A new reinsurance fund, ‘One Acre Fund Re’, is set to provide a critical financial safety net for 1 million smallholder farmers across Africa in 2024.
The fund was designed by African-based social enterprise One Acre Fund, in collaboration with the International Finance Corporation (IFC), the US International Development Finance Corporation (DFC) and the African Risk Capacity (ARC).
One Acre Fund supplies smallholder farmers in Africa with the finance and training to grow more food and earn more money, investing in farmers to generate a permanent gain in farm income.
This new resource will leverage One Acre Fund’s on-the-ground presence and data gathering capabilities to design insurance products and direct payouts in a way that “more effectively responds to farmer experiences”.
IFC is providing advisory services to the social enterprise to support the development of inclusive insurance products for farmers — including the proposed reinsurance facility — as part of its Africa Inclusive Insurance programme.
One Acre Fund aims to scale the scheme to 4 million farmers by 2030, helping to bolster the long-term resilience of smallholders in the region.
It announced the reinsurance fund and partnership at COP28, currently being held in Dubai.
More than 2 billion people worldwide rely on subsistence farming. This group is disproportionately affected by the impacts of the climate crisis.
Predictive models foresee rising temperatures, by 0.5 to 2.5 degrees, and erratic rainfall across the sub-Saharan Africa region, with a higher likelihood of droughts, floods and soil erosion.
Despite these increasing risks, affordable agri-insurance is only available in 4 out of 54 countries across Africa, and only 3 per cent of farmers have insurance coverage for their farms.
Annie Wakanyi, director of global government partnerships at One Acre Fund, comments: “Agricultural insurance can support lasting impact and resilience for small-scale farmers.
“With economic growth from agriculture being 11 times more effective at reducing extreme poverty than any other sector in sub-Saharan Africa, One Acre Fund Re aims to support smallholder families to achieve long-term poverty reduction and resilience.”
