Ghana sets up Insurance Fund to boost agriculture

Isaac AIDOO in Accra, Ghana  

THE lot of Ghanaian farmers and food security are set to see marked improvement, thanks to the establishment and operationalisation of an Agricultural Insurance Fund by Policy LINK and the National Insurance Commission (NIC). 

The two entities signed a Memorandum of Understanding (MoU) to develop and operationalise an Agricultural Insurance Fund to support farmers to produce more for local consumption and export. 

The Insurance Act 2021 (Act 1061) enjoins the NIC to set up an Agricultural Insurance Fund to provide Insurance to farmers.

Policy LINK Ghana is a five-year activity with the objective of fostering behavioral change that strengthens the capacity and ability of Ghanaian stakeholders to participate in a more transparent, inclusive, and evidence-based agriculture and food security policy process that leads to improved food and nutrition outcomes and broad-based economic growth.

Yunus Abdulai, country lead for Policy LINK, pointed out that ensuring financial inclusion was essential in “our quest to grow Ghana’s economy, particularly in a sector that provides livelihoods for nearly 40 percent of our population and contributes about one-fifth to the country’s Gross Domestic Product.”

This essential product can empower farmers, especially smallholder farmers, to effectively manage climate-related risks, safeguarding food production and security.

Signing the MoU symbolized and formalized respective commitment of the two entities to enhance the mutually beneficial collaboration.  

Despite its importance, the agricultural sector remains vulnerable to climate-related risks, such as droughts, excessive rainfall, floods, and wildfires, threatening our food production and security.

Abdulai recalled that Policy LINK undertook an agricultural lending assessment in September 2022. Subsequently, a stakeholder workshop was held in April 2023 that validated, prioritized, and strategized the implementation of policy recommendations captured in the assessment. 

Stakeholders were united in prioritizing the operationalization of the Agricultural Insurance Fund. He noted that current premiums on agriculture insurance were above the reach of many small holder farmers who remained the backbone of Ghana’s agricultural activities. 

The NIC and Policy LINK have been actively working alongside other stakeholders, with Policy LINK supporting the process to structure and operationalize the Fund to subsidize agriculture insurance premiums.

Policy LINK is a global Feed the Future programme to advance leadership and collaboration for better policy systems. 

“This partnership between Policy LINK and the NIC will enable us to leverage our respective technical and logistical resources towards operationalizing the Agricultural Insurance Fund,” Abdulai said.

Michael Kofi Andoh, acting commissioner of insurance, noted that “this agreement is a significant step forward in our collective commitment to address the unique challenges faced by our agricultural sector and the need for adequate risk protection for our farmers.”

The fund, Andoh indicated, will serve as a crucial safety net for the country’s agricultural community, providing them with the much-needed resilience to bounce back from the setbacks they encounter. 

“It is a testament to our commitment to inclusivity, sustainability, and the well-being of our farmers. It will also give confidence to farmers, aggregators and other players in the value chain to invest in modern farming techniques, purchase high-quality inputs, and expand their agricultural activities, thereby contributing to increased productivity,” Andoh stated. 

He reckoned that in light of the complexity of creating and managing such a fund, the NIC recognized the need for expertise and support. 

“It is here that Policy LINK Ghana enters the picture. Policy LINK has demonstrated a commendable track record in providing technical support and advisory services in the field of agriculture. Their knowledge and experience will be invaluable in helping us structure, develop the operational guidelines, and implement effective governance systems for the Agricultural Insurance Fund,” he added. 

According to the acting commissioner, a document to guide the operationalisation of the fund will, among other functions, define the crops to be insured, the number of farmers and the premiums to be paid by farmers.

Agriculture remains the life wire of the Ghanaian economy,  providing jobs for the majority ( about 70%) of its people, but the sector is plagued with vulnerabilities including climate related risks which have impacted its fortunes.