Only four percent of small and medium enterprises have business insurance cover while uptake of climate related insurance remains minimal, the National Financial Inclusion Strategy II (NFIS-II) document launched by the Government on Monday has revealed.
According to the report, two main challenges to improved uptake of insurance products by Micro, Small to Medium Enterprises (MSMEs) were the high cost and lack of knowledge on the products on offer and where to access them.
“Despite the low uptake, since Zimbabwe is an agro-based economy, it presents an opportunity to increase climate related insurance against exogenous shocks such as drought and cyclones,” reads the report.
The NFIS-II seeks to deepen the use of financial products in the informal sector to achieve the goals set out under the National Development Strategy 1 (NDS-1).
“Now, NFIS-II rides on the successful implementation of NFIS-I that ran between 2016 and 2021 focusing more on access to financial services by the low-income and marginalised groups such as women, youths, rural communities, smallholder farmers as well as micro, small and medium enterprises,” it said.
Despite low uptake of business cover by small-scale traders, 22 percent of the Zimbabwean adult population have insurance cover.
“Uptake of individual insurance products among the Zimbabwean adult population remained low at 22 percent in 2022 down from 26 percent in 2014, driven largely by funeral insurance, which accounted for 72 percent of those insured.
“About 72 percent of the population does not have any form of insurance,” further reads the report.
Uptake of formal insurance by MSMEs (which is largely personal insurance), remained low at 24 percent up from five percent in 2012. Formal insurance was largely driven by funeral cover (76 percent) and medical cover (36 percent).