To bring change and enhance productivity in the agriculture sector, small-scale farming which is the backbone of the economy and means of employment for the majority of the rural population, should come to the limelight.
To improve the standard of living of farmers and catalyze investment, providing insurance protection through micro financing could be taken as a way out in this regard.
While Nyala Insurance Company Micro Insurance Department Manager Solomon Zegeye made an exclusive interview with The Ethiopian Herald said that though rain-fed and nature-dependent small-scale farming has big risk, his company is involved in insurance business in the sector eyeing at the long term return. It as well made its objective delivering its corporate social responsibility as a forerunner in the country.
According to Solomon, the objective of the company’s venture is to make small-scale farming bankable and to encourage farmers to be courageous for harvesting high yield crop and livestock productivity through loan. The company began its pilot projects in 2007 in various states with the cooperation of donors such as Oxfam America
He said that in 2009-2015, over 9,250 small-scale farmers in Tigray and Amhara states have become beneficiaries of drought insurance. On the other hand, with a project named “Promoting Autonomous Adoption” and backed by UNDP, governmental and non-governmental organizations 113 and 790 small-scale farmers in Gambella and Tigray states respectively have managed to receive over 2.1 million Birr from drought insurance and the money comprises a sum meant for damage caused by El-Nino.
Asked about the difference between regular insurance and that of micro insurance, Solomon said that in the regular insurance business mostly involves people who have wealth and a capacity to pay premium for property and life insurance whereas, in micro insurance, in the first place, farmers should be a member of the farmers credit and saving associations. Here his company intervenes to encourage farmers to get more credit from the association and when damage occurs on their crop or livestock due to drought, flood, pests and insects the Insurance company outreaches farmers through their credit association.
As to Solomon, the agriculture sector is highly vulnerable to various types of risks. Hence, before involving in insurance business, to encourage farmers to get more credit from the association and when damage occurs on their crop or livestock due to drought, flood, pests and insects the Insurance company outreaches farmers through their credit association.
As to Solomon, the agriculture sector is highly vulnerable to various types of risks. Hence, before involving in insurance business, making critical and analytically research is a must. And in this case donors involve in supporting the research financially and technically.
He also announced plan that Nyala Insurance, would generate up to 10 per cent of its income through insurance business with small-scale farming in collaboration with the government and other stake holders over the next five years. However, Solomon underlined that before getting the return the sector must reach a robust level. According to studies, citizens that make 90 per cent of the Ethiopian population have neither property nor life insurance.