Financial Inclusion Key to Climate Risk Reduction for Zambia’s Smallholders
Tuesday, July 7, 2015
In the advent of unpredictable weather, smallholder rain-dependent agriculture is increasingly becoming a risky business and the situation could worsen if, as seems likely, the world experiences levels of global warming that could lead to an increase in droughts, floods and diseases, both in frequency and intensity.
Neva Hamalengo, a 40-year-old farmer from Moyo in Pemba district, Southern Zambia, knows what it means to lose everything in a blink of an eye – not only did a storm wipe out an entire hectare of market-ready tomatoes worth about 15,000 kwacha (2,000 dollars), but he also suffered maize crop failure due to a month-long drought.
“I expect very poor yields this season,” he told IPS. “We suffered crop damage through a storm and when crops needed the rains to recover, we had a severe drought.”
To make matters worse, his smallholder business had no insurance cover and, admitting that he “knew nothing about insurance,” Hamalengo said that would love to see insurance education incorporated into agricultural extension services.
Hamalengo’s situation represents the predicament faced by most smallholder farmers – who are generally excluded from financial services – and confirms arguments by some experts that the risk of running an uninsured business is far greater if climate is involved.
While financial inclusion is considered a key enabler for reducing poverty, the statistics in Zambia are far from encouraging. According to a 2009 FinScope survey, 63 percent of the Zambian adult population (6.4 million people) is excluded from formal financial services. Slightly over half of the adult population is engaged in farming.
Putting these statistics into context, the “unbanked” majority are poor people, with many of them smallholder farmers. Now, in an attempt to help them become more resilient to climate variability and shocks, the World Food Programme (WFP) has launched the R4 Rural Resilience Initiative, aimed at tackling risk in a holistic manner.