On October 14, 2024, nearly 1,800 smallholder farmers in Goromonzi, Zimbabwe, celebrated a significant milestone as they received their first insurance payout under the Agricultural Index Insurance Pilot Project. This payout came in response to the severe El Niño-induced drought that impacted the 2023/2024 farming season, leading to dramatically reduced crop yields across the region. Each farmer, received a payout of US$65 under the Farmer’s Basket Insurance Product, specifically designed to mitigate financial risks stemming from climate-related disasters.

The success of this initiative was made possible through the collaboration of key stakeholders, including the Ministry of Finance, the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development, the Insurance and Pensions Commission (IPEC), the Insurance Council of Zimbabwe (ICZ), the Access to Insurance Initiative (a2ii), the International Finance Corporation (IFC) under its Agri Insurance Support for IPEC project, and several other organizations. Together, they developed a product that not only provides immediate financial relief but also helps build resilience among Zimbabwe’s vulnerable smallholder farmers.

The importance of this initiative cannot be understated, particularly as Zimbabwe faces the repercussions of climate change. In light of the severe drought, President Emmerson Mnangagwa declared a national disaster earlier this year, appealing for US$3 billion in support to address the crisis. Rural areas, which comprise 67% of Zimbabwe's population, are among the most affected, making the need for effective agricultural insurance solutions even more pressing.

Following the aftermaths of the El Niño induced drought President Emmerson Mnangagwa declared a national disaster earlier this year appealing for US$3 billion in food assistance

At the payout ceremony, Finance Minister Professor Mthuli Ncube praised the collaborative efforts that led to the creation of the insurance product, stating, “Today’s payout to Goromonzi farmers is more than just a financial transaction; it is a symbol of progress, resilience, and the tangible impact that innovative financial solutions can have on our agricultural communities.” He further emphasized the government's commitment to subsidizing insurance premiums for smallholder farmers, making agricultural insurance more accessible and ensuring that more farmers can benefit from these risk mitigation products.

Finance Minister Professor Mthuli Ncube delivering remarks at the payout ceremony, highlighting the importance of collaborative efforts in developing the insurance product for smallholder farmers in Goromonzi.

Dr. Anxious Masuka, Minister of Lands, Agriculture, Fisheries, Water, and Rural Development, echoed these sentiments, highlighting the pilot project’s potential for scaling across the country. He stated, “Replicability is the basis for sustainability. It is absolutely critical that we replicate this model to build the resilience of these farmers as we move forward.”

Dr. Anxious Masuka, Minister of Lands, Agriculture, Fisheries, Water, and Rural Development, and Finance Minister Professor Mthuli Ncube with smallholder farmers during the payout ceremony.

As farmers like Charles Chidanga and Rutendo Taruvinga received their payouts, their reactions underscored the significance of this initiative. Chidanga expressed gratitude for the government’s efforts to collaborate with communities, emphasizing the need to extend such initiatives to other areas. Taruvinga, initially skeptical about the insurance's effectiveness, shared her delight at receiving the payout, stating, “This money will help us as smallholder farmers in Goromonzi to buy inputs for the coming season, and we hope this season we will be productive.”

Looking ahead, the government’s commitment to subsidizing insurance premiums will be crucial as the Agricultural Index Insurance Pilot Project prepares to expand beyond Goromonzi. Minister Ncube reassured farmers of the government's dedication to alleviating their financial burdens, stating, “We recognize the importance of easing the financial burden on our smallholder farmers, and this subsidy will ensure that more farmers benefit from these innovative risk mitigation products.”