Mali
In 2008 and 2009, GlobalAgRisk, with support from Save the Children and the United States Agency for International Development, performed a prefeasibility analysis focused on identifying basic conditions necessary to support development of a market for index-based insurance products that could allow either farmers or lenders to transfer highly correlated drought risk.
Malian agricultural producers and microfinance lenders are exposed to the risk of extreme drought. When lenders loan to large numbers of farmers, the highly correlated losses from drought events will create significant default risk. For microfinance institutions that serve agriculture, a capital rationing problem has emerged because donors are reluctant to increase their capital exposure to this nondiversifiable risk. Smallholder farmers remain vulnerable to the correlated event and are restricted in the amount of working and investment capital they are able to obtain.
The analysis focuses primarily on the Sikasso region, south of the capital, Bamako, and investigates the opportunities and constraints of this type of market development in the Malian context.
Further reading:
The Potential and Limitations of Index-based Weather Insurance: Mali and Peru |
Collier, Skees, and Barnett |
2009 |
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Prefeasibility Analysis: Index-based Weather Insurance in Mali |
Hartell and Skees |
2009 |
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