IFC, EU and Syngenta Foundation to Expand Weather Insurance to One Million East African Farmers
NAIROBI, Kenya, February 5, 2014/African Press Organization (APO)/ -- IFC, a member of the World Bank Group, signed two grant agreements, with a combined value of $3.9 million, with the Syngenta Foundation for Sustainable Agriculture to expand index-based insurance to small-scale farmers in Kenya, Rwanda and Tanzania. Index-based weather insurance can protect against the adverse effects of climate change and help to strengthen food security in rural communities.
The grants were issued by the Global Index Insurance Facility, a multi-donor trust fund financed by the European Union, Japan and the Netherlands and implemented by IFC and the World Bank. It is estimated that the project will bring index insurance to approximately one million small-scale farmers within two years.
At a signing ceremony in Nairobi, smallholder farmer Reuben Biwot from Kitale, Kenya, said, “The insurance has given me confidence. It has transformed my attitude from subsistence farming to farming as a business.
I am free from the fear of failure.”
Reuben Biwot is one of 187,000 small-scale farmers in East Africa already benefiting from index insurance provided by the Syngenta Foundation's agricultural index insurance initiative, Kilimo Salama.
Marco Ferroni, Executive Director of the Syngenta Foundation for Sustainable Agriculture, said "The support from IFC and the EU has been instrumental in the expansion of our index insurance program. This year, our team aims to reach over 600,000 farmers, expanding the program to cover Tanzania as well."
Much of the agricultural land in Kenya, Rwanda and Tanzania is rain fed and certain regions are vulnerable to drought and erratic rain. Many smallholder farmers limit their losses to extreme weather by making 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.
David Crush, IFC Manager for Access to Finance in Sub-Saharan Africa, said, “Index insurance helps to strengthen the livelihoods of small-scale farmers, which is one of the most important tasks in the quest to fight poverty and foster inclusive and sustainable economic growth in Africa and elsewhere.
A non-profit organization based in Switzerland, the Syngenta Foundation for Sustainable Agriculture's mission is to create value for resource-poor small farmers in developing countries through innovation in sustainable agriculture and the activation of value chains. The SFSA's two-pronged approach to improve livelihoods is raising agricultural productivity and linking farmers to markets.
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 and 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.