The International Finance Corporation (IFC), part of the World Bank Group, has signed new agreements with three partner index-insurance schemes in Africa to help expand access to microinsurance products for farmers and livestock herders. The schemes aim to help farmers and herders protect their crops and livestock from weather risks and natural disasters.
The IFC’s Global Index Insurance Facility (GIIF) will give grants totalling approximately $4.1m to the three schemes in Kenya and Rwanda. The partner schemes which will benefit from the grants are the Syngenta Foundation for Sustainable Agriculture/UAP Insurance weather index insurance initiative, the International Livestock Research Institute (ILRI) Livestock index insurance project (both in Kenya), and the MicroEnsure weather index insurance project in Rwanda.
These are the first grants provided under the GIIF program and it is hoped they will bring weather and index-based insurance products to 35,000 farmers and 5,000 livestock herders in Eastern Africa over a period of three years.
Jean Philippe Prosper, IFC Director for Eastern and Southern Africa, said: “These partnerships highlight IFC’s commitment to expanding insurance and other financial products where they are needed most in Africa. The Global Index Insurance Facility will facilitate farmers’ access to credit, leading to increased productivity, improved livelihoods and greater food security. We are grateful to the donors that have generously provided funding and to our partners for supporting this programme.”
These index-based insurance schemes are working well as microinsurance products due to their predictable nature (ie. the policy is triggered when weather conditions exceed pre-defined index points) which is making them easy for the target audience to understand. As these schemes come out of pilot phases, grants dry up and commercial re/insurers step in to assist in the ongoing running of the schemes, a big opportunity will emerge for re/insurers willing to tap into this emerging, developing market.