The National Insurance Commission (NIC) has entered into a Memorandum of Understanding (MoU) with Policy LINK to collaborate on the development of guidelines for the establishment and operation of the Agriculture Insurance Fund.
This partnership aims to facilitate the successful launch and implementation of the Agriculture Insurance Fund, which is designed to provide insurance coverage and risk mitigation for the agricultural sector.
The guidelines would put in place an effective governance system to manage the Fund and provide protective cover for farmers against unpredictable weather patterns, pests and diseases, which could destroy the livelihood of farmers and food security.
Under the MoU, it is expected that Policy LINK would provide necessary technical support for the designing of the model taking into consideration the crops, segment of famers to be insured, regional focus and even subsidies.
The NIC and Policy LINK have agreed to work together closely to develop comprehensive guidelines for the Agriculture Insurance Fund. This collaboration will involve the sharing of expertise and resources to ensure the fund’s effective functioning.
The primary focus of this partnership is to cater to the needs of the agricultural sector. By establishing insurance coverage for farmers and agricultural businesses, the Agriculture Insurance Fund aims to mitigate risks associated with crop and livestock production.
The Agriculture Insurance Fund is a Statutory Fund that is established by the Insurance Act, 2021 (Act 1061) to help make agricultural insurance premiums more affordable, develop the logistics for the insurance delivery, train and build the capacity of the human resources and promote the deployment of technology.
Agriculture is a high-risk area in terms of insurance premiums, which are high and data have indicated that even banks do not give out credit facilities often to farmers due to the sector’s high risk nature.
Agriculture Insurance to Ensure Financial Inclusion
It has been said that agriculture insurance would ensure financial inclusion, particularly for smallholder farmers in a sector that provides livelihoods for nearly 40 per cent of our population and contributes about one-fifth to the country’s economic value (Gross Domestic Products).
Mr Michael Kofi Andoh, Acting Commissioner of Insurance, National Insurance Commission, in a speech, noted that the knowledge and experience from Policy LINK would be invaluable and yield significant benefits for the agricultural sector.
Mr Michael Kofi Andoh noted that the NIC together with Policy Link had begun designing the operational guidelines in line with government agricultural policy to identify the crops, number of farmers, geographical areas to be supported.
“The numbers may also depend on how much money we’re able to raise into the fund. So we are expecting that by September 2024, we would have finished the design and lunched the agricultural insurance fund,” Mr Andoh said.
Mr Yunus Abdulai, Policy LINK Country Lead, noted that agricultural insurance had become a key solution and would empower farmers to effectively manage climate related risks, safeguarding food production and security.
“Current premiums on agriculture insurance are above the reach of many small holder farmers who are the backbone of Ghana’s agriculture activities. We will ensure a more secure future for our farmers and nation,” he said.
Policy LINK is a global Feed the Future programme that advances leadership and collaboration for better policy systems and with funding support from the USAID Mission in Ghana. It supports the Government and policy actors, such as the Ministry of Food and Agriculture, the NIC, the private sector, farmer-based organizations and groups, civil society and the media.
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