Boon for farmers as insurance policy unveiled

Cartoon

Patrick Githinji

APA Insurance and Agricultural Finance Corporation have launched an Index Based Weather Insurance policy in an effort to increase food security in the country,

Under the policy, dubbed ‘IBWI’, farmers will get compensation when crop production is affected by weather. Under the deal, APA will provide the crop cover for the farmers while AFC will provide loans for farming.

APA Insurance CEO Ashok Shah cited the food security situation in the country, saying agriculture insurance is the key in mitigating the risks inherent in farming and improving food security.

Provide loans

The cover will also encourage finance institutions to provide loans to farmers, since they will be assured that the money lent out will some back.

"It means that more farmers can get loans knowing that if the insured peril does happen, the bank will be paid by the insurance company," Shah said.

Meanwhile Agriculture Permanent Secretary (PS) Romano Kiome, called in commercial banks to avail more loans to farmers in order to support the country’s food security measures.

Transform businesses

Kiome said small-scale farmers need the loans to transform their agricultural based businesses to a more innovative and commercially oriented businesses.

"Agriculture is a big business and contributes to the economy. Advancing more loans to farmers would assist Kenya to become food sufficient," Kiome said.

He said banks would rather not give loans to farmers due to the unpredictability of weather patterns

"Last year only three per cent of money lent by banks went to farmers. This is very little. We would like these statistics to go up to 20 per cent, " the PS said.

Kiome blamed the low margin on the liberalisation of market, arguing that before the market was liberalised, banks were required to lend 17 per cent of their huge lending amount to farmers.

"But this has gone lower that we anticipated. We are looking at it and we are doing something on it," he said.

By AFP 5 hrs ago
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