In Zambia, recent droughts as well as the threat of future natural disasters cause significant financial strain on 2 million smallholder farmers. This comes in a country where more than half of the population lives below the poverty line. As a country that mainly relies on rain-fed agriculture, the major loss of income and food that comes with crop failure can be detrimental. A possible solution to recent challenges is climate insurance in Zambia, which can aid farmers and countries who have experienced financial challenges from natural disasters.

Recent Natural Disasters

Recent natural disasters include droughts in 2023 and 2024, which were ruinous to food production and income. According to the German Agency for International Cooperation (GIZ), 11% of Zambia’s people are affected by droughts every year. GIZ projected that 25% could be affected by 2050.

Climate Insurance Response

One response to the financial effects of crop failure is climate insurance in Zambia, which protects farmers and countries against financial hardships resulting from natural disasters such as drought. The World Food Programme (WFP) is a provider of this type of insurance.

WFP supplies three different insurance levels of climate insurance in Zambia. The first, microinsurance, protects individuals and households. According to an email sent to The Borgen Project from Chileshe Chilambwe from the WFP, microinsurance protects households and productive assets.

There is also meso insurance, which strengthens agricultural value chains and financial service providers, according to Chilambwe. Meso insurance covers institutions and groups serving farmers.

The largest tier is macro insurance, which caters to countries and larger regions. Macro insurance enables governments and humanitarian actors to respond rapidly to major climate shocks, said Chilambwe.

According to Chilambwe, the most effective approach is a layered risk financing system that combines micro, meso and macro insurance mechanisms. By utilizing all three types of insurance, Zambia can build resilience against natural disasters and crop failures.

WFP works with the Government of Zambia to provide financial and humanitarian assistance. WFP provides technical assistance to the Government of Zambia to strengthen national climate risk insurance systems, including agricultural and livestock insurance schemes, wrote Chilambwe.

Past and Present Impact

This type of insurance was in practice before the 2023-24 droughts. In 2014, WFP partnered with insurance companies to create weather insurance for smallholder farmers in Zambia’s Southern Province. As a result, the government successfully scaled agricultural insurance coverage to more than 1 million farmers nationwide, according to Chilambwe.

This impact was felt again during the 2023-2024 droughts, in which 721,969 smallholder farmers received insurance payouts. Separately, through the African Risk Capacity (ARC) Replica programme, WFP received a payout of $3.3 million, while the Government of Zambia received $9.9 million under the sovereign drought insurance coverage, wrote Chilambwe. This kind of macroinsurance payment allows people suffering from climate-related food shortages to meet immediate needs and protect their livelihoods.

Collaborative Efforts

WFP is not the only organization creating access to climate insurance. Through a project running from 2020 to 2023, GIZ partnered with the Ministry of Agriculture to train insurance and government employees and give companies advice on how to use insurance to protect Zambia.

According to the GIZ website, the project recognized that women face greater disadvantages in agricultural and financial systems and are more severely affected by climate change. By acknowledging women’s disadvantages in agricultural and financial systems, climate insurance can become more effective.

Future Prospects

As for the future, Zambia is working on expanding climate insurance in order to improve resilience against future droughts and other natural disasters. By improving agricultural and livestock insurance as well as financing mechanisms, Zambia can become more resilient than ever.

WFP will be helping too, by expanding access to on-demand insurance products and scaling up complementary financial inclusion and integrated resilience-building initiatives, according to Chilambwe.

Through multiple organizations working together with the Government of Zambia, climate resilience can grow stronger, and more people can meet immediate needs following natural disasters.

– Julia Cholerton

Julia is based in Gig Harbor, WA, USA and focuses on Technology and Solutions for The Borgen Project.

Photo: Unsplash