‘Agri-insurance uptake set for exponential growth’

Currently, the regulations are undergoing scrutiny by the Ministry of Agriculture for validation. Once implemented, it is estimated that agricultural insurance's contribution to the Gross Domestic Product (GDP) will rise by 3 percent.

Speaking to The Citizen on February 27, Commissioner for Insurance Dr Baghayo Saqware said that currently the contribution of agriculture insurance stands at less than one percent despite the fact that 65 percent of the workforce are in the agriculture sector.

However, with three years of implementation, the sector is projected to contribute up to 10 percent, aligning with the Financial Sector Development Master Plan (FSDMP).

Dr Saqware expressed optimism regarding the anticipated surge in insurance uptake, foreseeing that stakeholders will become increasingly knowledgeable about the types of crops and risks necessitating coverage within the next three years.

A recent study conducted by the Institute of Finance Management (IFM) under the Tanzania Insurance Regulatory Authority (Tira) and financed by the United Nations Development Programme (UNDP) indicated that average annual economic losses in agriculture due to drought are estimated at around $140 million.

Furthermore, over 20 percent of livestock are presently vulnerable to risks, with approximately 12 percent of the Gross Domestic Product (GDP) annually impacted by drought.

On the other hand, the Permanent Secretary in ministry of Agriculture Mr Gerald Mweli underscored the ongoing collaborative efforts with TIRA and the Tanzania Fertilizer Regulatory Authority (TFRA).

These efforts are focused on refining and elucidating the calculations integral to the process.

Mr Mweli said that initially, the insurance will prioritize a select few crops for coverage, gradually extending to encompass all farmers. He said they will utilize the TFRA system once farmers purchase fertilizers and obtain insurance.

 “Our objective is to expedite the commencement of this scheme's operations, notwithstanding the intricacies involved in insurance calculations. This insurance aims to address challenges confronting farmers, including natural disasters, and provide coverage for farmers whose harvests fall short of expectations,” he explained.

For his part, Africa College of Insurance and Social Protection (ACISP), director of Research, Consultancy, and International Relations Dr Anselmi Anselmi highlighted the complexity of agricultural insurance, noting that it is compounded by the diverse array of disasters that impact numerous individuals, including climate change and ecological factors, among others.

“For Tanzania and Africa, agricultural insurance ranks as the second most crucial insurance after health insurance. This significance arises from the fact that over 65 percent of the population is engaged in agriculture, and the agricultural sector contributes approximately 30 percent of the national income,” he said.

Dr Anselimi said regulations are good things but the government should provide a subsidy for agricultural insurance, increasing the financial capacity of insurance companies to combat agricultural disasters.

A rice wholesaler in Kinondoni, Ms Janet Laswai, emphasized the critical importance of agricultural insurance, especially for small-scale farmers.

She highlighted the challenges these farmers face during disasters, often resulting in prolonged periods of hardship and trapping them in cycles of poverty.

 “As purchasers of rice directly from farmers, we witness firsthand the challenges they endure. The introduction of insurance would not only benefit farmers but also numerous stakeholders across the value chain, ultimately leading to a substantial reduction in poverty,” she asserted.