BY ABEBE WOLDE GIORGIS
The Ethiopian government in collaboration with development partners and donors has introduced the provision of crop insurance service with a view to rescuing yield damage either due to natural calamity or manmade catastrophe.
Undeniably, agriculture is vulnerable to drought and flood and when severe climate conditions occur it incurs heavy toll on farm production which in turn leaves farmers to be indignant.
Solomon Zegeye works in Nyala Insurance Company as Micro insurance and Agricultural Insurance Manager.
As to him, there are very few companies which are engaged in crop insurance because it is not feasible. Therefore, the private sector shows very little interest to involve in such a lucrative business.
Nyala insurance is
one of the companies which engaged in crop insurance to deliver its social
responsibilities and to support the government efforts on poverty reduction. As
mentioned, above crop insurance help farmers serve when their harvest fails due
to drought.
To prove whether the crop is failed by drought or not, the Ethiopian Metrological Service Agency provides information to the pertinent agronomists obtained from satellite and checkes the damage on the farm.
As to Solomon, basically there are two types of products that could get insurances. The first one is crop or risk insurance intended to compensate damages caused by drought, pest and fire. Such kind of insurance services are provided both to commercial farmers and small scale ones.
The other one is the insurance services provided with the cooperation of donors and development partners known as index based insurance. It is provided to the pastoral communities when their cattle face heavy toll because of lack of grazing due to severe drought. The two types of insurances provided only for damages occurred due to drought.
As farming is subsistence here in Ethiopia, when rain fails or heavily deducted the probability to crop failure is very high. Similarly, in the low land parts of the country pastoralists might lost their animals due to the absence of grazing during the extreme weather conditions. The livestock insurance is provided to pastoralists with collaboration of donors.
As to Solomon, many private companies shy away in involving in disaster risk Insurance business because it requires research fund in which they ill afford it.
Even in Europe and the United States mostly index base insurance conducted with the financial support of the government and research institutions. After assessing the situation, insurance companies involve in the business as partners through pilot program and if it is feasible they continue the job in conventional way.
In the advanced countries private companies tried to do business in index based crop and disaster insurance for 10 years, but unable to sustain and later quit the project.
Due to the risk that may occur in Ethiopia, index based crop insurance and livestock insurance introduced with the cooperation of USAID and other partners in the form of public private partnership.
For the last 10 years, the mentioned projects were implemented in various parts of the country. Regions incorporated in the projects are among others, Tigray, Gambella, Beneshangul gumuz, Amhara and part of Oromia and they gained a lot from index based crop insurance.
Index based livestock insurance also implemented in Afar and Somali regions.
Farmers who grow teff and Maize obtained crop based insurance and in Gambela, the insurance coverage was conducted for maize growers, too. In northern Ethiopia, farmers who grow wheat and teff obtained insurance coverage. In the last 10 years, based on index insurance, some 37 thousand farmers obtained insurance coverage.
In Gambela region, due to crop failure farmers once obtained 630 thousand birr for index based insurance again on the other occasion they obtained 180 thousand Birr.
The money was delivered after it was proved that farmers faced crop failure due to drought. To obtain the money being the membership of the microfinance in their areas is taken as a criterion and to that end they should purchase a premium.
They must also have book for their saving account. Approving whether crop failure occurs by flood or drought is the mandate of the Ethiopian Metrology Service Agency.
As mentioned above, the information in this regard comes from satellite and interpreted by agronomists on the ground. However, as to Solomon, with regard to interpreting satellite information and checking the damage on the farm, there is shortage of professionals. It also needs Information Communication Technology and after getting the information working with bigger cyber is essential.
In gathering the information the government plays a dominant role and the sole entity is the Ethiopian Metrology Agency.
The micro saving and credit associations established in the rural part of the country play important role and serve as bridge between the insurance companies and farmers.
In Gambella region, the insurance money was distributed to farmers through micro finance institutions and to that end there must be efficient system. The premium micro products are collected from farmers by the micro finance institutions and deliver to insurance companies.
As to Solomon, index based insurance is conducted in the Aligore system and in such approach the insurance provider and the receiver are not equal partners.
The insurance company never regains the money it is rather works to deliver social responsibilities with the cooperation of partners. What farmers paid for premium and what they receive in the form of insurance is disproportional as they pay little but receive a lot.
Ethiopia is signal of sustainable development goal prepared by the United Nations. As to the goal, the major instrument for reducing poverty is the scheme of microfinance as it plays crucial role in stabilizing the economy of a nation. Had there not been insurance service, poverty would have been exacerbated to the level of beyond control.
The achieved economic progress witnessed in the last two decades would have been reversed. The World Bank and UNDP have supported the index based insurance carried out in Gambela and Tigray region. USAID on its part supports projects in Amhara region.
The role of the government is appreciated because as a sole facilitator and supporter, it provides satellite information to conduct the insurance activities for implementing the project has been impossible without its effort.
The Ethiopian Herald March 25/2021
