Please find below the
A lot of stakeholders involved with some assumptions, especially those related to Gov't entities, are a bit of stretch. The challenges of bringing these entities in line with the objective of the proposal need to be discussed better. As Oxfam-America is involved in some insurance schemes, its experience may need to be shared.
The ideas presented offer a way forward that is bold in addressing a gap in access to financial risk smoothing by the vast majority of small farmers and pastoralist with a national universal access system, integrative in that it builds novel connections across existing structures and programs to deliver more than the simple sum of respective services, and logical in that the steps to introduce, test and develop with strong stakeholder involvement are well-thought. What remains the greatest weakness is the need to persuade every stakeholder group at every level of involvement from beneficiaries to government programs to NGO partners. If the Ethiopian government is reluctant to join ARC, it would be quite surprising that it would embrace negotiating for an entirely new and unproven index insurance product for FAPAs the persuading pivot on whether to pay for sovereign drought risk insurance.
Thank you very much for your proposal to our contest. Our judges have selected your proposal to advance to the Semi-Finalists round. For the revision phase, we would like to provide you with some feedback from the judges that should help you improve your proposal and address open questions for the finalist round:
The idea of developing an insurance mechanism to support pastoralist is of course welcomed and timely and the proposal is quite original. As mentioned in the public comments, this proposal makes a good start by looking at how to create the largest and most inclusive insurance pool to benefit Ethiopian pastoralists. However, for the project to succeed, our judges identified a number of areas that need further research or clarification.
To start with, the proposal’s assessment of the context, issues and options is not sufficient in depth (particularly in terms of financial assessment for the insurance scheme). In your proposal you indicate that you are not aware of domestic Ethiopian insurance companies that could potentially be interested in carrying the proposed scheme. This overlooks that substantial amounts of time, attention and research have gone into the HARITA/R4 index insurance program in Ethiopia. A number of studies underline the paltriness of pastoralists' contributions to tax revenue in Ethiopia. The assertion that a pilot in Ethiopia could serve as model for other countries is true, but completely neglects the fact that the HARITA index insurance project has already led to the development of R4 replication projects in several more countries. For the revision phase, it would be important to clarify potential overlap with HARITA/R4 and explain to what extent this proposal is different.
Looking at ways to piggy-back pastoralists onto existing index schemes in order to create a larger pool including all farmers facing climate risks could be one avenue for strengthening this proposal. The importance of the proposed foundational work on outreach and sensitization of pastoralists (AND farmers) should be researched in more detail: Even with a government-subsidized scheme, getting wealthier farmers to pay in is likely to be crucial to the fiscal viability of the scheme from the standpoint of any insurer. The nesting of pay-outs with aggregators (pastoralist groups) is also a good idea put forward in this proposal, which could be further strengthened by considering the role of sovereign risk insurance (e.g. ARC), what linkages could be proposed, and generally how to protect the scheme from risk at the reinsurance level. If these issues could be addressed, this proposal would have strong potential for significant impact.
The proposal is built on the assumption that Ethiopian pastoralists can generate sufficient tax revenues to pay for the scheme, which might not be the case. This weakness puts the formula for arriving at a premium also in question – it should be justified with research into the existing insurance market: How is the ratio of premium to income justified in terms of what insurers might be willing to provide, at what price and at what scale of participation, relative to what pastoralists as a class of taxpayers could feasibly pay into such a pool? What are the lessons from similar/relevant insurances that have been designed in other countries?
Additional remarks to take into account:
• A more detailed description of the operationalization and the timeline is needed
• Anti-corruption measures have to be embedded, to vouch that the payout reaches the target group entirely
• The pastoral community must have the right to decide self-determined if they want to engage in this partnership or not
• Instruments that benefit gender-equality should be incorporated
Please note also that, as semi-finalists to the contest, you are requested to provide a detailed budget for the spending of the seed funding (40,000 euros) that the team winning the Judge’s choice award will be granted for the implementation of their proposal.
Good luck and all the best,
The contest fellows
Wassie Haile Woldeyohannes
May 8, 2018
Thank you very much for your comments on my contesting proposal. I am working to improve my proposal as per your comments and suggestions. However, I would like to forward my views on HARITA model which has been tested in Ethiopia. I thoroughly read the HARITA report as per your recommendation and truly speaking; I appreciate the finding and cleanly convey invaluable messages. I got several important information which I will be using them as inputs to improve my proposal. Especially, the innovation involving bundling or linking insurance models with access to credit is very important finding to accelerate the acceptance of insurance schemes by farmers and pastorals. Interesting, reading HARITA document triggered new insurance model in my mind which I have included it in my proposal as alternative to my previous model.
However, as far as I am concerned, despite several innovations, in HARITA model isn’t sustainable and scalable. This is because if we see one of the components of HARITA model which is “Risk transfer: Weather index insurance”, it is based on insurance-for-work arrangement in which farmers work extra days for productive safety net program (PSFNP) and the wages payments of extra work days beyond those required for normal payments were used to buy insurance premiums. Farmers earned insurance certificates protecting them against rainfall deficit (Page 12 of the report) instead of earning cash or grain. This such kind of insurance arrangement has been possible due to the presence PSNP which sponsor by relief society of Tigray (REST) or other donors in Tigray, northern Ethiopia, But the question is that is it possible to insure farmers for weather and climate risks and disasters found are in other parts of Ethiopia where PSNP isn’t available??. Even, can we be sure that donors of (REST and/or others) of PSNP will be everlasting there in Tigray and other parts of the country to serve similar purposes??. Thus, due to these and other reasons the HARITA CRI model is both unsustainable and un-scalable to wider socio economic, cultural and geographic circumstances.
Coming to my proposed CRI models, I proposed earlier and the new CRI models I have included after the semifinalist proposals were selected are different in several aspects from those developed by HARITA project. Thus, my CRI models can’t be overlaid on HARITA models. Because my models are designed in such a way that they will depend little or no on external funding for implementation, the models will be easily accepted by farmers and pastorals, the models will make ensured farmers and pastorals self reliant and self confident etc. Due to these reasons, both models especially the later model will be sustainable and scaleable. Consequently, I believe that either one or both of my models to be piloted as original, robust and independent CRI models. However, as I said earlier there are many important findings and points in HARITA model up on which I will capitalize in developing my proposal.
Wassie Haile Woldeyohannes
May 12, 2018
Follow up message,
I have revised and improved my proposal as per the comments and suggestions of judges; and tried to address all the issues raised by judges at semifinalist proposal selection stage as well. Moreover, I have included another CRI model to be considered as alternative or even as better option to my original model. It is my wish that both models be tested as pilot project to see which model works best. But this may be difficult at this point with budget amount that will be offered for the winning proposal. Consequently, if in case my proposal is selected as a winning proposal, with the budget availed, I prefer to work with my second model due to several reasons. Some of the reasons include: