The 2026 national budget of ZMW 253 billion, representing an increase of approximately 16 percent from last year’s budget, has been described as ambitious and progressive. It has a Growth Domestic Product (GDP) growth target of 6.5 per cent, reduced inflation to between 6 and 8 per cent and sustained measures to manage foreign exchange volatilities.
The story, however, will not be complete without appreciating some of the planned measures that will help meet the budgetary expectations, especially from the agricultural front.
The Ministry of Agriculture has been allocated ZMW 15.5 billion, out of which ZMW 9.2 billion will go towards the Farmer Input Support Program (FISP). This is a continued demonstration of the government’s commitment to safeguarding national food security. FISP has an insurance component that secures beneficiary farmers from potential losses due to adverse weather conditions. This was evident in the impact of the El Niño weather phenomenon during the 2023/24 farming season.
The insurance risk exposure is approximately ZMW 4.6 billion, with an estimated gross premium of ZMW 200 million. This year’s budgetary allocation to FISP has been maintained at the same level as last year, indicating that the insurance market dynamics surrounding FISP are expected to remain unchanged. It is expected to see a possible increase in local capacity uptake in view of the anticipated favorable weather indicators, which are expected to be neutral ENSO – between El Niño and La Niña. FISP is significantly instrumental in shaping the Zambian agricultural landscape; therefore, insurers with an appetite for this product must ensure that capacities are prudently deployed to sustain market confidence.
Under the Ministry of Community Development and Social Services is the Food Security Pact (FSP), which is meant for vulnerable yet viable smallholder farmers. The government has increased the budgetary allocation for this program slightly, from last year’s ZMW 1.2 billion to ZMW 1.5 billion. The scheme has an insurance risk exposure of approximately ZMW 450 million and a gross premium of approximately K 19.5 million. This insurance covers beneficiaries against crop failure resulting from adverse weather conditions. The insurance dynamics surrounding this scheme may change slightly due to the anticipated increase in the number of beneficiaries, resulting from the slight increase in the allocation.
To enhance efficiency and productivity among Small and Emerging farmers, the government has introduced the Sustainable Agriculture Finance Facility (SAFF) loan scheme. The scheme aims to empower farmers by providing them with access to farming implements and machinery. In the 2026 budget, ZMW 5 billion has been allocated to support various empowerment programs, including financing towards the Credit Guarantee Scheme, which provides guarantees to banks disbursing SAFF loans. From an insurance perspective, the exposure and premium levels for SAFF are expected to increase slightly from last year, due to the anticipated rise in the number of beneficiaries resulting from improvements in onboarding management. The current insurance risk exposure is approximately ZMW 700 million, with a gross premium income of approximately ZMW 22 million.
Lastly, the allocation of ZMW 740 million towards the creation of the livestock fund will stimulate growth in the livestock sub-sector and trigger supporting instruments, such as livestock insurance. In addition to ensuring strict adherence to livestock management protocols, farmers will still need insurance as an extra layer of protection for risks such as uncontrollable diseases and epidemics. The insurance market should view this as an opportunity to diversify its agricultural portfolio away from dependence on highly volatile rainfed crop covers. This should be demonstrated by developing tailor-made solutions that address the challenging risks faced by livestock farmers, which have also evolved due to climate change. Livestock index-based insurance is one case in point.
The 2026 budget is yet another opportunity for the insurance market to continue demonstrating its critical mandate of providing robust financial solutions needed to enable the government to actualize its budgetary objectives.
Dean Simuchimba
Agriculture Risk Specialist
Finsbury Reinsurance Limited