Rwandan banks urged to offer micro insurance products to farmers
Kilimo Salama, an agricultural insurance initiative, has urged banks to consider micro-insurance policies as collateral to facilitate access to credit to rural farmers.Kilimo Salama, an agricultural insurance initiative, has urged banks to consider micro-insurance policies as collateral to facilitate access to credit to rural farmers.
Head of business development at Kilimo Salama Laura Johnson said micro-insurance policies reduce risks involved in agro-funding.
"It's important for banks to review their guidelines and start accepting these policies to help the rural poor access credit. It can also address the issue of lack of collaterals and, hence, mitigate the risks involved in micro-lending," Mrs Johnson explained, quoted by the New Times.
She added that it is crucial to make insurance affordable, particularly for the poor, as she believes taxes on insurance are "still high" when compared to other countries in the region.
"While Rwanda charges 15 per cent withholding tax, Kenya charges only five per cent withholding tax on insurance," she said, adding that reducing the tax on insurance could help save about 30 per cent that is normally paid by farmers.
Kilimo Salama is an agricultural insurance initiative of the Syngenta Foundation for Sustainable Agriculture. It develops and offers insurance for Kenyan and Rwandan farmers so that they can feel confident investing in their farms and feed their communities.
Insurance products can facilitate access to credit for businesses, as adequate coverage can act as a guarantee for banks.