The partnership between Africa-Reinsurance Corporation (Africa Re) and the International Finance Corporation (IFC) is providing financial support to African farmers who have suffered losses of different magnitudes in their businesses.
The partnership between the two firms has also led to provision of technical support to insurance companies for their agricultural line by using index-based agricultural insurance.
Speaking on the development, deputy managing director, Africa Re, Ken Aghoghovbia, said, “This initiative would certainly go a long way in moving Nigeria towards its goal of food security in line with Africa-Re’s mission to support African economic development”.
While Africa Re believes this development will trigger innovative and more efficient solutions for small farmers and help them mitigate effects of climate change related shocks, it added that it also protects farmers against catastrophic losses and access to finance.
Under the terms of the partnership, Africa Re acts as the fund administrator to an ‘experience account’ created by IFC’s Global Index Insurance Facility (GIIF).
With the arrangement, the loss ratios of the net account for local risk carriers would be capped at 75 per cent and the excess loss amounts transferred to the Global Index Insurance experience account.
The pilot phase of the experience account was set up in 2017 for a 3-year period to end in December 2020. The USD$900,000 fund covered Nigeria and Zambia and was intended to support the development of weather and area yield index insurance programmes in these countries.