The Hague, Netherlands, June 3, 2014
– IFC, a member of the World Bank Group, signed an agreement today marking
the $25 million contribution by the Dutch Ministry of Foreign Affairs in
support of scaling up insurance markets in developing countries over the
next five years, thus helping to ensure that agricultural insurance
becomes a sustainable business model for smallholder farmers.
“With the world’s population expected to reach 9 billion by mid-century,
improved farmer productivity will prove critical for food security. This
calls for increased investments in agriculture, and sustainable agricultural
insurance markets offer a solution to the problem of low farmer productivity
and investment,” said Aaltje de Roos, Senior Policy Advisor for the Dutch
Ministry of Foreign Affairs.
Agricultural production in many developing countries, particularly in Sub-Saharan
Africa, South Asia and parts of East Asia Pacific is characterized by low
levels of yield due to insufficient levels of farm investment and vulnerability
to weather uncertainty and natural catastrophes. Understanding and managing
risks of weather-caused disasters for smallholder farmers is critical to
reducing their economic losses.
The Global Index Insurance Facility (GIIF), a programme managed by IFC
and implemented with the World Bank, aims to expand the use of index insurance
as a risk management tool in agriculture, food security and disaster risk
reduction, primarily in sub-Saharan Africa, the Caribbean and Asia Pacific,
supporting the growth of local markets for index insurance.
“We greatly value the ongoing collaboration with the Dutch government
in support of index-insurance programs targeting smallholder farmers,”
said Peer Stein, Director of IFC Access to Finance Advisory Services. “With
the number of people affected by climate-related disasters on the rise
globally and the poorest households left without the means to deal with
their economic effects, index insurance holds the promise to be a great
vehicle for protecting the most vulnerable from the unknown”.
For much of the developing world, agricultural insurance has not
taken off due to the lack of appropriate products, high cost of premiums,
and payment delays that discourage potential clients.
“We at IFC are eager to address what you may consider a market failure
and do the needful to make insurance and other mitigation tools for natural
and climate change-related disasters available and affordable to farmers,”
said Gilles Galludec, Manager of GIIF.
To date, the Facility, funded by the European Union, Japan, and the Netherlands,
has supported nearly a dozen partners in developing countries to set up
index insurance markets for farmers and micro- and small-to-medium enterprises,
with more than 500,000 clients covered to date and $109 million
in sums insured. One of GIIF’s most successful partners, the Syngenta
Foundation for Sustainable Agriculture, set up the Kilimo Salama initiative
which currently insures 186,000 farmers in Kenya, Rwanda and Tanzania.
The project was recently the recipient of the 2012 Financial Times/IFC
Sustainable Finance Awards for Technology in Sustainable Finance category.
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
Launched 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. For more information, see www.ifc.org/giif
and the Index Insurance Forum on LinkedIn.