Malawi rethinks new drought insurance cover

Minister of Finance, Economic Planning and Development Goodall Gondwe says government is considering whether to buy a new drought insurance cover following last season’s botched up K21 billion ($30 million) cover.

In an interview yesterday amid assertions from sources that government may not buy another policy after the disastrous experience during the 2015/16 farming season, Gondwe said Malawi will first discuss with the insurer, Africa Risk Insurance Capacity Company Limited, an initiative of the African Union (AU), on why the agency did not honour its cover.

Said the minister: “We would like to discuss with them first why they did not honour the insurance policy before. We would like to know the reasons first before we can consider it. If they [reasons] satisfy us, we might [buy another policy]. We should not just pay before we know how they decide their payments.”

Malawi paid a K2.9 billion ($4 million) annual premium for the drought risk cover with a maximum annual benefit of $30 million.

Essentially, the drought insurance cover was meant to cushion the cost of recovery from the impact of the El Nino pattern of rainfall.

But whereas Gondwe says government is discussing with the insurer on why the policy did not pay the cover, in May this year The Nation learnt that failure by some public officers to scrutinise documents cost the country possible benefits.

Apparently, the insurance contract stipulated terms and conditions under which the country can make a successful claim which Malawi Government officials might have omitted.

Department of Disaster Management Affairs (Dodma) Principal Secretary Ben Botolo said in an earlier interview there was need to critically scrutinize the policy documents and involve lawyers before signing.

He said: “There is a clause within the policy which talks of rainfall patterns. The policy compensates for extreme weather conditions and, unfortunately, despite the adverse drought encountered within the Southern and Central regions, Malawi did not qualify.”

In a related development, Dodma yesterday held a consultative meeting with stakeholders in Lilongwe to strategise on the country’s disaster response amid revelations that Malawi lacks an early warning system, a factor experts cite as the reason the country has struggled to contain and prevent disasters.

The meeting came hot on the heels of an announcement by the Department of Climate Change and Meteorological Services that Malawi will likely face effects of an adverse weather phenomenon called La Nina which is characterised either adverse drought or flooding.

Speaking during the meeting, Lead Southern and Eastern Africa director Sosten Chiotcha said the country also lacks climate change and meteorological policies.

He said: “We did not have a climate change policy and meteorological policies policy then and it meant that the early warning system could not stand alone. Now policy has been finalised and the Met policy is being drafted, meaning with these two pillars, we should have a robust early warning system in place.

“Of course, there have been a lot that could have been prevented had we the early warning system in place. For example, issues of pests and diseases, like the red locusts, could have been prevented early on if we had this in place. We are talking of floods and drought, all these would have [been well managed].”

Chiotcha further said farmers have lost inputs because Malawi does not have a clear system on not only how to respond to disaster but also on how to implement the policies.

Addressing the same meeting, director of Climate Change and Meteorological Services Jolamu Nkhokwe said the workshop would give guidance on how best to align the policy and respond to calamities.

In the recent farming season, Malawi registered an estimated 30 percent drop in food harvest which has rendered about 8.5 million of the 17.8 million people food insecure after losing their crops due to adverse impacts of drought.

In April this year, President Peter Mutharika declared the country a State of National Disaster following prolonged dry spells in the Southern Region and parts of Central Region that wilted crops, reducing harvest. The President appealed for assistance from well-wishers which is trickling in.