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Luanda, Angola, July 20, 2023 — IFC and the Angolan Insurance Regulation and Supervision Agency (ARSEG) have signed a partnership agreement to boost access to agriculture insurance products in Angola to protect smallholder farmers and small businesses from crop damage caused by climate change and other shocks.
Under the partnership, IFC will work with ARSEG to help Angolan insurance companies develop an agriculture insurance market and products that meet the specific needs of Angolan farmers, who make a significant contribution to the country's economy but are vulnerable to shifting climatic conditions and catastrophic weather events.
Through satellite-based data and a market diagnostic, IFC will also help ARSEG identify the main risks farmers and Micro, Small and Medium Enterprises (MSMEs) face and assess the demand for agriculture insurance. An education and awareness-raising program will help farmers better understand the benefits of agriculture insurance and stimulate their interest to acquire insurance to protect their livelihoods.
Agriculture is a significant contributor to Angola's economy, accounting for 10 percent of GDP, and the sector employs millions of young people. However, there are currently no agriculture insurance products in the country specifically designed to protect smallholder farmers.
"We believe that the insurance market may improve its penetration as it is aware of the demand for this product and, despite the risks, represents a very attractive business opportunity, in addition to the impact of agriculture for the national economy, families and especially young Angolans employed in this sector," said Elmer Serrão, Chairman of the Board of Directors of ARSEG.
Increasing the penetration of agriculture insurance in Angola is key to protecting against heavy agriculture production losses and safeguarding farmers' assets, which is important for creating national wealth. The expected outcome is increased agricultural activity and sustainable economic growth.
"Smallholder farmers and MSMEs are an important pillar of Angola's agriculture sector, yet they face many potentially devastating risks," said Carlos Katsuya, IFC's Senior Country Manager and head of mission for Angola. "Together, IFC and ARSEG will help create an efficient and sustainable agricultural insurance system to protect Angolan farmers and MSMEs, giving them confidence to invest in and develop their businesses."
IFC will facilitate knowledge exchange to help Angolan insurance providers learn best practices from more developed agri-insurance markets.
ARSEG is responsible for developing sustainable insurance, pensions markets and consumer protection in Angola. By developing agricultural insurance in Angola, ARSEG will contribute to the adoption of more resilient and sustainable agriculture practices, support national wealth creation and increase food security.
The project will draw on the experience of the Global Index Insurance Facility (GIIF), through which IFC has supported the growth of climate insurance markets in Cameroon, Cote d'Ivoire, Mozambique, Nigeria, Madagascar, Zimbabwe, Senegal, Zambia, and elsewhere.
GIIF is a multi-donor program managed by the World Bank Group, which includes IFC's Financial Institutions Group. It was created to increase financial access for smallholder farmers, micro-entrepreneurs, and microfinance institutions by addressing the scarcity of accessible and affordable index insurance solutions against weather and catastrophic risks in developing countries. The project in Angola is also supported by the German Federal Ministry for Economic Cooperation and Development (BMZ).
About ARSEG
The Angolan Agency for Insurance Regulation and Supervision is a legal entity governed by public law, with legal personality, administrative, regulatory, patrimonial, and financial autonomy. ARSEG collaborates in matters within its jurisdiction with all national authorities, with the National Bank of Angola and the Capital Market Commission, to ensure the protection of the rights and obligations of all parties intervening in the sector, to ensure the effectiveness of the overall supervision of the financial system, the balance of public accounts and the prevention of the occurrence of systemic risks. For more information, visit www.arseg.ao
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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