheme become more effective and beneficial to both farmers and insurers?

There is need to put in place clear procedures and principles for the operation of agriculture insurance scheme and also ensure farmers get standard insurance contracts. In addition, the government needs to engage farmers at all the levels for the scheme to be truly beneficial to them.

There is also need to adopt modern technologies in damage assessment as this will make the implementation of scheme more effective. Timely payment of premium to insurance companies by the government would also ensure that money is disbursed to the farmers who suffer losses which, in turn, would increase uptake of the product. That’s why you have to fast-track settlement of claims.

Government should also review and monitor implementation of the scheme, and the risk pool strategy, including coverage, premium rates. Of course the need for creating a conducive business environment to woo more private sector players to join the scheme cannot be overemphasised.

We also have to ensure proper mobilisation and create awareness among farmers for the scheme to achieve the intended goals.

How do you think the scheme will impact the sector?

The insurance scheme will greatly improve farmers incomes, food security, nutrition, as well as make the sector more resilient to shocks.

This will also increase access to finance by farmers, create employment opportunities at farm level and along the value chain, among other benefits. With more insurers coming on board, competition in agriculture insurance service provision will increase, which will help to lower the premiums and thus make it more attractive for farmers to embrace insurance.

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