Visit of Tanzanian delegation of ministries and insurance industry officials to Uganda

From 31 January to 4 February, Social Finance facilitated a “study tour” of Tanzanian delegates to Uganda. The study tour helped participants learn from interactions with Ugandan ministries, the central bank, the regulatory authority and different insurance companies.

The visit to Uganda was part of Social Finance’s ongoing project with the International Fund for Agricultural Development and its INSURED (Insurance for Rural Resilience and Economic Development) programme.

INSURED is supporting the development of the National Agricultural and Livestock Insurance Scheme for smallholder farmers in the United Republic of Tanzania. This is in line with the government’s priorities to promote agricultural insurance and build the resilience of smallholder farmers. To learn from successful regional national insurance schemes, Social Finance worked with the Agriculture Insurance Consortium in Uganda to organize the study tour. A Tanzanian delegation including ministries, the national insurance corporation and insurance regulation authority learned from the consortium’s experience in running the Uganda Agriculture Insurance Scheme.

Participants interacted with representatives from Ugandan ministries, the central bank, the insurance regulator and (re)insurance companies. Presentations explained the roles of institutions and operational aspects of the insurance programme. The study tour also included field visits to farms, so that delegates got first-hand feedback from users about the benefits of insurance and possible improvements. These interactions with both the supply and demand side helped participants to understand emerging trends and to identify success factors, challenges, and steps to overcome them.

Key insights

  • Coordination needs to happen not just between different ministries, such as the Ministry of Agriculture and Livestock and the Ministry of Finance, but also with the central bank and the regulatory body.
  • There is need for significant investments in information, infrastructure, training, and capacity building (all of which are public goods in nature)
  • The government has a critical role to play. Besides providing subsidies for insurance premiums, it can be a catalyst by managing meteorological and yield data and undertaking customer sensitisation programmes.
  • The development of agriculture insurance requires the promotion of an adequate legal and regulatory framework. The regulator also needs to support capacity building for underwriters, promoters, loss adjusters and others engaged in the agriculture insurance work.
  • In case individual insurers do not sufficient resources to make the investments needed for a sustainable agriculture insurance scheme, the creation of the agriculture insurance consortium of the insurers should be explored.
  • To promote a cost-effective layering of agriculture production risks, organizing farmers in groups for pooling agriculture risks can work well. Farmers’ cooperatives or associations also provide efficient channels for distributing agriculture insurance, by bundling it loans or with high quality inputs such as seeds and fertilizers.
  • For successful operation of a large national agriculture insurance programme, the roles and responsibilities of the different stakeholders need to be clearly defined.
  • Technology has a big role to play for improving the quality of product as well as the operations. Mechanisms for accessing and then evaluating emerging technologies needs to be in place.

Next steps

The study tour paves the way for the further development of Tanzania’s agriculture insurance scheme. The study tour participants said that the development of a scheme is “essential for the sustainability of the agriculture sector”. Upon return, the participants will work together using the key insights to define a roadmap and the steps to take. This will include identifying interventions where the Tanzanian government can play an effective role. Possible areas are:
  • The development of an agriculture and weather database
  • Public services for consumer awareness and insurance education
  • Provision of subsidies, not just for premiums but also to finance support activities, such as data management and consumer outreach.
  • The processes for provision of subsidies to be developed with the Central Bank
  • Develop a partnership with the private sector to develop and implement a national scheme
  • Determine the criteria for voluntary or compulsory (credit-linked) enrolment
  • Develop a plan for capacity building for agriculture insurance for all stakeholders