WINDHOEK-Namibia is mooting establishment of an agriculture centred insurance product to mitigate the devastating effects of natural calamities like drought and floods on the sector
This comes after the country reported a cumulative loss of 100 000 cattle from the national herd in the agriculture year 2019-2020 leaving the government to pump in N$140 000 to farmers to recoup their losses.
The Namibian government said 16 927 claims for the 2015/16 and 2019/20 drought seasons under the National Drought Scheme Program managed by the state owned Agricultural Bank of Namibia to avert potential losses from the persistent droughts as the country has no insurance covering crops and livestock.
The catastrophic effects of drought and climate change also left about 500 000 Namibians food insecure facing water shortages.
Namibian Financial Supervisory Authority (NAMFISA) Chief Executive Officer Kenneth Matomola said the contribution by the Namibian Government into the resuscitation of the Agriculture sector shows the country’s dire need for a specific insurance product tailor made for the agriculture sector.
Matomola said the establishment of Agriculture index-based insurance concept which aims to cushion the losses experienced from natural disaster related events such as drought by spreading the risks to different stakeholders when an adverse event occurs will be a vital cog in securing the agriculture sector as a viable business.
“As we are well aware, the agricultural sector plays a pivotal role in the Namibian economy. In the same vein, this sector is highly vulnerable as it is more often exposed to the weather related hazards leading to low levels of productivity. Similarly, this sector has experienced low access to credit facilities especially the small scale and communal farmers.
“Key objective of the Agriculture index-based insurance will be to reduce vulnerability, increase crop or livestock output, and ultimately reduce volatility in the sector through direct empowerment of the farmers. Also, Namibia is classified as a semi-arid country characterised by erratic rainfall patterns and this is likely to impact the livelihood of individuals and farmers for years to come. Therefore, finding a risk management solution to the devastating losses experienced by Namibian farmers is key to sustainable farming practices,“ Matomola said.
He added the concept of agriculture index based insurance is also necessitated by the fact that, traditional insurance products and services do not offer tailor-made micro insurance products and/or services, and the Government of Namibia has been playing the mitigating role to that effect.
According to Matomola the concept of agriculture index based insurance is deemed an instrument that can be used to promote financial inclusion, through the provision of financial products and services to the rural based Namibians that cannot easily access and afford traditional insurance products.
“Latest development on the Index-based insurance upon realising that a number of Namibian farmers (both crop and livestock farmers) incurred enormous losses and the Government of Namibia spent a significant amount on the national drought relief programme, NAMFISA as a regulator undertook a desktop feasibility,” he said.