MICROCAPITAL BRIEF: Global Index Insurance Facility Issues Mayfair Performance-based Funding to Expand Crop Cover in Zambia

Mayfair Insurance Company Zambia, a subsidiary of Mayfair Insurance Company Kenya, recently secured an unspecified amount of additional funding for its crop insurance product from the Dutch government via the Global Index Insurance Facility of the World Bank Group’s International Finance Corporation (IFC). The goal is to help farmers both “protect their crops against losses and encourage investment.”

The Mayfair Zambia insurance product is offered under the government of Zambia’s Farmer Input Support Programme (FISP). Through FISP, each farmer pays ZMW 400 (USD 42), and the government pays ZMW 1,700 (USD 177). The farmer receives ZMW 2,000 (USD 209) in seeds and fertilizer, and ZMW 100 (USD 10) covers the premium for the weather-index insurance, which pays out if weather conditions cross pre-defined parameters. To date, Mayfair Zambia is to issue ZMW 39 million (USD 4.1 million) to 300,000 beneficiaries due to this year’s drought.

Mayfair Zambia earned the new funding by successfully insuring over 100,000 farmers for the growing season that began late in 2017. The new funding commits the company to insuring at least 400,000 farmers for the season that begins late in 2018. As of March 2018, the government has enrolled 1 million farmers in FISP, of which some or all will be insured by Mayfair Zambia, depending on whether the government decides to bring other insurers into the program.

Enrolling in the insurance product “will improve the farmers’ resilience to weather-related shocks and improve sustainable farming opportunities in Zambia,” according to Alejandro Alvarez de la Campa, the Africa Practice Manager for the World Bank Group’s Finance, Competitiveness, and Innovation Global Practice.

Mayfair Zambia has 7 branches and offers a wide range of insurance types. For 2016, Mayfair Kenya, which operates in four countries, reports pre-tax profit of KES 404 million (USD 4 million) on KES 2.3 billion (USD 23 million) in premiums written.

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. IFC has 184 member countries and total assets of USD 95 billion as of September 2017.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2018, it has 189 member nations. The group encompasses (1) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (2) the International Finance Corporation (IFC); (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During 2017, the World Bank Group disbursed funds totaling USD 44 billion.

Sources and Additional Resources

IFC press release
https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/42920C04EE5171F48525821900496B6B

African Farming article
https://www.africanfarming.com/zambia-scales-up-weather-insurance-for-smallholder-farmers/

Mayfair Kenya financials
https://mayfair.co.ke/wp-content/uploads/2015/11/Mayfair-Annual-Report-Update-31-May.pdf

IFC budget for fiscal year 2018
http://www.ifc.org/wps/wcm/connect/cbd63894-c62a-453c-bfc8-92b8f8a3155f/IFC+FY18+Q1+MDA+and+FS_FINAL.pdf?MOD=AJPERES

World Bank Group
http://worldbankgroup.org/

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