The 2023/2024 farming season delivered what many described as the worst drought in Zambia’s living memory. For the country’s smallholder farmers, already navigating market volatility, pest outbreaks and limited access to credit, it was a crisis that exposed the fragility of rural livelihoods with brutal clarity. The insurance consortium that stepped in paid out over US$45 million in claims. Without that mechanism, the damage to rural economies and food security would have been considerably worse.
That moment crystallised something that Hollard Zambia’s Chief Operating Officer Choolwe Sianyinda has been articulating with growing urgency, that agricultural insurance is no longer a peripheral product for Zambia’s farming sector but a structural necessity. “Zambia’s agricultural sector has experienced significant climate-related disruptions in recent years, including what has been described as the country’s worst drought in living memory during the 2023/2024 farming season,” said Sianyinda.
Hollard Insurance Zambia is part of a consortium of insurers providing Hybrid Index insurance products to smallholder farmers under Zambia’s agricultural support programmes. The hybrid model combines weather-index and area-yield cover, an evolution from earlier products that addressed these risks in isolation and left gaps that vulnerable farmers could not afford. “There has been growing need to close the gaps that each index poses to smallholder farmers. As such, the Hybrid product appears to be more aligned to the current challenges facing smallholder farmers,” added Sianyinda. The claims data reflects the volatile and unpredictable nature of agricultural risk in Zambia, swinging from over US$45 million in drought-year payouts to under US$43,000 the following season when rainfall recovered. “In some years claims numbers are high and in others very low. In instances where the claims are not drought-related, they would arise from floods or pests and diseases,” noted Sianyinda.
Zambia has achieved relatively stronger agricultural insurance uptake than most regional peers, largely through a government programme that bundles insurance cover with subsidised farming inputs for more than one million smallholder farmers, with the state subsidising 50% of premiums. That model has expanded access, improved awareness and demonstrated what public-private collaboration in disaster risk financing can deliver at scale. But it has also exposed the ceiling. Of an estimated three million smallholder farmers in Zambia, only one million are currently insured, leaving two million exposed to climate shocks with no financial safety net. “Expanding access will require stronger partnership beyond government initiatives including partnerships with private sector players, aggregators and distribution platforms to reach underserved farming communities,” explained Sianyinda.
The barriers to closing that gap are real, such as trust deficits in rural communities, limited distribution infrastructure, technology constraints, inadequate meteorological data and low financial literacy. Addressing them requires sustained investment from both public and private actors. “As insurance awareness increases and claims payouts reach smallholder farmers during difficult farming seasons, more farmers will begin to explore insurance as an alternative risk mitigation measure,” concluded Sianyinda. The foundation is in place but will the ambition to protect all of Zambia’s smallholder farmers be matched by the partnerships and distribution reach required to make it a reality?
