Rwanda has launched the piloting phase of the National Agriculture Insurance Scheme, which aims to protect farmers against loss of or damage to crops or livestock.
The pilot phase will begin with maize, rice and livestock farmers in 14 districts before it can be rolled out across the country. The scheme is expected to help unlock financing to the sector, which remains largely underfunded.
According to sector figures, in 2016, credit to the agriculture sector was reported at 2.3 per cent in the six months to June, then it plummeted to 1.8 per cent in the same period in 2017.
“We hope the scheme will encourage financial service providers to be more receptive to the agriculture sector,” said Joseph Gafaranga, the president of farmers’ association Imbaraga.
Financial sector figures show that credit to the agriculture sector is dwin- dling as disasters continue to hit farmers hard.
Currently, Sonarwa, Prime and Radiant insurances companies have signed a service level agreement with the government to operationalise the scheme, in which they will be covering 60 per cent of cost of the service, while the government will cater for the remaining 40 per cent.
“By farmers being insured for bad and good seasons, we expect better access to finance and credit, and an increase in the overall productivity at the farm level,” said Joseph Museruka, head of the Insurance Scheme in the Ministry of Agriculture.
Without disclosing the cost of the scheme, Mr Museruka said the budget for the pilot is available and the roll out will depend on demand and take off.
According to government officials, the scheme seeks to push the economy from a culture of providing ad hoc support to farmers in the aftermath of large production shocks to a system of pre-planned and budgeted agriculture insurance.
The scheme also seeks to improve the efficiency of government subsidies.
The pilot insurance scheme will first start with maize and rice even as the government remains under mounting pressure to increase domestic production to feed the growing population and supply raw materials to industries including breweries, maize millers and food processors.