Online Reporter
Business Reporter
THE Government took a bold step to safeguard the agriculture sector against the effects of climate change when it subscribed to the African Risk Capacity (ARC) drought insurance scheme for the 2024/2025 season.
With a premium of US$3 million already paid, the Government has been proactive in its risk management efforts, signalling a commitment to building economic resilience in the face of persistent drought risks.
Founded in 2014, ARC is a hybrid mutual insurer and financial affiliate of the African Risk Capacity Group.
The organisation provides parametric insurance services to African Union member states and farmer organisations, employing innovative financing mechanisms to pool disaster-related risk across Africa and transferring it to international risk markets.
In doing so, it improves the continent’s response to climate-related disasters and contributes to resilience building and ultimately to food security.
Speaking during his recent 2025 National Budget Statement presentation, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube emphasised the importance of this policy.
“Government has led by example by paying for the ARC drought insurance policy for the forthcoming season,” he said. “This underscores our commitment to protecting our farmers and ensuring food security amidst climate uncertainties.”
The subscription follows the country’s successful participation in the ARC sovereign insurance risk pool for the 2023/2024 agricultural season.
Zimbabwe received a payout of US$16,8 million after the country suffered a severe drought in the 2023/2024 season while its Replica partners, the World Food Programme (WFP) and Start Network, received a further US$15 million.
In total, Zimbabwe benefitted to the tune of US$31,8 million, which provided critical support to over 500 000 vulnerable households in 27 districts.
“This payout will contribute immensely towards complementing the early drought response intervention measures which the Government has put in place,” said Minister Ncube.
The ARC insurance policy has been hailed as a game-changer for Zimbabwean farmers.
Mr Garikai Ncube, an insurance broker, highlighted the importance of the insurance programme.
“Farmers are often the hardest hit by droughts, losing both crops and income. This policy provides a financial safety net, enabling them to recover more quickly and maintain their livelihoods,” he said.
Economist Mr Tinevimbo Shava concurred, saying the insurance policy is not only a tool for risk mitigation but also a catalyst for economic stability.
“When farmers are assured of compensation during drought years, they are more likely to invest in their crops and adopt modern farming techniques,” Mr Shava explained.
“This has a ripple effect on the economy, ensuring food security and reducing the need for costly emergency imports.”
The 2024/2025 policy was made possible through support from international partners, including the Swiss Development Corporation (SDC), KFW Development Bank and the African Development Bank (AfDB).
Additionally, the WFP, Start Network and the United Nations High Commissioner for Refugees (UNHCR) have subscribed to the ARC Replica drought insurance policy, enhancing the country’s collective capacity to respond to climate-induced disasters.
Insurance industry expert Mr Vincent Magura lauded the collaborative approach, saying: “The partnership between the Government and Replica partners ensures that resources are pooled and response efforts are coordinated. This maximises the impact of the insurance payouts and ensures that aid reaches those who need it most.”
Zimbabwe’s commitment to the ARC framework goes beyond immediate financial relief. The Government is finalising the ratification of the ARC Treaty, a move that will institutionalise its participation in the ARC ecosystem.
Minister Ncube earlier highlighted this strategic direction, saying: “Ratifying the ARC Treaty will enable us to proactively plan, prepare and respond to natural disasters through sovereign risk insurance.”
This forward-looking approach is particularly critical as climate change continues to pose significant challenges to the agriculture sector.
Zimbabwe’s reliance on rain-fed agriculture makes it particularly vulnerable to erratic weather patterns, but initiatives like the ARC policy offer a sustainable pathway to building resilience.
The country’s proactive stance has positioned it as a regional leader in leveraging innovative financial instruments to address climate risks.
The ARC model, which combines insurance with capacity building and contingency planning, is being closely watched by other African nations.
“Zimbabwe’s experience with ARC demonstrates the value of such policies in mitigating the impacts of climate change,” said Mr Shava.
“It’s a model that other countries can emulate to safeguard their agriculture sectors and protect vulnerable populations.”
With the 2024/2025 agricultural season on, Zimbabwe’s commitment to the ARC drought insurance policy underscores its determination to shield its farmers and economy from the ravages of climate change.
With strong partnerships, strategic foresight and a proven track record, the nation is charting a path towards greater resilience and food security.
