Frequent droughts threaten food security
Agriculture index-based insurance crucial
NAMFISA approached the World Bank to conduct a technical assistance diagnostic assessment of the preparation progress towards the launching of agriculture index-based insurance.
The advent of frequent droughts owing to climatic changes threaten food security and the livelihood of many Namibians, the Namibia Financial Institutions Supervisory Authority (NAMFISA) said.
Hence, the agriculture index-based insurance carries the potential to serve as a catalyst in promoting financial inclusion, in cushioning farmers against adverse weather conditions faced by farmers, and in helping to effectively utilise fiscal spending, particularly regarding disaster risk programmes.
According to NAMFISA, essentially, index insurance is designed to protect farmers against risk based while keeping costs low.
Pay-outs are made according to the predicted losses incurred by smallholder farmers, usually based on the index’s correlation with average losses in the area. A physical inspection of the loss area is not necessarily conducted, NAMFISA added.
“If the rainfall received is below a pre-specified threshold for a specific area, the insurer will automatically pay out based on the parametric data obtained from the index reader.”
In addition, if no drought conditions are experienced in the particular period, the insurance company will not pay out, even if other adverse events such as floods or pest outbreaks occur. Similarly, if an area receives rainfall that is too inadequate to fall within the agreed contract limits, the insurance company will not compensate the farmers.
Dependence
NAMFISA noted that 70% of the Namibian population depends on agricultural activities as a livelihood and over the last few years agriculture productivity has continued to decline.
According to the Namibia Statistics Agency (NSA), the livestock farming sub-sector contracted by an average of 0.4% over the past six years.
This illustrates the adverse impact of the droughts experienced nationally in recent times, NAMFISA pointed out.
To identify the challenges faced by farmers, particularly communal farmers who do not have access to agriculture insurance products for livestock and crop production risks in Namibia, NAMFISA undertook a desktop study to determine the coverage and feasibility of agriculture index-based insurance in the country.
The study concluded that there is an appetite for agriculture index-based insurance in Namibia, which led to the establishment of a Multi Sectoral Working Group that comprises of insurance entities, government offices and agencies, banks, farmers associations and other relevant stakeholders in the agriculture and non-bank financial institutions sectors, NAMFISA said.
The non-banking financial instructions regulator has approached the World Bank to conduct a technical assistance diagnostic assessment of the preparation progress towards the launching of agriculture index-based [email protected]
Hence, the agriculture index-based insurance carries the potential to serve as a catalyst in promoting financial inclusion, in cushioning farmers against adverse weather conditions faced by farmers, and in helping to effectively utilise fiscal spending, particularly regarding disaster risk programmes.
According to NAMFISA, essentially, index insurance is designed to protect farmers against risk based while keeping costs low.
Pay-outs are made according to the predicted losses incurred by smallholder farmers, usually based on the index’s correlation with average losses in the area. A physical inspection of the loss area is not necessarily conducted, NAMFISA added.
“If the rainfall received is below a pre-specified threshold for a specific area, the insurer will automatically pay out based on the parametric data obtained from the index reader.”
In addition, if no drought conditions are experienced in the particular period, the insurance company will not pay out, even if other adverse events such as floods or pest outbreaks occur. Similarly, if an area receives rainfall that is too inadequate to fall within the agreed contract limits, the insurance company will not compensate the farmers.
Dependence
NAMFISA noted that 70% of the Namibian population depends on agricultural activities as a livelihood and over the last few years agriculture productivity has continued to decline.
According to the Namibia Statistics Agency (NSA), the livestock farming sub-sector contracted by an average of 0.4% over the past six years.
This illustrates the adverse impact of the droughts experienced nationally in recent times, NAMFISA pointed out.
To identify the challenges faced by farmers, particularly communal farmers who do not have access to agriculture insurance products for livestock and crop production risks in Namibia, NAMFISA undertook a desktop study to determine the coverage and feasibility of agriculture index-based insurance in the country.
The study concluded that there is an appetite for agriculture index-based insurance in Namibia, which led to the establishment of a Multi Sectoral Working Group that comprises of insurance entities, government offices and agencies, banks, farmers associations and other relevant stakeholders in the agriculture and non-bank financial institutions sectors, NAMFISA said.
The non-banking financial instructions regulator has approached the World Bank to conduct a technical assistance diagnostic assessment of the preparation progress towards the launching of agriculture index-based [email protected]
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