Farmers in Kenya and Rwanda are expected to benefit from a World Bank-funded insurance scheme under which they will be compensated based on an agreed formula irrespective of their actual losses.
Under the initiative, which seeks to help protect crops and animals from weather-related risks and natural disasters, covered farmers will qualify for payouts as soon as pre-defined statistical indexes are triggered without.
This will be done without having to wait for claims to be settled in the traditional way.
The International Finance Corporation, through the Global Index Insurance Facility (GIIF), will give grants totalling Sh328 million ($4.1 million) for the purpose.
“It will facilitate farmers’ access to credit, leading to increased productivity, improved livelihoods and greater food security,” said Mr Jean Philippe Prosper, IFC Director for Eastern and Southern Africa.
The grants, the first three provided under the GIIF programme, 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.
IFC will grant Sh192 million ($2.4 million) to Syngenta Foundation for Sustainable Agriculture/UAP Insurance weather index insurance initiative, which expects to help protect about 20,000 farmers in Kenya over the next three years.
Help insure herders
It will give Sh12.3 million ($154,000) to the ILRI, which expects to help insure 5,000 livestock herders in northern Kenya over the next two years while Sh128 million ($1.6 million) will go to MicroEnsure, which expects to cover 15,000 farmers in Rwanda over the coming three years.
“It will support the development of new insurance products and increase expertise in this field, which will benefit smallholders and livestock keepers affected by climatic events,” said Mr Bernard Rey, the head of operations European Union Delegation to Kenya.
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.