The government will pay 40 per cent of insurance costs for rice, maize and dairy farmers, as it seeks unlock funding, boost investments and improve the livelihoods of smallholder farmers.

The move comes when credit to the agriculture sector is dwindling, with data from the National Bank of Rwanda showing credit to the agriculture sector dropped to 1.5 per cent from January-June.

In 2016, credit to agriculture was reported at 2.3 per cent in the six months to June, then it plummeted to 1.8 per cent during the same period in 2017.

This means agriculture is not attracting the required funding to spur growth and support the economy. The lenders say agriculture is a high risk business especially when the country experiences no rain or too much of it, which leads to crop failure, thus farmers are unable to

service their loans.

Benefits

“The subsidies are going to open the window for banks to lend more actively to the agriculture sector,” said Maurice Toroitich, managing director of Bank Populaire du Rwanda (BPR AtlasMara).

It’s understood that livestock insurance could kick off in January 2019, while crop cover is expected to be rolled out in agricultural season B in March 2019.

The delay to rollout the scheme is partly blamed on lengthy procurement process. 

Rwanda Today understands that the Ministry of Agriculture invited bids from interested insurers to cover crops and livestock.

However, by press time the selection process had not been completed. The ministry also has not made public the budget to support the subsidies saying the scheme is demand- driven, meaning as more farmers seek insurance covers, the budget will be increased.

Starting the pilot insurance scheme with maize and rice comes as the government remains under increasing pressure to increase domestic production to feed the growing population and supply raw materials to industries including breweries, maize millers and food processors.

African Improved Foods (AIF), a soya and maize flour maker for children and mothers has to import large quantities of maize from Uganda, adding to the production costs and also draining the foreign exchange reserves.

Beverage makers including Bralirwa also import huge quantities of maize from the region for use as a raw material in beer manufacturing.

Target areas

The dairy cattle insurance cover will be piloted in Nyanza, Gicumbi, Musanze, Rwamagana, Gatsibo, Ruhango, Nyagatare and Burera.

Crop insurance targets rice and maize farmers in Gatsibo, Nyagatare, Bugesera, Gisagara. Kirehe, Gicumbi, Huye, Rulindo, Ngoma and Rwamagana districts.

“We have mapped the country in different small grids that match with rainfall forecasts from the Rwanda Metrological agency. We have a large amount of data that allows us to assess

the risk in different parts of the country,” Thomas Bazarusanga the country manager of Acre

Rwanda, told Rwanda Today.

One Acre Rwanda is the lead implementing agency of the scheme after they successfully rolled it out in Kenya and Tanzania.

Tentative premium rates show that farmers in theEastern province, which is prone to drought could pay a rate of 11 per cent to cover crops and livestock, more than what farmers in Northern and Western provinces, which receives enough rain.

They could pay a rate of five per cent. “ We are going to assess the risks based on different agro-ecological zones and the premiums goes with the risk,” said Mr Bazarusanga.

He added that the government has tried to encourage farmers to consolidate their land not only to benefit from the insurance scheme, but to also access inputs and technical assistance

from agronomists.

Currently, only UAP Rwanda, Soras General Insurance and Sonar wa General Insurance cover agriculture, but they mostly work with middle and upper class farmers, leaving out the majority smallholder farmers.