Hollard benefits 16 thousand smallholder farmers directly in the central region of Mozambique

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Hollard benefits 16 thousand smallholder farmers directly in the central region of Mozambique

12:49 CAT | 26 Aug 2024

Photo courtesy: Hollard Mozambique

Hollard-Agri, an innovative micro-insurance initiative, is making a significant impact on the lives of 16,000 small-holder farmers affected by drought in Mozambique’s central region of Manica, Tete and Sofala.

Launched a year ago, this micro-insurance scheme is providing critical coverage to small-holder farmers, securing their livelihoods, resilience and fostering sustainability. For this product covering only the cost of seed, Hollard paid out Mts 10 million of claims, following severe drought caused by the El Niño phenomenon.

Israel Muchena, Hollard Managing Director of Life & Agricultural Insurance, stated, “The number of farmers covered directly, 16,000, is tiny compared to the 4 million smallholder farmers in Mozambique. However, what we are doing so far could serve as a baseline study to launch a national programme with all stakeholders in the development of the agricultural sector who have not yet implemented measures to protect farmers and improve their resilience”.

Hollard-Agri’s micro-insurance scheme is designed to be accessible and affordable, with lower premiums that make it feasible for smallholder farmers to participate. The most basic option of the same climate insurance offers financial protection in the event of severe or extreme drought in the stages of germination until maturation of the crops. The payout process is streamlined, often triggered automatically by satellite data or weather index thresholds, ensuring timely financial support without lengthy claims procedures.

Currently, half of the farmers covered are from a specific partnership where insurance is included during sale of seeds of Phoenix Seeds Lda. “At the beginning of the season, farmers buy insured seeds, a more affordable approach that has worked well” Muchena emphasized.

The GermanWatch global report identified Mozambique as one of the most vulnerable countries in the world to severe climate risks. Agriculture is the backbone of Mozambique’s economy, with a large portion of the population relying on farming for their sustenance and income.

Changing weather patterns have increased the frequency and severity of droughts, exposing farmers to significant financial risks. Lack of financial inclusion and traditional insurance models often fail to meet the needs of small-scale farmers due to high premiums and complex claim processes.

Hollard-Agri -seedbundling is Hollard Mozambique’s flagship parametric insurance product, seeks to optimize opportunities for creating value and better life conditions to communities, while also delivering value and innovation within the insurance market.

Source: Hollard Mozambique /Media Release