In a small village in East Africa, a young woman’s neck strains under the weight of a plastic sack of bananas resting on her head. She’s walked miles now to reach her village’s market stall, a patchwork of gathered aluminum and wooden planks. On a good day, the proprietor of the stall, also a woman, will pay her a decent price for what’s she’s grown and carried.
On a bad day, the proprietor will either pay her less than it cost to produce her crops, or send her back home with nothing. Women like her represent the small fraction of African farmers lucky enough to have fed their own families and still have a surplus of something worth selling, despite erratic rainfall and dusty soils leached of nutrients.
This daily game of chance takes place throughout Sub-Saharan Africa, where nearly 500 million people depend on agriculture for their livelihoods. Half of these smallholder farmers live in extreme poverty, and a third of them are undernourished. For most of them, moving away from subsistence into small-scale commercial agricultural production represents their only chance at escaping a life of want and need, but too often it locks them in a vicious cycle of indebtedness and hunger. Increasingly, due to global climate change, their odds of breaking that cycle are becoming worse.
African farmers already grapple with wild swings in weather, growing crops at temperatures near their maximum tolerance. That means even minor droughts can lead to crisis, resulting in hunger and death at a rate higher than on any other continent. As climate change leads to higher temperatures, less dependable rains, and longer droughts, outbreaks of famine throughout the region will become increasingly common. And if an agricultural economy suffers a major climate-related natural disaster, such as a severe drought or debilitating storm, as much as 15 percent of its GDP could be wiped out, with after effects lasting five years.
Climate change will undoubtedly hurt Africa’s smallholder farmers, but it does not have to consign them to economic despair. Microinsurance can help poor farmers survive the shocks of erratic weather and climbing temperatures, and protect their fragile economic security.
New insurance models, especially those based on local weather indexes, have lowered the costs of premiums, making them a realistic option for struggling farmers. These affordable crop and livestock insurance products allow farmers to withstand droughts and overcome bad harvests, encouraging them to make investments that increase land and labor productivity.
In 2009, the Rockefeller Foundation worked with partners to design and test new microinsurance models, helping to create products that shield smallholder farmers from weather risk, improving their odds of success. We continue to test and pilot these products in hopes of increasing their scale, lowering their cost, and disseminating them throughout the developing world.
In Ethiopia, the Rockefeller Foundation worked with the national government and Oxfam America, as well as other NGOs, private sector partners, and academic institutions to provide insurance products that are tied to the local region's weather measurements rather than individual claims, dramatically lowering administrative costs and premiums. The success of these products will lead to opportunities to devise them at a much larger scale, helping mitigate risk at a regional, national, and even continental level, widening the risk pool and driving down costs even further.
The Foundation also supported Oxfam’s pioneering HARITA (Horn of Africa Risk Transfer for Adaptation) program, allowing subsistence farmers to obtain insurance in exchange for their labor. Instead of spending what little income they generate on premiums, farmers obtain insurance vouchers after working on public works projects in the off-season, many of which are designed to strengthen resilience to climate change. The insurance products are collaboratively designed, encouraging participation from local farmers and administered through existing community and social structures.
In Kenya, the Foundation worked with the World Bank and local NGOs to pilot an indexed-based weather insurance (IBWI) project, which will help develop a market for agriculture insurance to reduce the risk climate change presents to farmers and pastoralists. Tailored products are being designed for various crops, including cereals, bananas, tea and coffee, further helping to stabilize fragile economies.
Also with the support of the Foundation in 2009, the World Food Programme’s Climate and Disaster Risk Solutions team developed Africa RiskView, a software tool that allows the WFP to predict and assess the impact of severe droughts on food security throughout Africa. The tool help governments and aid organizations predict and prepare for climate-related food crises, responding quickly and efficiently, even before outbreaks of famine occur.