The National Insurance Commission (NIC) has entered into a Memorandum of Understanding (MoU) with Policy LINK, aiming to establish operational guidelines for the effective implementation of the Agriculture Insurance Fund. These guidelines are instrumental in establishing a robust governance system for managing the fund and providing essential protection for farmers against the unpredictable threats posed by weather patterns, pests, and diseases. These threats have the potential to jeopardize the livelihoods of farmers and food security.
In this collaborative effort, Policy LINK is expected to offer technical support in designing a comprehensive model, taking into account factors such as the types of crops to be covered, the specific farmer segments eligible for insurance, regional focus, and the potential for subsidies.
The Agriculture Insurance Fund is a Statutory Fund created under the Insurance Act, 2021 (Act 1061). Its primary objectives include making agricultural insurance premiums more accessible, enhancing the logistics for insurance delivery, strengthening the capabilities of human resources through training, and encouraging the deployment of technology in the sector.
Agriculture is a high-risk sector in terms of insurance premiums, with high associated costs. This situation has been such that even financial institutions, like banks, are often hesitant to provide credit facilities to farmers due to the sector’s inherent risk nature.
Agricultural insurance has the potential to foster financial inclusion, particularly for smallholder farmers, a demographic that constitutes nearly 40 percent of the population and contributes significantly, about one-fifth, to the country’s economic value, as measured by Gross Domestic Product (GDP).
Mr. Michael Kofi Andoh, Acting Commissioner of Insurance at the National Insurance Commission, expressed optimism regarding the valuable knowledge and experience that Policy LINK would bring to the table, highlighting the significant benefits anticipated for the agricultural sector. He further disclosed that the NIC, in collaboration with Policy Link, has initiated the development of operational guidelines in alignment with the government’s agricultural policy, focusing on identifying the types of crops, the number of farmers, and the geographic regions 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 launched the agricultural insurance fund,” Mr. Andoh stated.
Mr. Yunus Abdulai, Policy LINK Country Lead, emphasized that agricultural insurance had evolved into a vital solution empowering farmers to effectively manage climate-related risks, thereby safeguarding food production and security. He acknowledged that current premiums for agricultural insurance often exceed the means of many smallholder farmers, who are the backbone of Ghana’s agriculture. Policy LINK is committed to ensuring a more secure future for these farmers and the nation at large.
Policy LINK is a global Feed the Future program that promotes leadership and collaboration to enhance policy systems. With funding support from the USAID Mission in Ghana, it collaborates with government bodies and policy stakeholders, including the Ministry of Food and Agriculture, the NIC, the private sector, farmer-based organizations, civil society, and the media, to advance policy goals.
Comments are closed.