Hollard, a leading Pan-African insurer, is bucking traditional marketing trends by using unconventional methods to drive financial literacy and encourage insurance uptake in cyclone-prone Mozambique through relatable, yet simple and effective techniques that are rapidly gaining traction.
Israel Muchena, Managing Director of Life & Agricultural Insurance at Hollard, says that financial literacy levels are low in Mozambique, and this hinders broader access to the insurance needed to protect small-holder farmers from the risk of climatic disaster.
Higher levels of financial literacy can only be achieved if the concept of insurance is demystified, made relatable and communicated in Indigenous languages, he points out.
Muchena’s remarks come in response to Mozambican Deputy Minister of Economy and Finance, Amílcar Tivane’s call for insurance companies in the country to develop comprehensive services for the low-income population.
Muchena agrees that the insurance industry has fallen short in this regard, and said his company is already taking corrective action to plug these gaps.
“Insurance often has complex offerings that are difficult to understand. The challenge is the lack of easy-to-understand policies for consumers,” he said.” “Then there is the issue of financial illiteracy. Many insurance products are not offered in local languages, which makes it difficult for people to grasp the information, particularly in areas where financial illiteracy is high.”
Using local languages can help drive financial inclusion. “Transacting in Portuguese, full of technical jargon that isn’t understood by ordinary civilians, loses the interest of a large section of the population. This is especially true for those who speak indigenous languages,” says Muchena.
In a bid to address these barriers, Muchena says Hollard has weaved financial literacy into popular indigenous games to educate people about financial products in a manner that is relatable to them.
Muchena says that his company has also partnered with mobile network operators. Hollard has launched an innovative product called Paga Leve, which allows users to buy and pay for third party liability insurance subscriptions monthly, using their cell phones. This is revolutionary in Mozambique where premiums for motor insurance are payable annually, which can be a huge financial burden for many.
Another hurdle is limited financial assistance and insurance options available to small-holder farmers. The unprecedented shifts in climate, including erratic rainfall, floods, and cyclones, are already having a detrimental effect on productivity and crop yields.
Agriculture is a national priority in Mozambique, supporting over 70% of the population, according to the International Trade Administration. With this in mind, Hollard has developed a novel initiative that seeks to mitigate the impact of climate change on the country by promoting sustainable farming methods that will improve productivity and enhance food security, while reducing the impact of climate change.
This is accomplished through a collaboration with Phoenix Seeds and is appropriately labelled Rewarding A Good Farmer. The programme promises to unlock the latent potential of agriculture in Mozambique.
The initiative seeks to incentivise small-holder farmers, 26% of whom are women, and who constitute 99.6% of farmers in Mozambique. The country has low rates of agricultural production and output compared to its counterparts in Sub-Saharan Africa.
“According to the most recent agricultural survey by the Republic Of Mozambique Ministry of Agriculture and Rural Development, maize production of smallholder farmers in some parts of Mozambique are as low as 401 kilograms per hectare,” he said. With access to the right quality of inputs, the same farmers could produce as much as 2 000 to 3 000 kilograms of maize on a hectare. Skilled farmers with access to advanced farming technology in our region can achieve output as high as 10 000 kilograms per hectare.”
He explains that Rewarding A Good Farmer empowers farmers with the skills, resources, and expertise to implement sustainable farming methods that foster the preservation of the environment and generate improved agricultural output.
“One of our objectives is to safeguard the environment. Land is not limitless; by raising awareness and enhancing productivity, we can protect the environment and tackle issues like soil erosion and deforestation. When you source your seeds from Phoenix Seeds, we will educate you on effective farming practices.”
The company deploys agronomists to educate communities about best practises in areas where traditional farming methods have resulted in large scale deforestation, environmental degradation, and soil erosion. Farmers who improve their agricultural yield through these new sustainable farming methods are rewarded with a bicycle, a commodity that is indispensable in the unforgiving terrain in many rural areas.
“Empowering vulnerable farmers with best farming practises and rewarding them for improving their yield through sustainable practises demonstrates our commitment to contribute meaningfully to the development of the agricultural sector in Mozambique,” Muchena says. “It showcases the benefits of partnering with a leading Pan-African insurer and with Phoenix Seeds. It also highlights our support for instilling good and sustainable agricultural practises and the benefits of having access to insurance which goes beyond to just providing much-needed cover for unforeseen event such as droughts and flooding heavy rains.”
This intervention will go a long way towards enhancing food security in Mozambique, stem urbanisation and stimulate the revitalisation of rural economies. This initiative has received a thumbs from the World Bank for its ingenuity.
A study by the World Bank has found that financial inclusion, or the extent to which people have access to useful and affordable financial products that meet their financial needs, is a cornerstone of economic development.”. The study found that financial literacy has positive multiplier social and economic outcomes.