Ncube injects $100,7bn into agric sector

By The NewsDay | Aug. 1, 2022 | 2 Min read

The allocation comes after he revealed that the agriculture sector is now projected to contract to 5% this year, from the initially anticipated expansion of 5,1% due to poor rains, bottlenecks in inputs distribution and high cost of inputs, among other challenges.

BY MTHANDAZO NYONI FINANCE minister Mthuli Ncube has allocated the Agriculture ministry a total of $100,7 billion in his Mid-Term Budget Statement, saying the resources were earmarked for grain procurement, preparations for the forthcoming summer rainfall season and dam construction

“Almost all sectors of the economy are expected to record positive growth except agriculture, which was affected by the uneven rainfall distribution, bottlenecks in input distribution and high cost of inputs, among other challenges,” Ncube said in his mid-term national budget presented last week.

“These developments led to substantial write-offs in hectarage planted of more than 23%. As a result, the agriculture sector is now projected to contract by -5%, from the initially projected expansion of 5,1%.”

Despite the numerous risks and shocks affecting performance of the sector, Ncube said insurance cover for agricultural activities has remained very low with insurance premiums at less than 3% of the total gross premiums generated by the insurance industry.

In this regard, he said development of agricultural index insurance, which commenced in early 2022, was expected to be launched during the third quarter of this year.

This initiative will lead to development of a regulatory framework for agricultural index insurance, setting up of knowledge exchange forums, as well as developing capacity in agriculture index insurance including innovative insurance solutions for smallholder farmers.

The Insurance and Pensions Commission (Ipec) and the International Finance Corporation this year launched the agricultural index-based insurance project whose objective is to provide insurance solutions for smallholder farmers who are vulnerable to climate-related crop losses in Zimbabwe.

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According to Ipec, while the agricultural sector faced uncertainty owing to climate change, the uptake of agricultural insurance was relatively low.

Some of the factors behind this are unaffordability of existing agricultural insurance products, inappropriate products, low levels of awareness on the role of insurance by farmers, especially smallholder farmers and lack of trust between insurers and farmers.

Agriculture is the backbone of Zimbabwe’s economy, providing employment and income for 60 to 70% of the population, supplying 60% of the raw materials required by the industrial sector and contributing 40% of total export earnings.

The sector also contributes approximately 17% to the country’s gross domestic product, according to the Food and Agriculture Organisation of the United Nations.