Increased resilience against drought and extreme rainfall for smallholder farmers in Uganda
(Frankfurt, Kampala) Induced by El Niño in 2016, Uganda faced one of the worst drought events in recent years, causing severe food shortage and livestock mortality rates to increase. In the short term such events especially drive the rural population into crisis mode, often for months. In the long term they increase the danger for small income households to either slip back into poverty or even sink deeper into it.
With around 70% of Uganda’s total population depending on agriculture as a means of employment, source of livelihood, consumption and income, natural disasters such as drought and flood hit extremely hard and will do so more frequently and severely due to climate change.
In the same year of El Niño, the Government of Uganda launched a national insurance scheme, the Uganda Agricultural Insurance Scheme (UAIS). With the UAIS, the Government currently provides insurance coverage to roughly 150,000 farmers – reaching less than 2% of the 8 million people active in the agricultural sector. With this new project supported by the InsuResilience Solutions Fund (ISF), managed by Frankfurt School of Finance & Management (FS) and funded by KfW Development Bank, the offer of the national insurance scheme will be further enhanced by providing farmers, who have not been reached so far, access to agricultural insurance. Therefor the InsuResilience Solutions Fund (ISF) has signed a grant agreement supporting the improvement of existing and the development of new insurance products for Uganda’s smallholder farmers. The project is implemented by a partnership consisting of the local insurance company Sanlam, representing the national consortium of insurance companies AgroConsortium, and eLEAF, a data processing and product designer from the Netherlands, acting as the project lead. The partnership member Agricultural Reinsurance Consultants (ARC) supports with training and consultation in capacity building as well as distribution of the products, OKO supports in sales and on-boarding of farmers and provides the insurance platform. ISF is providing co-funding for the product development and improvement of the agriculture insurance solutions.
The project is implemented in close cooperation with a number of local aggregators, such as MFIs, associations of farming cooperatives and access providers to off-takers. The partnership aims to complement the national insurance scheme UAIS and close the protection gap by improving the existing insurance products and developing new products to cover additional crops such as sorghum and barley, and other perils such as flood, heatwaves, cold spells and storm. Additionally, an IT infrastructure will be further improved and elaborated to enable an efficient and effective outreach to the farmers so far not reached by the existing scheme.
The insurance policies can be provided either directly to the respective farmers or indirectly through group policies or a meso-level insurance. Furthermore, the products may be bundled with agricultural extension services or loans resulting in a broader and encompassing offer of agricultural insurance products. Covering a wide range of crops and climatic zones the project will help to better meet the needs of smallholder farmers in Uganda.