Insurance – A Safety Net for Smallholder Farmers

Joyce Kabura Njenga, VisionFund’s Insurance Manager for Africa works in Nairobi, Kenya. She writes with passion about the important support that insurance is providing to smallholder farmers in Africa.

The World Bank tells us that 78% of the world’s 800 million poor people live in rural areas and they mainly depend on agriculture for survival. These hardworking smallholder farmers are a focus for the work that VisionFund carries out in 28 countries in Africa, Asia, Eastern Europe and Latin America.

Before I get into the detail of how micro insurance is helping smallholder farmers, I want to share a quote from George Monbiot – an author and a columnist with The Guardian newspaper – that drives me forward in my work with VisionFund.

“If wealth was the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire.”

This is a powerful statement in countries where the majority of poor people are surviving on less than $1 a day. I see this hard work every day as I visit clients in rural areas where we are telling them how insurance coverage could provide a vital safety net if a disaster were to hit their crops or livestock or, more especially, their health.

Our programme called “Bima Maono-Insure Vision” is new, it was launched in 2017 and helps transform agriculture through a holistic support system that includes climate insurance and other forms of micro-insurance, micro-finance and agriculture development. Crop insurance was first piloted in Tanzania to help our clients grow their way out of poverty. To date, almost 6,000 financially excluded smallholder farmers in Tanzania have benefited from the programme offering both insurance and loans that together have had a positive impact on more than 35,000 lives. Today it also operates in Kenya and Malawi and we are pleased to share that 69% of our clients benefitting from micro-insurance are women.

The programme depends on engaging with like-minded partners such as InsuResilience Investment Fund (IIF) who provide funding elements of the programme. Then, with IIF’s technical assistance funding, VisionFund is able to develop products with local insurance companies, local risk surveyors and reinsurance companies and also sign contracts with commercial buyers that agree not only on the price for each harvest but guarantee collection at the end of the growing season. The crop insurance coverage begins from planting right through to harvest for multi perils.

Multi-peril crop insurance for smallholder farmers is the first of its kind in Africa. Through the agronomic-related partnerships, farmers are also advised on the best crops to grow and within what timelines, taking into account the geographic and climate data that is used to determine which will make the best returns for the farmers. From the funds received from IIF, VisionFund provides the loans for the farmers to purchase the recommended seeds (beans, cashew nuts, tea, coffee or maize, for example) and also pay for the insurance coverage. In addition to covering the farmer throughout the growing cycle right up to harvest, the insurance also includes health insurance for the farmer and his family. If disaster struck and the farmer died, the insurance would write off the loan balance, cover the funeral costs and would also contribute to paying for the education of the children. 

Our insurance and lending programme is only relevant to farmers who grow crops that can feed their families and communities. It’s a new programme so a number of farmers continue to grow a small amount of tobacco as it is drought hardy and they know that they are guaranteed money for this crop even though it pays less than the other edible crops.

We still have a lot of work to do; according to the World Bank by 2050 agriculture needs to provide 50% more food to nutritiously feed nine billion people. I’m convinced that our insurance work with smallholder farmers will help achieve this goal and improve food security. For our work to succeed we have to prove that our clients can trust the promises we make to them. To make good on these promises, we sign contracts with commercial buyers of food produce who guarantee the fee they will pay when they collect the crops.

Insurance is only one aspect of the changes we can help our clients to make. In the villages I visit it is common for the children to fetch water on their way to school so that they can have a drink, paint pictures and wash their hands, they also have to collect water on their return from school so that it can be used to water the vegetable gardens in their homes. VisionFund loans enable farmers to have an income which means they can add wrought iron roofs and gutters to their homes so that they can capture rain water in large tanks for use in their homes and gardens. This means that their children no longer have to make long treks to search for water. They now have easy access to the water to take with them when they go to school.

In addition to our multi-peril crop insurance, we introduced, ARDIS – Africa and Asia Disaster Insurance Scheme – in January 2018 to four countries in Africa and two in Asia to increase access to finance and provide post-disaster recovery lending to rural families and smallholder farmers who live below the poverty line and participate in VisionFund’s microfinance network.

We are also gradually introducing livestock (dairy and chicken) insurance into African countries where we have partners keen on equipping smallholder farmers with good animal husbandry practices that allows them to increase milk production or increase income. The insurance coverage also allows farmers to use their own animals as collateral for their loans and provide that much needed safety net in case of an epidemic. With the insurance coverage clients are confident to acquire loans in order to improve their livelihoods with better quality animals and thus increase their income.

Our micro-insurance products are still in their infancy and we are learning all the time. We will continue to adapt our offers to better meet the needs of our clients.

I’m excited to be part of the VisionFund insurance team as I know that, with our help and advice, our smallholder farmers will be able use agriculture to improve their livelihoods and provide better lives for their families.

I am blessed to be here to serve in this ministry with my technical skills in insurance. I’m also lucky to have faith in God and I know that he helps me every day as I meet with clients. I experience his support in my work every day and this verse from Hebrews 6:10 is one that resonates with me. God is not unjust; he will not forget your work and the love you have shown him as you have helped his people and continue to help them.