Govt buys $30m drought insurance

 

Government has taken out a $30 million insurance policy from the African Risk Capacity Insurance Company Limited for the 2015-2016 farming season as cover against drought in the event of El Nino affecting Malawi, Vice-President Saulos Chilima announced on Friday.

Addressing the media in Lilongwe yesterday, Chilima disclosed that the insurance, for which government would pay K2.9 billion ($4,816,100) in premiums, would be the first time Malawians are insured against drought.

Chilima: We are taking a proactive approach
Chilima: We are taking a proactive approach

“The exact amount of the payout to which the country would be eligible would be up to a maximum of $30million, depending on the extent of the drought. This is another form of planning that we are taking on so that we don’t lose out on everything when there is a dry spell,” said Chilima.

He further disclosed that government has set aside K1 billion ($1,660,720) for preparedness and prevention so that in the event that some area are affected by floods, it should be able to respond immediately and not be taken unawares like the last rainy season.

“We intend to use this money to re-position our troops in strategic areas where they would respond quickly with rescue efforts once disaster strikes,” he said.

The money, he added, would also ensure that logistics for military helicopters, boats, vehicles are in place and on alert for response.

Said Chilima: “We are taking a proactive approach in order to be in a state of preparedness so that we minimise any damage and loss.”

The Vice-President further disclosed that the price of maize in all Admarc deports would remain at K110 per kilogram to deter unscrupulous traders who always take advantage of maize scarcity to raise prices.

He, however, pointed out that following President Peter Mutharika’s appeal for assistance, donors such as the World Bank, United States, United Kingdom, Ireland, Brazil, the European Union, Italy, Norway, Egypt, Botswana, Save the Children Italy, the United Nations’ Central Emergency Response Fund and WFP have provided assistance amounting to about $91 million.

“We have a shortfall of approximately K31 billion [about $55 million] to cater for the remaining populace that need support,” he said.

In January, Mutharika declared Malawi a state of disaster following devastating floods caused by unusually heavy rainfall that resulted in loss of lives and crops, damaged property and houses, and displacements.

The problem was compounded by drought which affected large parts of country, leaving as many as 2.8 million short of food.

In September, Mutharika appealed to development partners, local and international well-wishers to assist government in mobilising resources to feed the Malawians facing starvation.

Malawi is facing one of its worst hunger situations in recent years following a 27.7 percent drop in the production of maize, the staple grain, due to combined effects of floods and drought earlier this year.

Mutharika said then that a 2015/16 Food Insecurity Response Plan developed by government based on results of the Malawi Vulnerability Assessment Committee (Mvac) Food Insecurity Assessment Exercise carried out between June 8 and July 2 this year said the country requires $146.378 million (about K83.4 billion). n

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  1. Avatar

    We need to start making connections between our current farming practices and our susceptibility to droughts and floods. After years of monocropping maize, our soils have become compacted, depleted, infertile. This means that when heavy rains fall, the water quickly runs off creating floods; since the rainfall is not absorbed and held by the soil, if we get a gap in the rains for a week or two we quickly find that we move into drought-like conditions; and, because we have become overly-reliant on the use of expensive synthetic fertilizers, we have neglected our responsibility to build soil structure and fertility through a constant return of diverse organic matter.

    It would seem that if we can spend millions of dollars on drought and flood ‘insurance’, we can certainly afford to invest in agricultural extension services that can promote and teach people about the value of healing our soil, planting trees, building swales, mulching our fields, building water harvesting tanks, digging banana pits, constructing check dams, and diversifying into seasonal cropping systems which include both water-loving species as well as drought-tolerant ones. Consider it ‘long-term insurance’ which is an investment that becomes more profitable over the years.

  2. Avatar

    Good idea in principle. However, paying annual premium of $5m for a maximum benefit of $30m is too expensive. I am assuming that, if you have floods instead, you will claim nothing. I would be interested to read what the policy actually says. Looks good business to the insurance company, but a poor one for Malawi.

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