Posted by: africanpressorganization | 16 January 2014

IFC, EU and MicroEnsure Advance Weather Index Insurance for Small-scale Farmers in Rwanda, Zambia


 

IFC, EU and MicroEnsure Advance Weather Index Insurance for Small-scale Farmers in Rwanda, Zambia

 

JOHANNESBURG, South-Africa, January 16, 2014/African Press Organization (APO)/ IFC, a member of the World Bank Group, signed two grant agreements with MicroEnsure Ltd, valued at about $650,000 combined, to increase the supply of index-based weather insurance to small-scale farmers in Rwanda and Zambia to help mitigate the adverse effects of climate change and to strengthen food security.

 

The grants were issued by the Global Index Insurance Facility (GIIF), a multi-donor trust fund financed by the European Union, Japan and the Netherlands, and implemented by IFC and the World Bank.

 

Richard Leftley, CEO MicroEnsure and MicroEnsure Asia, said “As a pioneer in the provision of weather index insurance to smallholders since 2004 we have seen the impact that these products have in unlocking credit to fund inputs, resulting in a dramatic increase in yields and rural income. Our on-going relationship with the team at IFC has been central to our growth in this sector.”

 

Agricultural land in Rwanda and Zambia is largely rain-fed and certain regions are vulnerable to drought and excess rain. To limit their losses due to extreme weather, smallholder farmers make minimal investments into their land, leading to reduced yields and continued food insecurity.

 

Traditional indemnity-based agricultural insurance has seen little success due to high transaction costs and premiums. Index-based insurance, which pays out benefits on the basis of weather data without costly field verification of losses, is a more efficient risk management tool. Supported by the GIIF grants, MicroEnsure is expected to offer index-based insurance to an additional 90,000 small-scale farmers in Rwanda within two years and 15,000 small-scale farmers in Zambia within one year.

 

Gilles Galludec, IFC GIIF program manager, said “There is great potential for index insurance to strengthen economic security for smallholder farmers in Rwanda and Zambia while also serving to further the development of sustainable insurance markets in both countries. A reduction in weather-related risks also stimulates investment in farming by making it viable for financial institutions and agribusinesses to extend credit to smallholder farmers for long-term investment in the land. Index-based insurance is a powerful tool in the fight against poverty.”

 

Headquartered in the UK, with a regional base in Nairobi and country operations across Africa and Asia, MicroEnsure works with mobile network operators, banks, microfinance institutions, and other aggregators to provide insurance for the mass market. MicroEnsure has been operating since

2002 and its shareholders include IFC, Omidyar Network, Opportunity International and members of management. The company has twice been awarded the Financial Times/IFC Sustainable Finance Award.

 

About GIIF

Launched in Africa in 2009, the Global Index Insurance Facility is a multi-donor trust fund financed by the European Union, Japan and the Netherlands and implemented by IFC and the World Bank. GIIF supports the development and growth of local markets for indexed/catastrophic insurance in developing countries, primarily in Sub-Saharan Africa, Latin America and the Caribbean, South Asia and Southeast Asia. GIIF’s objective is to expand the use of index insurance as a risk management tool in agriculture, food security and disaster risk reduction.

 

SOURCE 

International Finance Corporation (IFC) – The World Bank


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