NAIROBI, Kenya, Nov 25 – The International Finance Corporation (IFC), a member of the World Bank Group, has signed agreements with three partners to expand access to insurance to thousands of farmers and livestock herders in Kenya and Rwanda.
This cover will enable them protect their crops, animals, and livelihoods from weather-related risks and natural disasters.
IFC, through the Global Index Insurance Facility (GIIF), will confer grants totaling roughly $4.1 million (Sh329 million) to the Syngenta Foundation for Sustainable Agriculture/UAP Insurance weather index insurance initiative, the International Livestock Research Institute (ILRI) Livestock index insurance project (both in Kenya), and the MicroEnsure weather index insurance project in Rwanda.
The grants, the first three provided under the GIIF program, will help bring weather-related, index-based insurance to about 35,000 farmers and 5,000 livestock herders in East Africa over the next three years.
Jean Philippe Prosper, IFC Director for Eastern and Southern Africa, said: “These partnerships highlight IFC’s commitment to expanding insurance and other financial products where they are needed most in Africa. The Global Index Insurance Facility will facilitate farmers’ access to credit, leading to increased productivity, improved livelihoods and greater food security. We are grateful to the donors that have generously provided funding and to our partners for supporting this programme.”
Bernard Rey, the Head of Operations for European Union Delegation to Kenya, said: “The implementation of these three first GIIF projects in Kenya and Rwanda will support the development of new insurance products and will increase expertise in this field, which will benefit smallholders and livestock keepers affected by climatic events. In addition to the GIIF, The European Union is providing further financing to the ILRI Livestock Insurance project in Kenya through the 10th European Development Fund, Kenya Rural Development Project that will start in 2011.”
The specific grant agreements are:
IFC will confer a grant of up to $2.4 million (Sh193 million) on Syngenta Foundation for Sustainable Agriculture, which expects to help insure 20,000 farmers in Kenya over the next three years.
IFC will confer a grant of up to $154,000 (Sh12 million) on the ILRI, which expects to help insure 5,000 livestock herders in northern Kenya over the next two years, and IFC will confer a grant of up to $1.6 million (Sh129 million) on MicroEnsure, which expects to insure 15,000 farmers in Rwanda over the next three years.
IFC’s GIIF program was established in 2009 to assist the development of index-based insurance for natural disasters and weather risks in developing countries, where insurance is rarely available.
The grants will fund advisory activities, including local capacity building, infrastructure development, product development, and development of local insurance companies’ capacity to provide index-based insurance products.
Index-based insurance insures against catastrophic events, such as wind storms or droughts, depending on their severity. Index-linked insurance products eliminate the need for insurance companies to individually verify claims, reducing transaction costs and making it easier for the products and services to be offered to rural communities and in frontier regions.
The European Union committed 24.5 million Euros as the first donor to the GIIF Trust Fund. The fund is also supported by Japan’s Ministry of Finance with an initial grant of $2 million (Sh121 million), and the Dutch Ministry of Foreign Affairs, which provided funding to establish the facility.