Johannesburg, South Africa, January 14, 2014—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
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.
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.
IFC, a member of the World Bank Group, is
the largest global development institution focused exclusively on the private
sector. Working with private enterprises in more than 100 countries, we
use our capital, expertise, and influence to help eliminate extreme poverty
and promote shared prosperity. In FY13, our investments climbed to an all-time
high of nearly $25 billion, leveraging the power of the private sector
to create jobs and tackle the world’s most pressing development challenges.
For more information, visit www.ifc.org