The International Finance Corporation (IFC) and Madagascar have entered into an agricultural insurance pact to enable local farmers build stronger climate resilience, increase productivity and more easily access financial services.
Under the programme, IFC will help Malagasy insurance companies develop targeted insurance products to protect farmers from weather-related risks and other natural disasters that threaten their livelihoods and undermine creditor confidence.
“The establishment of an agricultural insurance system is a sustainable solution to develop the agricultural sectors,” said Fanomezantsoa Lucien Ranarivelo, the Minister of Agriculture, Livestock and Fisheries.
“This will encourage banks and financial institutions to support farmers through access to credit to overcome the risks associated with climate change,” the minister added.
Agricultural insurance will help protect farmers from natural disasters, including cyclones, droughts, floods and pest invasions.
Natural disasters cost Madagascar’s economy on average 1 percent of GDP annually.
Agriculture is a significant contributor to Madagascar’s economy, accounting for about a quarter of the country’s GDP and 64 percent of total employment. Smallholder farmers make up about 70 percent of the farming population, yet more than half cite limited access to financial services as a key constraint holding back their productivity and incomes.
“Smallholder farmers are often on the front lines of risk and they deserve insurance programs specifically targeted to meet their needs,” said Marcelle Ayo, IFC’s Country Manager for Madagascar.
The Global Index Insurance Facility, a multi-donor program managed by the World Bank Group, funds the Madagascar project.