Opportunities for agriculture insurance in Mozambique

Policy brief Firms

  • Weather-related risks such as drought, flood, and hail can cause irreversible damage to households and affect food security. They are complemented by a large number of additional constraints, such as limited technical knowledge, lack of processing capacity, high exposure to pests and diseases, limited access to finance and markets, and high risk of price volatility.
  • This study provides a general overview of the agricultural sector in Mozambique to identify key policy challenges along with the potential of policy interventions related to agricultural insurance. To do so, the researchers undertook a review of the current state of the agricultural sector in Mozambique with a particular focus on agricultural insurance.
  • There is currently no major product available in the market providing coverage for weather-related events. In the absence of it, farmers depend on informal insurance. Furthermore, there are potentially large benefits from the introduction of an agricultural insurance product as weather-related risks for agricultural production are spread throughout the country, and mitigation capacity is very limited.
  • The findings suggest the introduction of a new insurance product presents several constraints: liquidity constraints are an important determinant for purchase; identifying ways to address the lack of trust is crucial, and low levels of insurance awareness and financial literacy demands for intensive sensitisation sessions among farmers