Posted on :Thursday , 4th March 2021

The government has devised a five-year strategy to entice insurance firms to join the agriculture industry.

The Tanzania Insurance Regulatory Authority's (Tira) proposal comes amid insurance companies' reluctance to venture into agriculture, despite the sector's enormous potential, which accounts for about 28% of the country's Gross Domestic Product (GDP).

According to Tira data, only five of Tanzania's 26 insurance companies provide insurance products and services to the agricultural sector.

Tira's proposal, known as the National Agriculture and Livestock Insurance (NALI) Scheme, aims to change the position of each player in agriculture insurance from 2021 to 2025.

How different actors, including the government, will increase their participation in agriculture insurance is a key part of the programme.

Although the government will be required to invest in agriculture infrastructure such as irrigation farming systems, insurance companies will be required to commit to providing a variety of quality products to a large population.

Farmers' lack of knowledge of the insurance industry, as well as a lack of agricultural experts in insurance companies, have caused insurers to avoid entering the agriculture insurance market.

The strategy is one of many devised by Tira in order to increase the insurance sector's contribution to Tanzania's GDP from 0.53 percent to three percent by 2023, and five percent by 2024.

Tira also plans to achieve its objectives by extending micro-insurance products and services to low-income earners, particularly small-scale farmers, traders and livestock farmers.

"We expect the implementation of the National Agricultural and Livestock Insurance Scheme to be completed so that it can be approved in the next financial year', quoted acting Director of Planning, Research and Market Development, Mr Muyengi Zakaria.

Under the plan, the government will also be responsible for a certain percentage of risks as a means of building confidence in the plan among firms and prospective beneficiaries.

The move, he hopes, will attract both farmers and insurance companies. It will also encourage commercial banks to lend to players in the agricultural sector.

Insurance firms agree that agriculture has an enormous untapped potential.