Angola: IFC and Government Forge Partnership to Enhance Agricultural Insurance

IFC and the Angolan Insurance Regulation and Supervision Agency (ARSEG) have signed a partnership agreement to increase access to agriculture insurance products in Angola in order to defend smallholder farmers and small businesses from crop damage resulting from climate change and other shocks.

Under the partnership, IFC will collaborate with ARSEG to assist Angolan insurance companies in developing an agriculture insurance market and products that meet the specific needs of Angolan farmers, who contribute significantly to the country’s economy but are vulnerable to changing climatic conditions and extreme weather events.

IFC will also assist ARSEG in identifying the primary risks farmers and Micro, Small, and Medium Enterprises (MSMEs) confront and assessing the demand for agriculture insurance using satellite-based data and a market diagnostic. A programme of education and awareness-raising will assist farmers in comprehending the benefits of agriculture insurance and pique their interest in purchasing coverage to safeguard their livelihoods.

Agriculture contributes significantly to Angola’s economy, accounting for 10% of GDP, and employing millions of young people. However, there are presently no agriculture insurance products designed to protect smallholder farmers in the United States.

Elmer Serro, Chairman of the Board of Directors of ARSEG, stated, “We believe that the insurance market may increase its penetration as it is aware of the demand for this product and, despite the risks, represents a very attractive business opportunity, in addition to the impact of agriculture on the national economy, families, and especially young Angolans employed in this sector.”

Increasing the penetration of agriculture insurance in Angola is essential for protecting against massive agricultural production losses and safeguarding farmers’ assets, which is crucial for the creation of national wealth. Increased agricultural activity and sustainable economic expansion are anticipated outcomes.

“Smallholder farmers and MSMEs are important pillars of Angola’s agriculture sector, yet they face many potentially devastating risks,” said Carlos Katsuya, IFC’s Senior Country Manager and head of mission for Angola. Together, IFC and ARSEG will contribute to the development of an efficient and sustainable agricultural insurance system to protect Angolan farmers and MSMEs, providing them the confidence to invest and grow their businesses.

IFC will facilitate knowledge exchange to assist Angolan insurance providers in learning best practises from agri-insurance markets that are more developed.

ARSEG is responsible for the development of Angola’s insurance, pension, and consumer protection markets. By establishing agricultural insurance in Angola, ARSEG will encourage the adoption of more resilient and sustainable agricultural practises, support the creation of national wealth, and increase food security.

IFC has supported the development of climate insurance markets in Cameroon, Cote d’Ivoire, Mozambique, Nigeria, Madagascar, Zimbabwe, Senegal, Zambia, and other countries through the Global Index Insurance Facility (GIIF).

GIIF is a multi-donor programme administered by the World Bank Group, which incorporates the Financial Institutions Group of the IFC. It was designed to increase financial access for smallholder farmers, microentrepreneurs, and microfinance institutions by addressing the lack of accessible and affordable index insurance solutions against weather and calamitous risks in developing nations. Additionally, the German Federal Ministry for Economic Cooperation and Development (BMZ) supports the Angola initiative.