Recently, the International Finance Corporation (IFC), an organization under the World Bank Group that has been a significant source of financing for the microfinance industry, agreed to confer to three microinsurance projects in East Africa a grant of USD 4.1 million, which is expected to allow 35,000 farmers and 5,000 livestock herders in Rwanda and Kenya to protect their crops and livestock from natural disasters.
The grants were made through the Global Index Insurance Facility (GIIF), a reinsurance vehicle established by IFC in 2009 that aims to increase the accessibility of insurance against natural disasters and weather risks in developing countries by originating, intermediating and underwriting various types of indexable risks in developing countries. For a risk to be indexable, it has to be in a strong correlation with other measurable variables, so that one can use the measurable variables to assess the probability of the risk and determine the payout. For instance, the risk of pest and disease outbreaks in South East Asia is often indexed to temperature as they are strongly correlated.
The three institutions include Syngenta Foundation for Sustainable Agriculture (SFSA), International Livestock Research Institute (ILRI) and MicroEnsure:
Based in Basel, Switzerland, SFSA has worked in India, Bangladesh, Vietnam, Indonesia, Kenya, Rwanda, Tanzania, Uganda, Ethiopia, Mali, Honduras, Brazil and Peru to help small farmers become more professional growers by “extending science-based know-how, facilitating access to quality inputs, and linking smallholders to markets in profitable ways.” SFSA plans to use IFC funding of approximately USD 2.4 million to further insure 20,000 farmers in Kenya over the next three years.
Headquartered in Nairobi, Kenya, ILRI has worked with livestock herders in Africa and South Asia, and it will use the IFC grant of approximately USD 154,000 to insure 5,000 livestock herders in northern Kenya over the next two years.
MicroEnsure, which has administrative offices in the US and UK, provides a range of low-cost products including health, life, property and weather-index insurance to approximately 3.5 million poor clients across eight countries: Ghana, Bangladesh, Mozambique, Malawi, India, the Philippines, Tanzania and Kenya. It plans to use the approximately USD 1.6 million from IFC to insure 15,000 farmers in Rwanda.
By Paul K. Kim, Research Associate
ABOUT International Finance Corporation IFC:
A member of the World Bank Group, IFC offers loan and debt securities, equity investments, advisory services and technical assistance intended to alleviate poverty and promote open and competitive markets in developing countries. IFC has 182 member countries that “collectively determine its policies, and approve investments.” In fiscal year 2009, IFC’s new investments totaled USD 14.5 billion.
ABOUT MicroEnsure:
MicroEnsure was founded in 2005 as a wholly owned subsidiary of Opportunity International, a global nonprofit microfinance network created in 1974. It was known as the Micro Insurance Agency until 2008. As an insurance intermediary, it provides a range of low-cost products including health, life, property and weather-index-based insurance to approximately 3.5 million poor clients across eight countries: Ghana, Bangladesh, Mozambique, Malawi, India, the Philippines, Tanzania and Kenya. In 2008, MicroEnsure received a USD 24.2 million grant from the Bill and Melinda Gates Foundation to help expand its insurance products to the poor in Africa, Asia and Latin America. In 2009, it won the Financial Times award for Achievement in Basic Needs Financing.
ABOUT Syngenta Foundation for Sustainable Agriculture (SFSA):
SFSA is a nonprofit organization based in Basel, Switzerland, whose mission is to create value for resource-poor, small-scale farmers in developing countries through innovation in sustainable agriculture and the activation of value chains.
ABOUT International Livestock Research Institute (ILRI):
ILRI works at the crossroads of livestock and poverty, aiming to bring science and capacity-building to bear on poverty reduction and sustainable development. Based in Kenya, ILRI works in Africa and Asia.
SOURCES:
[1] MicroEnsure. “IFC SIGNS AGREEMENTS TO EXPAND MICROINSURANCE TO FARMERS IN EAST AFRICA” 24 November 2010 http://www.microensure.com/news.asp?id=77&start=0
[2] ProVention Consortium. “Global Index Insurance Facility (GIIF) Concept Note” http://www.proventionconsortium.org/themes/default/pdfs/GIIF_overview_Fe…
MicroCapital’s Microfinance Universe Profile: International Finance Corporation (IFC) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Int…
MicroCapital’s Microfinance Universe Profile: MicroEnsure https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Mic…
MicroCapital’s Microfinance Universe Profile: Syngenta Foundation for Sustainable Agriculture (SFSA) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Syngenta+Foundation+for+Sustainable+Agriculture+(SFSA)
MicroCapital’s Microfinance Universe Profile: International Livestock Research Institute (ILRI)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Int…
MicroCapital.org Article, December 7, 2010: Cooperative Insurance Company (CIC) of Kenya Launches M-Bima, Mobile-to-Mobile Premium Payment Program https://www.microcapital.org/microcapital-brief-cooperative-insurance-com…
MicroCapital.org Article, December 11, 2010: Munich Re Foundation, Microinsurance Network Publishes Proceedings of 6th International Microinsurance Conference in Manila, Philippines
https://www.microcapital.org/microcapital-brief-munich-re-foundation-micr…
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