‘Building farmer’s climate resilience critical in achieving SDGs’

THE insurance industry should play a pivotal role in building climate resilience by supporting small-holder farmers to access risk mitigation measures to help Africa fight climate change and achieve Sustainable Development Goals (SDGs).

Officiating at the 33rd Annual General Meeting of ZEP-RE (PTA) Reinsurance Company), a leading insurer established in 1990 by the Common Market for Eastern and Southern Africa (Comesa) in Victoria Falls last week, Insurance and Pensions Commission (Ipec) board chairperson, Mr Albert Nduna, who was guest of honour, said re-insurance is a key driver of the continent’s development agenda and operationalisation of the African Continental Free Trade Area.

He said without insurance protection of people and assets, achieving the Agenda 2030 Goals will remain a pipedream.

Mr Nduna said the protection gaps that are increasing due to the increased frequency of the El Nino and La Nina-induced droughts, cyclones and floods in Zimbabwe and Africa in general, attest to the fact that climate change is now the greatest threat to humankind and sustainability.

“In our jurisdictions, we should be making significant efforts and prioritise the discussion on the insurance industry playing a pivotal role in building climate resilience,” he said.

“One of the efforts is Zimbabwe’s journey to implementing agricultural index insurance, taking lessons from the experiences of Kenya and Uganda who took the lead in promoting agricultural index insurance for smallholder farmers.

“The role of de-risking agriculture starts with the Government providing the necessary support, such as premium subsidies, the insurer designing appropriate products for the smallholder farmers and the regulator ensuring the appropriate regulatory environment,” said Mr Nduna.

“It is against this background that I call on re-insurance companies like ZEP-RE, to actively participate in the development of insurance for smallholder farmers by partnering with underwriters, so that they can access the necessary capital and expertise to design and distribute affordable and effective insurance products for smallholder farmers,” he added.

Mr Nduna also said offering coverage to smallholder farmers will promote resilience against climate-related risks, noting that African insurance regulators on the continent, including Ipec, are prepared to engage with insurance practitioners on climate-proofing and creating climate resilience, which is important given the continent’s climate vulnerability and reliance on agriculture.

Mr Nduna bemoaned the slow insurance penetration rate in Africa, partly attributable to inappropriate products from the supply side and failure to shift focus to the informal sector. He called upon re-insurance companies’ underwriters in member states to develop appropriate products that meet everyone in the financial inclusion agenda “leaving no one behind”.

Mr Nduna said since its formation, ZEP-RE has spread to nine Comesa states and has written a cumulative premium of over US$1,7 billion and paid over US$1 billion in claims.

African population remains largely uninsured with an average insurance penetration of three percent against a global insurance penetration of seven percent.

“According to the Access to Insurance Initiative, insurance as a risk mitigation measure is at the core and a key enabler to at least nine of the 17 Sustainable Development Goals,” he said.

“Without the protection of people and assets, achieving the Agenda 2030 Goals will remain a pipedream.

“Most Governments are committed to achieving the SDGs by 2030. With only five years to go and the African continent’s mission appearing to have derailed, let it be a call to action to everyone that the programming be deliberate and focused on achieving the SDGs by 2030,” said the official.

He said one of the key drivers of the full implementation of the AfCFTA must be re-insurance, which is a cross-border business that should lead the pack and drive the full implementation of the AfCFTA to improve the ZEP-RE footprint in Africa.

Ipec Commissioner, Dr Grace Muradzikwa, said the role of re-insurers is paramount as the sector provides critical support to underwriters, which enhances market stability and facilitates economic growth.
She called upon the industry to comply with all regulatory requirements and ethical business practices.