MICROCAPITAL BRIEF: Financial Sector Development Program (FSD) Africa to Invest $2m in Microinsurance Innovation Laboratory of International Labor Organization’s (ILO’s) Impact Insurance Facility

The Financial Sector Development Program (FSD) Africa, a project funded by the UK’s Department for International Development (DfID), will invest USD 1.8 million over the next four years in the “microinsurance innovation laboratory” to be developed by the Impact Insurance Facility (IIF) of the International Labor Organization (ILO), an agency of the United Nations.

The laboratory is slated to assist five insurance companies and/or distributors in sub-Saharan Africa to develop “innovative micro-insurance products” [1] to increase insurance penetration in the region. The assistance for the insurance companies will consist of supporting changes in organizational structure, capacity building, staff training and the development of business analysis tools. The goal is to provide a safety net for approximately 1 million low-income households by 2020.

Paul Musoke, who serves as the change manager at FSD Africa, said that “unfortunately the insurance sector is in its infancy in most African countries with penetration below 1 percent. FSD Africa is therefore delighted to partner with ILO’s Impact Insurance Facility to promote innovation micro-insurance products targeting low income households across sub-Saharan Africa” [1].

By Kevin van den Brink, Research Associate

About Financial Sector Development Program (FSD) Africa

The Financial Sector Development Program (FSD) Africa was founded in 2012 by the Department for International Development (DFID), the agency of the United Kingdom’s government that is responsible for international development initiatives. With an initial budget of GBP 35 million (USD 50 million) FSD Africa is intended to reduce poverty in sub-Saharan Africa through contributing to efficient financial markets by facilitating that capital flows to projects that show the most potential to reduce poverty, such as renewable energy operations, financial literacy programs and efforts to decrease corruption. FSD Africa is part of the FSD network, which consists of regional FSDs in South Africa and Kenya and national FSDs in Kenya, Mozambique, Nigeria, Rwanda, Tanzania, Uganda and Zambia. This network comprises approximately USD 450 million in collective investment by DFID; The Bill & Melinda Gates Foundation; The Swedish International Development Cooperation; Danish International Development Agency; Foreign Affairs and Trade and Development Canada; The Royal Netherlands Embassy and the World Bank.

About International Labor Organization’s (ILO’s) Impact Insurance Facility (IIF)

Launched in 2008 with a donation of USD 34 million from the US-based Bill & Melinda Gates Foundation, the Impact Insurance Facility (IIF) is housed at the International Labor Organization’s (ILO’s) Social Finance Program. Formerly known as the Microinsurance Innovation Facility, the entity’s goal is to enable the insurance industry, governments and their partners to expand insurance for low-income people with an emphasis on agriculture, health, life and property insurance. As of 2015, it has received funding from donors including Z Zurich Foundation, Munich Re Foundation, the World Bank Group, the United States Agency for International Development and the Australian Agency for International Development in addition to the Bill & Melinda Gates Foundation. ILO is an agency of the United Nations and is located in Geneva, Switzerland.

About International Labor Organization (ILO)

Founded in 1919, the International Labor Organization (ILO) is an agency of the United Nations. The objective of ILO is “to advance opportunities for men and women to obtain productive work in conditions of freedom, equity, security and human dignity”. Headquartered in Switzerland, ILO has proposed a budget plan of USD 797 million for the biennium 2016-2017. The International Labor Office is the permanent secretariat of ILO.

Additional Sources and Resources

[1] FSD Africa, News, “FSD Africa and ILO’s Impact Insurance Facility partner to launch a micro-insurance innovation facility to reach 1 million new insurance clients in sub-Saharan Africa”

MicroCapital Universe Profile: FSD Africa

MicroCapital Universe Profile: IIF

MicroCapital Universe Profile: ILO

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