The agricultural sector in Madagascar employs approximately 80% of the active population and, along with livestock farming, fishing, and forestry, contributes 27% of the country’s GDP. However, the sector faces numerous risks, particularly those related to climate change. Madagascar is one of the African countries most affected by climate change, experiencing an average of three cyclones per year. These cyclones significantly threaten economic sustainability and agricultural productivity. To manage agricultural and climate risks, the Platform for Agricultural Risk Management (PARM) has identified insurance as a key tool. Agricultural insurance helps rural communities prepare for and recover from shocks, thereby strengthening their resilience and enhancing food systems.
Agricultural risk insurance in Madagascar
In Madagascar, while the country benefits from sovereign insurance at the macro level through the African Risk Capacity (ARC) to better protect populations against natural disaster risks, agricultural insurance is not well developed at meso and micro levels. This is due to several factors, including the low level of banking access among farmer, high risk exposure, non-inclusion of insurance premiums in agricultural credit, profitability issues for insurers, high cost of premiums, even when partially subsidized, and inadequate insurance culture among rural populations. Despite these challenges, Madagascar offers various opportunities to develop agricultural insurance for different stakeholders, notably government commitment and favourable legal frameworks, support from technical and financial partners (IFAD, World Bank, GIZ, IMF, etc.), and growing digitalization facilitating subscription and compensation.
In 2024, the Malagasy government, through the Ministry of Agriculture and Livestock (MINAE), requested technical assistance from PARM to assess the current state of agricultural insurance in Madagascar and develop a roadmap to promote its development in the country.
The preliminary findings of the study were presented during a workshop on 28 February 2025 in Antananarivo. The workshop brought together key institutional stakeholders and various technical and financial partners active in the agricultural and insurance sectors to discuss opportunities and the way forward. The session facilitated knowledge sharing from several institutions already implementing agricultural insurance in the country. For instance, the World Food Programme (WFP) presented the successes and challenges of their Climate Disaster Risk Financing and Insurance (CDRFI) initiative; the African Risk Capacity shared initiatives on insurance mechanisms implemented at the micro-level; and the private company Assurance ARO highlighted their practical interventions on the ground.
The Way forward
PARM’s study recommended a roadmap of actions to further develop agricultural insurance in Madagascar. These actions include creating a premium subsidy fund to encourage the adoption of insurance, strengthening the legal and institutional framework to attract private insurers, integrating agricultural insurance into climate risk management and social protection policies, exploring product models that combine microinsurance and savings products, providing financial education for smallholder farmers, and systematically integrating agricultural insurance into financial institutions’ agricultural credit offerings.
Through its CDRFI programme, WFP will continue developing insurance initiatives at the micro and meso levels for inclusive climate risk management, facilitating access to financing and credit to smallholder farmers, and introducing savings and emergency funds.
At the macro level, ARC developed Africa RiskView digital platform, a drought risk modeling tool that allows ARC Member States to monitor and analyze rainfall patterns across the continent in near real-time. It translates agro-meteorological developments into impacts on vulnerable populations and calculates drought response costs. Additionally, Madagascar benefits from ARC’s Tropical Cyclone Explorer (TCE) software, which uses cyclone data to model the affected population and economic losses caused by cyclones. These initiatives will continue to support the country’s agricultural resilience.
