Reinsurance News

African farmers receive pay-outs of $1.5mn following drought

14th May 2018 - Author: Matt Sheehan

Smallholder farmers under the R4 Rural Resilience Initiative (R4) climate risk management scheme have received pay-outs of US $1.5 million following poor rainfall in Ethiopia, Kenya, Malawi, Senegal, and Zambia.

Farming in AfricaThe R4 scheme, which was launched in 2011 by the United Nations World Food Programme (WFP) and Oxfam America, is designed to protect vulnerable farmers from weather-related crop losses.

This latest pay-out enables nearly 30,000 farming households to cover immediate financial needs like purchasing food and paying for school fees, as well as allowing many smallholders to invest in seeds, fertilisers, or small-scale businesses.

R4 insures over 57,000 farmers in Africa against extreme weather shocks linked to climate change based on an index of rainfall, vegetation, or yield estimates, which are used to determine the extent of losses incurred.

Smallholders are compensated if the index falls below a pre-determined threshold, as the level of rainfall did during the growing season for these five countries.

Benoit Thiry, Country Director for WFP Malawi, said: “In Malawi, more than 7,000 drought-affected families will receive an insurance payment worth US$ 400,000. This is the first time that a weather index insurance programme has delivered payouts at such a large scale in Malawi.

“Insurance is a key element which complements other initiatives being undertaken to make people more resilient to weather-related shocks.”

In addition to its risk transfer element, R4 strives to improve smallholder farmers’ natural resource management, and to promote investment, access to micro-credit, and savings.

The scheme has distributed total pay-outs of $2.4 million since its inception, and is supported by the governments of the U.S, Switzerland, Flanders, the UK, France, the Republic of Korea, Canada, and Sweden.

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