Nairobi, 15th July, 2014. Presentation by Shadrek Mapfumo (Global Index Insurance Facility in Africa) on Day 1 of the Fin4Ag conference

1. Global Index Insurance Facility
in Africa
GIIF is funded by:
OFFICIAL USE ONLY
1

2. Index insurance
pays out benefits on the
basis of transparent
parameters (e.g. rainfall
level) without the
traditional services of
insurance claims
assessors,
allowing for faster and
more objective claims
settlement.
What is index insurance?
Covers crops against extreme
WEATHER
and catastrophes
Uses multiple sources of
DATA
Highly
ADAPTABLE
to local conditions
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CONFIDENTIAL

3. Climate change and agriculture in
Mozambique
Why is IFC
involved?
• Agriculture accounts for 32%of GDP and provides a livelihood to
almost 81% of the labor force.
• The majority of production is by smallholder families, many of whom
combine food crops with a single cash crop such as cotton.
• The majority of Mozambican agriculture is rain fed and therefore very
sensitive to climatic conditions.
• Climate change models
indicate an increased
likelihood of extreme
weather events such as
flood, drought, and
cyclones leading to
severe negative impacts
on the agricultural sector
in Mozambique.
Impact on
agribusinesses
Impact of
climate change
Agriculture in
Mozambique
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CONFIDENTIAL
Food insecure population

4. The index insurance value chain• Intermediary/broker designs
product to cover company’s
portfolio, with input from
agribusiness management
and staff
• Agribusiness purchases
portfolio insurance from local
insurer on behalf of farmers
• Insurer transfers part of the
risk to international
reinsurance companies,
insuring an influx of foreign
capital in case of major
catastrophe
• In case of weather event,
insurance company transfers
payout to agribusiness
• Agribusiness can use payout
to provide loan balance
credits, replacement inputs,
or value add services
Farmers
Farmers
Farmers
Insurance
Company
Payout in case of
weather event
Reinsurance
Company
Intermediary
/Broker
Agribusiness
Premium payment Inputs/loan
*loan
balance
credit or
add in
case of
payout
Product design
Risk transfer
Payout in case of
weather event
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CONFIDENTIAL

5. Insured $333k in
inputs
$55k paid in
premiums
Received payout of
$153k
IFC
OLAM
OLAM Mozambique
IFC ENGAGEMENT
OLAM Mozambique
• Operates contract farming and
food processing schemes for
seven value chains.
• Assists contract farmers with
inputs, financing and extension
services
IFC ADVISORY SERVICES
• IFC client Guy Carpenter
designed product to protect
cotton crops against excess
rain, drought and cold
temperatures
COVERAGE
• Insured $333,000 in inputs for
cotton farmers in the Monapo
district in 2013.
OUTCOMES
• Received a payout of $153k
due to drought during the
flowering period.
• Mozambique Cotton Institute
used the payout to pay the
premium for following year
Guy
CarpenterAdvisory
Product
design
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CONFIDENTIAL