Action Is Needed to Ensure Agricultural Stability – Finance Minister

Angolan minister of Finance Vera Daves has defended the adoption of necessary instruments for the stability of the Angolan agricultural sector, having named the insurance sector as one of the competitors that can ensure the required balance.

Vera Daves said agriculture is instrumental in the process of sustainable growth of any economy and responds to the primary goal of achieving food self-sufficiency.

Addressing a partnership agreement signing ceremony with the International Finance Corporation (IFC), in the context of the introduction of Agricultural Insurance in Angola, the minister defends the need to promote this instrument.

According to her, this is a tool that reduces the exposure of agricultural products to exogenous risks, with emphasis on climatic risks.

Mindful that the agreement will not address all the problems related to the insurance of agribusiness entrepreneurs, the minister predicted a substantial improvement, which is an important starting point for the paradigm shift, for this insurance considered "so sensitive" for national insurers.

"We hope that the IFC will bring the best policy to encourage the massive subscription of agricultural insurance in Angola," says Vera Daves.

She hopes that the standards of operational or performance of the same will be the best possible, making insurance "a reality that is here to stay for many, many years, changing the security framework for all those who undertake agribusiness in Angola".

The agreement between the Angolan state and IFC will also build the capacity of the insurance market to apply climate risk analysis in prioritising the agricultural value chain, apply satellite-based data in developing insurance products and manage basis risk.

The tool will also help to outline the operation of additional risk coverage for insurers, primarily through risk modeling, both to estimate the capital required for the risk coverage mechanism and to advise on good administration practices and reinsurance structures.

Agreement is a milestone

In turn, the deputy -president of the International Finance Corporation (IFC) for Africa, Sérgio Pimenta, considered the initial agreement as a "significant" milestone in the partnership with the Government of Angola.

In the process of supporting the creation of the agricultural / climate insurance market in Angola, Sérgio Pimenta assures that the IFC will make its "global expertise" available so that the Angolan Insurance Regulation and Supervision Agency (ARSEG) can assess the possibility of establishing reinsurance mechanisms that create incentives for companies in the industry to make products related to climate risk available on the market.

The IFC will also assess farmers' demand and ability to pay for such products, expanding commercial and family farming activities.

"As we have seen in other African markets, we expect agricultural insurance and climate risk products to have a huge impact in Angola," Sérgio Pimenta said.

Between 2016 and 2021, IFC developed similar programmes in Zambia and Nigeria, creating access to climate risk protection for about two million farmers, increasing the resilience of the agricultural sector to such risks and farmers' livelihoods by unlocking access to finance.

IFC, one of the arms of the World Bank Group, is a global development institution focused on the private sector in emerging markets.NE/DAN/NIC