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Pitch

Feasibility study for the implementation of an index insurance in the agricultural sector as part of increasing the resilience capacities.


Description

Summary

Ivorian farmers, apart from environmental risks, are also faced with other economic and organizational constraints such as fluctuating prices, lack of supply, or simply due to poor agricultural practices (technical gap, environmental problems). Many projects are already working on these different constraints.

Faced with the limitations of these self-insurance strategies, they have also developed self-help mechanisms (community stocks, donations of seeds, food and animals). But given the annual population growth of Côte d’Ivoire estimated at 2.6% according to the National Institute of Statistics, it will be necessary to produce more, and therefore develop more intensive farming systems and respectful of the environment. Moreover, in the current context, the ties of mutual assistance and the rural land issue, which is too often archaic and conflicting, are no longer sufficient to access credit. In order not to be excluded from the credit, peasants decapitalize themselves  or go into debt with usurers, thus putting themselves in danger. It seems more and more difficult to be able to do without agricultural insurance to manage the climatic impacts on agriculture in rural areas in particular, which destabilize producers but also the efforts made by the government in economic development programs, agricultural intensification, rural access to credit and the reduction of humanitarian crises or migratory waves of populations and amplifying land conflicts.


What actions do you propose?

In Africa, where agricultural insurance is still embryonic, insurance based on an index is an innovation that the country wishes to develop. This index insurance consists of a financial product linked to an index that has a strong correlation with local returns. Subscribers such as governments, producer associations, banks or microfinance institutions could pay a premium per crop yearly and could receive compensation in a year of bad harvest due to climate.

To successfully implement such insurance, a public and private investment is necessary as well as a will to evaluate its success objectively and to gradually adjust the actions in this area. It will make it possible to face covariant risks in rural areas. Its mode of operation can be described as follows: when the level of the climatic parameter (temperature, rainfall, relative air humidity, etc.) falls below a certain threshold, farmers receive compensation to buy food or inputs, in compensation for losses of yield, with a view to strengthening their resilience.

This index insurance will have to involve aggregator organizations and will be conducted through banks, traders or farmers' organizations, or any other aggregator.

As a prelude to its implementation, the project submitted to competition consists of a pilot phase or demonstrative project. It aims to study possible options in Côte d’Ivoire based on the area covered by the ClimDev project.

ClimDev project aims to enable the Ivorian government to respond positively to its overall goal of reducing the vulnerability of populations to climate change by 2019. More specifically, this project supports national initiatives aimed at improving the resilience of the population. climate change, through access to climate information for better integration of climate change in national and sectoral development policies for better decision-making in Côte d’Ivoire. Its components are: (i) large-scale production and dissemination of reliable and high-quality climate information in Ivory Cost; (ii) strengthening the capacity of legislators and policy support institutions to integrate climate change information into development programs; and (iii) implementing pilot adaptation practices demonstrating the added value of climate change. Popularization of information on the developing climate. The index insurance project in the agricultural sector could capitalize the specific climatic information that will be provided for the three pilot areas.

For an insurance program to work, the risk exposure and resources available to insurers and government sponsors, as well as their risk appetite and resources, must be finely calibrated. This is why the index insurance project should first be approached in a smaller area, with consultation and awareness sessions.

Action 1: Realize an inventory and the diagnostic of agricultural insurance in Cote d’Ivoire.

This action is to develop a complete mapping of national stakeholders and assess their level of knowledge on agricultural insurance in Ivory Coast. As part of the ClimDev project, a number of stakeholders have been identified. This mapping will be updated according to additional stakeholders in climate insurance.

In addition, an assessment of gaps and analysis of the impact chain of agricultural insurance will be produced. This assessment will highlight the determinants of agricultural insurance in Côte d'Ivoire and establish a SWOT and TOWS analysis of the agricultural insurance sector as well as an assessment of the capacity building needs of stakeholders. It will be done by a consultant, economist, sociologist or statistician, with the required capacities and familiar with the theme and technical support of InsuResilience. During this evaluation, the consultants will also evaluate knowledge of other types of innovative insurance in the agricultural sector, including index insurance, which is the subject of this study.

Activity 1.1.Activity 1.1. Mapping stakeholders and assessing national knowledge

Activity 1.2. Analyze the gaps and the chain of impact of the implementation of agricultural insurance in Côte d'Ivoire

Activity 1.3. Conduct an analysis of the institutional and legal climate insurance framework in Côte d'Ivoire and the index insurance anchor points.

Action 2: Social Acceptability Study

The social acceptability study will be done with the support of the ClimDev project. The field and consultation missions for this study could be carried out simultaneously with the ClimDev monitoring and evaluation missions and also with the ClimDev project pilot projects. In order to avoid resistance against the rapid introduction of new agricultural insurance and to avoid a process of negotiation and awareness that is too long, a social acceptability study should be conducted. This study should be developed by a national consultant.

Activity 2.1. Conduct an assessment of social acceptability based on key stakeholders and populations in the areas covered by the ClimDev project (M'Bengué, Kouho, Boundiali, Tiebissou, Toumodi and Daoukro).

Activity 2.2. Sensitize the populations covered by the ClimDev project on climate insurance based on a climate index.

Action 3: Strengthening national and local capacities for the promotion of index agricultural insurance

A residential workshop will be organized with the actors of the insurance system, the NGOs, the Ministry in charge of Economy and Finance, the Ministry of Agriculture, the research centers, the Ministry of the Environment on the index insurance. At this capacity building workshop, the choice of culture and climatic parameter will be made by the participants. Three crops, however, are possible: rice, maize and cassava. In addition, the project could benefit from the results of the study on food security tipping points in West Africa's linked socio-ecological systems under climatic hazards. This is a study conducted by the United Nations University's Institute of Environment and Human Security, which receives funding from the German Ministry of Scientific Research. The results of this study will be available in March 2018. It will guide the choice of culture and the assessment of the impact of climate hazards on it and the impact on food security.  In addition, to fill the lack of precise information on climate data, conventions will be signed with African regional institutions, in particular with the AGRHYMET Regional Center which develops Seasonal Forecasts of Agro-hydro-climatic characteristics in the Sudano-Sahelian zone (PRESAO), the West African Center for Scientific Service on Climate Change and Adapted Land Use (WASCAL).

As part of the capacity building, the training of two technical assistants on the Africa RiskView (ARV) software will be initiated.  Africa RiskView (ARV) is the technical engine behind ARC. It is a software application, developed by the United Nations World Food Programme (WFP), which provides a transparent system to estimate crop losses and the impact on populations’ food security from past and future droughts for sub-Saharan African countries. ARV combines a number of different disciplines including crop monitoring and early warning, vulnerability assessment and mapping, financial planning and risk management into one software tool that provides a standardised approach for estimating drought response costs systematically across a large number of African countries.

Activity 3.1. Training workshop of key stakeholders.

Activity 3.2. Train two technical assistants of the National Climate Change Program and the Ministry of Agriculture, the process of implementing climate insurance and the use of the Africa RiskView software, through a study trip to Africa.

Activity 3.3. Sign agri-climate partnership and information sharing agreements.

To summarize

Action 1: Inventory and inventory of agricultural insurance in Côte d'Ivoire 

Activity 1.1. Mapping National Stakeholders and Knowledge Assessment

Task 1.1.1 Launch a notice of expression of interest for the recruitment of a national consultant 

Task 1.1.2. Development of Stakeholder Mapping and Consultant Knowledge Assessment 

Task 1.1.3. Validation workshop with stakeholders 

Activity 1.2. Analyze the gaps and the chain of impact of the implementation of agricultural insurance in Ivory Coast 

Task 1.2.1. Launch a notice for an event interest in hiring a national consultant 

Task 1.2.2. Development of gap analysis and value chain by the consultant 

Activity 2.3. Conduct an analysis of the institutional and legal climate insurance framework in Côte d'Ivoire and the index insurance anchor points

Task 1.1.1 Launch a notice of expression of interest for the recruitment of a national consultant 

Task 1.1.2. Preparation of the consultant's analysis of the institutional and legal framework

Action 2: Social Acceptability Study 

Activity 2.1. Conduct an assessment of social acceptability based on key stakeholders and populations in ClimDev project areas 

Task 2.1.1 Launch a notice to attend to select a consultant 

Task 2.1.2. Elaboration of the acceptability study by the consultant 

Task 2.1.3. Results validation workshop with all stakeholders 

Activity 2.2. Raise the awareness of ClimDev-covered populations on climate-index-based climate insurance 

Task 2.2.1. Making Awareness Tools 

Task 2.2.2. Organization of sensitization sessions to the population 

Action 3: Strengthen national and local capacities for the promotion of index agricultural insurance 

Activity 3.1. Key Stakeholder Training Workshop 

Task 3.1.1. Recruitment of a trainer consultant 

Task 3.1.1 Training workshop in Abidjan for 30 key stakeholders 

Activity 3.2. Train two technical assistants from the National Climate Change Program and the Ministry of Agriculture and Rural Development, to the process of implementing climate insurance through a study trip to Africa 

Task 3.2.1. Study trip organization (return tickets, travel insurance, etc.). 

Task 3.2.2. Provision of laptops and software licenses 

Activity 3.3. Sign agri-climate information partnership and sharing agreements 

Task 3.3.1. Exchange meeting with national partners

Task 3.3.2. Skype meeting with regional partners

Task 3.3.3. Preparation of convention documents


Who will take these actions?

The project's actions are initiated by the Ministry of Health, Environment and Sustainable Development through the National Program for Combating Climate Change. These actions will be carried out with the support of the Ministry of Agriculture and Rural Development, the private sector, as well as research centers for calculating the thresholds of climatic parameters to be applied and the calculation of premiums and allowances.

The partners in the project are:

- The Regional Center Agrhymet;

- The West African Center for Scientific Service on Climate Change and Adapted Use of Land (WASCAL);

- The Swiss Center for Scientific Research (CSRS);

- The National Center for Agronomic Research;

- The Company of Airport Exploitation and Development, Aeronautical and Meteorological


Where will these actions be taken?

The project will be conducted in Cote d'Ivoire for the consultation phases of national stakeholders. However, the social feasibility studies and the field sensitization phases will be carried out in the areas covered by the ClimDev project.


What are other key benefits?

The project plans to reduce the vulnerability of populations in the middle term. Firstly, it will provide the country with skills in setting up index insurance and provide crucial information for conducting a full-scale feasibility study for the whole country.


What are the proposal’s costs?

Action 1: Inventory and inventory of agricultural insurance in Côte d'Ivoire (14,000 USD)

Activity 1.1. Mapping National Stakeholders and Knowledge Assessment (US $ 7,000)

Activity 1.2. Analyze the gaps and the chain of impact of the implementation of agricultural insurance in Ivory Coast (3,000 USD)

Activity 2.3. Conduct an analysis of the institutional and legal climate insurance framework in Côte d'Ivoire and the index insurance anchor points (USD 4,000).

Action 2: Social Acceptability Study (18,000 USD)

Activity 2.1. Conduct an assessment of social acceptability based on key stakeholders and populations in ClimDev project areas (12,000 USD)

Activity 2.2. Raise the awareness of ClimDev-covered populations on climate-index-based climate insurance (USD 6,000)

Action 3: Strengthen national and local capacities for the promotion of index agricultural insurance (USD 20,000)

Activity 3.1. Key Stakeholder Training Workshop (USD 8,000)

Activity 3.2. Train two technical assistants from the National Climate Change Program and the Ministry of Agriculture and Rural Development, to the process of implementing climate insurance through a study trip to Africa (12,000 USD)

Activity 3.3. Sign agri-climate information partnership and sharing agreements (1,000 USD)


Time line

The project will be implemented over 10 months.

In Short term (5-15 years): farmers have insurance for high consumption crops. 

 


Related proposals


References

AGBRI L. (2014) : « L’agriculture Intelligente face au Climat en Côte d’Ivoire: état des lieux et besoins d’appui pour mieux intégrer l’Agriculture Intelligente face au Climat (AIC) dans le Programme National d’Investissement Agricole (PNIA) » : Communication-pays.

FIDA (2016), L’assurance basée sur un indice climatique: potentiel d’expansion et de durabilité pour l’agriculture et les moyens de subsistence en milieu rural

MINISTERE DE L'ENVIRONNEMENT (2015), Contribution prévue déterminée au niveau nationale. 

MINISTERE DE L’AGRICULTURE (2014), « Stratégie d’Adaptation et d’Atténuation de l’Agriculture Ivoirienne Face aux Changements Climatiques ».

NIANG I. (2007) : « Programme d’Adaptation aux Changements Climatiques en Afrique »: Rapport sur le Cadre Institutionnel en Afrique de l’Ouest et du Centre en Matière de Changement Climatique.

PAM/FAO/ANADER (2014) » Mission de Suivi de la Saison Agricole 2013-2014 et de la Sécurité Alimentaire (SASA): Rapport final.

PNCC (2014) : « Document de Stratégie Nationale de Lutte Contre les Changements Climatiques 2015-2020 ».