Why do you need insurance if you are a farmer in Africa?


A farmer in Africa or any other place on earth needs insurance. Agriculture is among the most profitable investments with big ROI but it requires much of your time and huge capital. Farmers need capital for farm animals and for raising crops to get their profits. At the onset, there is already the risk of untoward events. To safeguard investment, agriculture insurance is the best option. Today, there are many companies offering such services to farmers.

About farm insurance

Farm insurance involves the payment of premiums to an insurance server. A representative from the company visits the farm to inspect the animals, crops and structures. After evaluation is done, the farmer is given quote of the premium, payment & conditions are agreed and the process is complete.

Advantages of farm insurance

  • Protection of crops, livestock, farming and harvesting from untoward events;
  • Aid in fighting poverty when farm is destroyed due to unpredictable natural disasters;
  • Money from insurance enables farmers to reinvest in farming and other agricultural activities;
  • Farmers have the opportunity to enjoy new technology in the market; and
  • In the interim, farmers have peace of mind.

African farmer, the government and insurance

Government assists farmers to increase their produce for self-reliance in food supply. To encourage farmers to get their farm covered, the government reduces premiums by providing subsidies. This is advantageous as farmers are now paying less. Through subsidies, the cost of insurance becomes more affordable and the farm is now protected against natural disasters.

Mobile financing

In Africa, Kenya is seen as the pioneer and leader in mobile financing. Farmers in Kenya who own and till at least a single acre of land can get insurance. This is a great way to be protected against natural and man-made disasters.

A payment of 5% surcharge is required to buy fertilizers and seeds that are registered under an insurance company where communication between them is via text message.

Mobile financing was introduced in Kenya way back 2009 and now is increasingly used to transact business. With mobile, there no need for claim forms as data are just triggered automatically and distributed from local weather stations. Cheaper and easy to operate, the system removes any mistake in the farmer’s claims.

World Bank support

Last year. Government in Kenya and the World Bank launched Kenya National Agricultural Insurance Program nationwide. This system is complicated as it combines the use of mobile, data from crop yield and sampling taken from statistics. GPS tracking were utilized for covering the entire area. Another positive development is that the government will subsidize and pay insurance premiums of poor farmers from private companies.

Ethiopian model

Last year, a group of Ethiopian, Dutch and international agencies require farmers to pay 10% premium on prices of all agro inputs, such as fertilizers, seeds and pesticides. Their plan was to insure around 15 million Ethiopian smallholders.

In Ethiopia, the government controls the telecoms sector so the private sector has not experienced the mobile boom as the other African states. For 100 Ethiopians, only 34 mobiles are available so majority of farmers are not able to use this modern communication.

However, Ethiopia remains positive that in the near future, they will have access to mobile phones and like Kenya will benefit from innovative technological experiments.

Programs and systems are in place and the farmers are ready to enjoy the benefits of farm insurance. If you were a farmer in Africa, you would surely opt for farm insurance!

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