Weather index formed for African farmers

Farming communities in several African countries are to benefit from the formation of an index-based weather insurance programme that will offer them protection against adverse weather events and the effects of climate change.

Working with the Syngenta Foundation for Sustainable Agriculture, a non-profit organization based in Switzerland, some $3.9 million in grants has been committed by the Global Index Insurance Facility, a multi-donor trust fund financed by the European Union, Japan and the Netherlands and implemented by IFC, a member of the World Bank Group, and the World Bank.

The index will be available to small-scale farmers in Kenya, Rwanda and Tanzania. It is estimated that the project will bring index insurance to approximately one million small-scale farmers within two years.
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.”