In a strategic move to safeguard farmers against the growing risks posed by natural disasters, the Government of Lesotho is set to roll out an Agricultural Insurance Program under the Smallholder Agriculture Development Project II (SADP II).
The initiative, backed by the World Bank, the Government of Japan, and the International Fund for Agricultural Development (IFAD), aims to provide smallholder farmers with the tools and financial protection they need to sustain productivity in the face of unpredictable climatic events.
The program, which aligns with SADP II’s Sub-Component 2.4, focuses on promoting smart subsidies and agricultural insurance as part of a broader strategy to encourage sustainable agricultural investment.
The pilot phase would focus on crop insurance, offering farmers a financial safety net against climate-related losses such as droughts, floods, storms, and other natural disasters.
Why Agricultural Insurance Matters
Lesotho’s agricultural sector has long been vulnerable to climate shocks, with extreme weather events increasingly disrupting food production. According to reports from the Food and Agriculture Organization (FAO), disasters like droughts, floods, and storms have intensified in frequency and severity, resulting in substantial economic losses and threatening food security.
Nancy Chawawa, a Resilience Specialist consultant from the World Food Programme (WFP), highlighted the importance of agricultural insurance during an implementation strategy meeting held at Avani Maseru.
“Agriculture insurance helps farmers manage unpredictable challenges, especially as extreme weather events become more common due to climate change. It offers a financial cushion that promotes stability and encourages growth in the agricultural sector,” she noted.
Insurance does more than just protect crops—it empowers farmers to invest in their businesses, she said, adding that with coverage in place, farmers are more likely to access credit, invest in better technology, and expand their operations, leading to long-term gains in productivity and sustainability.
The Pilot Program: How It Will Work
The agricultural insurance initiative will be piloted for one year, focusing primarily on crop insurance. The pilot will use an index-based insurance system, including tools like the:
- Area Yield Index – measures average yield in specific regions to assess losses.
- Weather Index – tracks climatic conditions like rainfall deficits or excesses to determine pay-outs.
- Indemnity Insurance – offers traditional coverage for direct losses to crops or inputs.
This approach allows for quicker claim settlements and reduces administrative costs, ensuring that farmers receive timely compensation in the event of crop failure.
The pilot would initially target commercial farmers focusing on cereal crops grown in open fields. However, considerations such as soil type, field size, and climate conditions would also influence coverage eligibility.
Chawawa emphasised the program’s long-term vision; “We aim to create a sustainable model that can be scaled nationally. This isn’t just a short-term fix—it’s about transforming how we manage risk in agriculture.”
Harnessing Technology for Efficiency
A significant feature of the program is its reliance on digital platforms to streamline transactions.
Khauta Faku, an Information Technology Officer at WFP, explained that participating farmers would use an electronic voucher system to pay for subsidised insurance premiums and agricultural inputs.
“Farmers will be able to use commercial mobile payment platforms like M-Pesa, EcoCash, and C-Pay to purchase insurance and inputs. This makes the process accessible even to farmers in remote areas,” Faku noted.
Agro-dealers participating in the program would serve as access points where farmers can purchase inputs and pay premiums.
“These dealers will then reconcile their records with insurance providers to ensure accuracy. The government and WFP will oversee the processing of disaster-related claims, using data provided by insurance companies to expedite payments,” Faku explained.
He stressed the importance of educating farmers on how the system works.
“For the program to succeed, farmers need to understand the process—from paying premiums to filing claims. We’re rolling out training programs to ensure everyone is well-prepared.”
Expanding Access and Awareness
While the pilot program focuses on crop insurance, there are plans to expand coverage to include livestock insurance and other agricultural sectors if the initial phase proves successful.
To maximise the program’s impact, efforts would be made to raise awareness among farmers, particularly smallholder farmers who are often the most vulnerable to climate shocks.
Chawawa pointed out that local partnerships would be critical.
“We need to work with cooperatives, agro-dealers, and extension services to spread the word and make sure farmers fully understand the benefits of agricultural insurance,” she said.
The program also aims to integrate agricultural insurance into broader climate-smart agriculture strategies, helping farmers adopt sustainable practices that reduce vulnerability to climate risks.
Learning from Regional Successes
Lesotho’s initiative follows the example of neighbouring countries like Kenya, which successfully introduced an agricultural insurance program in 2016.
Kenya’s government-subsidised plan offers farmers coverage against droughts, floods, and pest infestations, significantly reducing financial risks and stabilising food production.
The Lesotho pilot draws on Kenya’s model but adapts it to the country’s unique agricultural landscape, focusing on index-based insurance and leveraging technology for efficiency.
A Path Toward Resilience and Food Security
For Lesotho, the agricultural insurance program represents a significant step toward building climate resilience and ensuring long-term food security. By protecting farmers from the financial fallout of natural disasters, the government is empowering them to take calculated risks, invest in their farms, and improve productivity.
Malefetsane Raliengoane, SADP II’s Communications Specialist, underscored the transformative potential of the initiative; “This is about more than just protecting crops—it’s about protecting livelihoods, strengthening communities, and building a more resilient agricultural sector.”
He indicated that the pilot’s success would depend on how well it addresses farmers’ needs and adapts to on-the-ground realities.
“Following the one-year trial period, a thorough evaluation will determine whether the program can be scaled up to benefit the broader farming community,” he said.
