African insurance services provider African Risk Capacity and development finance institution the International Finance Corporation (IFC) have signed a letter of engagement to strengthen agricultural insurance solutions in Africa.

The partnership aims to create a safer and more attractive environment for investment in agriculture by reducing risks linked to climate change and other uncertainties.

African Risk Capacity and the IFC will develop insurance solutions that help farmers, financial institutions and agribusinesses manage risks.

The initiative will also support the IFC’s Africa Inclusive Insurance Program (AIIP) by introducing insurance products that protect farmers from climate shocks and other uncertainties.

This will not only reduce financial losses but also encourage more investment in agriculture, leading to increased food production and improved food security across the continent, the partners said.

Agriculture is the backbone of Africa’s economy, providing livelihoods for millions, yet, farmers and agribusinesses struggle to secure funding owing to the high risks posed by unpredictable weather, market fluctuations and limited financial protections.

Africa has an estimated 183-million hectares of cultivated land, with 95% of it dependent on rainfall, making the sector highly vulnerable to climate variability. The World Bank estimates that food demand will increase by 70% by 2050, requiring massive investments in agriculture.

However, in Africa, less than 5% of farmland is irrigated, and access to financing remains a major barrier to growth.

Without effective risk management solutions, many investors hesitate to support agricultural projects, leaving farmers exposed and food production unstable, the organisations said.

“This partnership is an important step in our mission to strengthen Africa’s resilience to climate and financial risks. By working with IFC, we can scale up agricultural insurance solutions and provide farmers with the confidence to invest in their future,” said African Risk Capacity CEO Lesley Ndlovu.

“Agriculture is central to Africa’s economy and food security. Supporting food security and nutrition of the continent is an important priority for IFC in Africa, which reflects our commitment to fostering economic development and resilience in the region,” said IFC Africa VP Sérgio Pimenta.

“With this collaboration, we are creating insurance solutions that will protect farmers and attract the investments needed to drive sustainable growth in agriculture.”

At a time when climate change and global food demand are putting increased pressure on African agriculture, this partnership marks a significant step toward ensuring food security and economic stability.

By reducing risks and increasing access to financial protection, African Risk Capacity and the IFC are working to build a stronger, more resilient future for African farmers and investors alike, the organisations said.