TITLE:
An Analysis of Factors Influencing Uptake of Agriculture Index Insurance among Smallholder Farmers—A Case of Kasama District in Zambia
AUTHORS:
Swithan Kaunda, Taonaziso Chowa
KEYWORDS:
Uptake, Weather Index Insurance, Probit, Smallholder Farmers, Awareness
JOURNAL NAME:
Open Journal of Business and Management,
Vol.11 No.1,
January
17,
2023
ABSTRACT: Kasama district is a rural farming
district with a population of over 91,525 smallholder farmers. Smallholder
farmers face several production risks including floods, pests and droughts
which are being worsened due to climate change. To manage the impact of these
risks, weather index insurance has been designed to help farmers hedge against
the loss of income due to crop losses. However, the uptake of Weather Index
Insurance (WII) in Zambia is low, and as for Kasama District, there is little
documented information on factors influencing the uptake of WII among
smallholder farmers. In this study, the Probit regression model was used to
measure the expected change in the likelihood of uptake of WII given a unit
change in the regressors. Data analysed were collected using a semi-structured questionnaire from 200 farmer
respondents and an interview guide from 5 key informants purposively selected.
The study drew participants from a population of smallholder farmers estimated
to be 91,525 farmers in the district. SPSS and STATA were applied to analyse
Quantitative data using the Chi-Square test at 5% and 1% levels of
significance. The study concluded that age, knowledge of WII and alternative
source of income were statistically significant factors influencing uptake of WII
by smallholder farmers in Kasama district. In addition, whereas age and
alternative income had a negative and significant effect on uptake, knowledge
of WII had a positive and significant effect. Furthermore, the study concluded
that education level, gender, the frequency of discussing WII during extension
services meetings, perception on the price of WII, distance to the providers of
insurance services from a farm, and use of traditional methods of managing
production risks were not significant factors influencing the farmer’s uptake
of WII. The research, therefore, recommended that policymakers, insurance
service providers and multilateral partners in the sector should work to raise
awareness of WII as it is critical to its uptake by smallholder farmers. It was
further recommended that product design becomes inclusive of smallholder
farmers in order to come up with products that meet the needs of the end users.