The parties behind the R4 Rural Resilience Initiative microinsurance scheme have committed to expanding the reach of their weather-index insurance products outside of the original pilot country Ethiopia. The initiative involves the United Nations World Food Programme (WFP) and Oxfam America, supported by the United States Agency for International Development (USAID). Swiss Re provide the risk transfer solution to back the index insurance products.
The aim of the R4 project is to help rural poor, who are mainly subsistence or small-holder farmers, to protect their crops and livelihoods from the impacts of climate change and weather risks including drought. R4 is not just insurance coverage though as the project also aims to educate, make microcredit available and encourage members to increase their savings. The microinsurance component aims to underpin all of these making it easier for policyholders to recover after drought or weather events.
“For the 1.3 billion people living on less than a dollar a day who depend on agriculture for their livelihoods, natural disasters are a constant threat to their food security. The most vulnerable people in the world are being hit by more frequent and intense climate-related disasters. The world knows how to do this: Proven tools have broken the cycle of emergency hunger for millions, building resilience in the face of repeat disasters,” said WFP Executive Director Josette Sheeran.
USAID has awarded $8m to the WFP to support the expansion of the scheme to Senegal. Over the next five years Senegal farmers will benefit from the same coverage as those in Ethiopia have benefitted from. The expansion of the scheme has been a key aim since the initiative was launched.
Swiss Re are the exclusive insurance partner for the initiative and will lead the design and implementation of the risk transfer solutions. The weather-index insurance products will enable farmers in these countries to manage their weather risks and give them the chance to take out microcredit loans and take the risks which the initiative says are essential to economic development. Swiss Re have contributed $1.25m to the initiative.
“Insurance is a cornerstone of economic growth and stability, and we are proud to contribute our expertise to this project which allows the poorest farmers and their families to cope when crops are ruined by drought, flood or other climate related impacts. Through the pilot in Ethiopia, we have seen that even farmers with no monetary income can build a better future by trading labour for insurance, in ways that also help to strengthen their communities. We are pleased that the model which began with just 200 households in Ethiopia three years ago, has been successfully scaled up and will now be replicated as R4 in other countries, including Senegal, to help thousands more,” said Michel Liès, Chairman Global Partnerships, Swiss Re.