Index Insurance for agriculture in Africa : Emergent direction or dead end?

• Main Author: Mulangu, Francis
• Other Authors: Nanyang Business School
• Format: Newsletter
• Language: English
• Published: 2020
• Subjects: Business; Business::General; Africa; Index Insurance
• Online Access: https://hdl.handle.net/10356/142633
• Institution: Nanyang Technological University

A farm, whether large or small, can be a risky business. Farmers face price, yield, and resource risks. Such risks tend to make their incomes unstable and unpredictable. Systemic1 risks such as crop disease and extreme weather affect individual farmers, and the social networks and communities on which they rely. Drought or new pest outbreaks may destroy crops and/or livestock. Assets, revenue, and even lives may be lost due to extreme events such as hurricanes, fires and floods. Agricultural risks also vary by scope. Trends in local or world markets may push market prices down, or drive input costs up. This note explores the innovative index approach to insuring the agricultural value chain, evaluates its potential to add value to stakeholders in African agriculture, and identifies potential business opportunities. Downstream business stakeholders include banks, out growers and other contract farmers, nucleus farms, warehousing firms, input dealers, processing firms, and other agricultural aggregators. On the upstream end, niche opportunities may emerge for weather and commodity market data providers, blockchain and other technology developers, and mobile payment providers.