Posted on November, 14, 2024 at 05:19 pm
THE government is set to come up with a comprehensive agricultural insurance scheme as part of efforts to transform the farming sector across the country.
Hussein Bashe, the Agriculture minister made this remark in Dar es Salaam yesterday when receiving an insurance premium pay-out of 1.1bn/- for 222,6 tobacco farmers from 22 Agricultural Marketing Cooperative Societies (AMCOS) in Tabora Region.
The farmers suffered devastating effects of hailstorms during the previous farming season, with the insurance pay out made by NMB Bank in partnership with UAP Insurance (T), its bancassurance partner.
Dr Baghayo Saqware, the Tanzania Insurance Regulatory Authority (TIRA) commissioner, witnessed the handing over, where the minister noted that agriculture remains a high-risk area for insurance cover.
“The appetite is still very low,” he said, commending NMB Bank for its leadership role in that field, affirming that without bancassurance farmers will have little avenue for guarantee to secure loans.
“We should understand that farmers suffer losses during the whole farming life cycle,” he stated, affirming that total earnings from tobacco farmers last year hit 724bn/-, from 717bn/- the previous year.
The bank and its partners were doing a great job in supporting farm sector development which can be taken up by other financial institutions, he said, while the commissioner said the insurance sector has grown substantially since 2018 when new insurance regulations paved the way for bancassurance operations.
“The regulations have been instrumental in the growth of the insurance sector over the years. We understand that the insurance sector is quite sensitive but players should strive to come up with products that add value to the agriculture sector,” he said.
TIRA in partnership with the ministry plans to come up with the Tanzania Agriculture Insurance Scheme to regulate insurance service provision in the sector, he said, while Ruth Zaipuna, the hank’s CEO, reaffirmed commitment to supporting agriculture sector development.
NMB earmarked $108m (291bn/-) in loans to boost tobacco farming for the current financial year, destined for eight regions across the country at 9.0 percent interest rate, she said.
The pay-out follows completion of assessments to ascertain the extent of loss incurred by the farmers, she said, underlining that agricultural insurance is among modern risk management strategies.
It is designed to make the agricultural system more resilient so long as banks offer flexible agriculture insurance products, she said, noting that this is the second time NMB compensates tobacco farmers in Tabora Region.
It handed over 374m/- that benefited over 400 farmers, she said, pointing at bank efforts to follow up with insurance partners to ensure timely compensation payments in case of disaster.
Agriculture insurance offers a safety net for such shocks, she said, pointing at the need to invest in financial inclusion for smallholder farmers to cope with climate-related threats.
"Smallholder farmers face a range of shocks and challenges beyond their control that can have a drastic impact on their incomes and livelihoods," she explained, hailing the bancassurance partnership in mitigating such risks.
Nelson Rwihula, the UAP (T) chief executive officer said the insurer had revamped its agriculture insurance product offering this year to make it accessible to a wider range of the farming community.
Source: IPP