World Food Day: boosting agriculture helps fight African poverty

According to the Food and Agricultural Organization (FAO), more than one third of the world's 805 million poor live in Sub-Saharan Africa. In times where climate change is exposing farmers to increasing floods, storms and droughts, insurance can play an important role in establishing a more resilient agriculture in Africa.

Across the world, poverty has decreased since the 1990s according to the FAO – with one exception: Sub-Saharan Africa. Today there are 38 million more people in need than at the start of the nineties. The reasons for this increase are complex. Two key factors are a growing population and an increasing variability in climate conditions.

What does the future hold for Africa?

Agriculture employs 65% of the African population and contributes 32% to the GDP. Farming is therefore crucial to end hunger by moving people out of poverty. While there is optimism about Africa's future, there are still considerable challenges to overcome. The population will continue to grow and the effects of climate change are expected to become even more evident in the years ahead.

As Swiss Re has shown in its publications Sub-Saharan Africa – breadbasket for a growing population, Agro insurance hot spot: Mozambique, and the newly published Agro insurance hotspot: Kenya, increasingly frequent storms, floods and droughts pose a threat to Africans' reliance on agriculture for their living. This in turn makes the battle against poverty an even bigger challenge.

How to make a difference

As the FAO notes, fighting poverty is a complex problem where many steps have to be taken in a concerted fashion. Climate change must be addressed seriously, now, as a first step. At the same time, cooperation between all stakeholders needs to be strengthened in order to boost training opportunities and technology use.  

These points were underlined by participants at the "4th Swiss Re Agricultural Insurance Workshop" in Kenya (see video here of the key statements), who all stressed that cooperation between governments, NGOs, training institutions and the private sector is urgently needed to develop an agricultural system more resilient to external shocks.

Swiss Re's contributions

Protecting farmers worldwide against perils has been Swiss Re's business for decades. While it was difficult to bring insurance solutions to small scale farmers in the past, there are many projects making this a reality today. In our video "Partnering for Food Security" we explain our stance on agricultural insurance and how microinsurance programmes work. The programmes Swiss Re supports worldwide are cases in point.

In India, Weather Index Crop Insurance supported by Swiss Re's Agriculture team includes more than 20 million farmers. We are now introducing similar programs with local reinsurers in 15 African countries, bringing much needed protection to the core of the economy in these countries.

Swiss Re Corporate Solutions works on the ground with our partners on innovative agri-microinsurance projects such as R4 in Ethiopia and Senegal and Kilimo Salama in Kenya and Rwanda. The latter has already proven its value during the most recent drought, keeping farmers in business though fields were bare.

Swiss Re Global Partnerships, a unit a dedicated to developing disaster risk financing solutions for national governments, was instrumental in getting the African Risk Capacity off the ground. Together with Swiss Re Corporate Solutions, they helped create ARC Insurance Company Ltd, which will initially offer drought insurance to the governments of Kenya, Mauritania, Mozambique, Niger and Senegal.

Helping smallholder farmers become entrepreneurs

All these initiatives are important to feed the growing population of Africa in the decades to come. As Shadrek Mapfumo from the International Finance Cooperation points out: "As long as we continue to promote farming as subsistence and not as a business venture, I do not see our agriculture sector growing and competing with the other sectors." Part of this transition will also involve making professional insurance available to all farmers in Africa.

For this to happen "crop insurance must be a viable business proposition" says Swiss Re's Lovemore Forichi. "Otherwise it will not be sustainable in the long run," he continues. To make it practicable we need to scale up the solutions we already offer, and at the same time give risk management training to farmers, government representatives and other key stakeholders.

Insurance is not a silver bullet to fight poverty in Africa. Still, for farmers in many parts of the world it is normal to have insurance protection against natural perils. Bringing this normality to farmers in Africa can make a fundamental difference to their lives and the continent's broader economic prosperity. After all, the fundamental purpose of these efforts is to keep African farmers in business, even if disaster strikes.

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