The MAP-FARCC project raises awareness among farmers about financial instruments against climate risks, particularly index insurance.
Index-based agricultural insurance, implemented by the Compagnie Nationale de l’Assurance Agricole du Senegal (CNAAS), is an innovative risk transfer solution that aims to protect farmers against climate impacts. This is a financial instrument that helps strengthen the resilience of producers in a context of climate change where agriculture is strongly threatened by hazards such as drought, flooding, etc. However, despite the communication efforts made with beneficiaries, the main limit to subscribing to this insurance policy remains the lack of access to information. To this end, the Multi-Actor Partnership on Finance and Climate Risk Insurance (PMA-FARCC) initiative implemented by ENDA Energie and its partners aims to strengthen communication and awareness on climate finance mechanisms and instruments. .
Unlike traditional insurance, which compensates producers' real losses based on in situ findings, index-based agricultural insurance uses predefined climatic indices (rainfall) to trigger compensation payments. For example, if the average annual rainfall recorded in a given area is below the predefined threshold, the insurer pays the insured financial compensation for losses due to the drop in rainfall. In 2021, for the climate index harvest, the amount of loss amounts to 622,193,650 FCFA.
However, agricultural insurance offers financial security to farmers, easy access to credit by protecting them against climatic hazards which threaten their livelihoods. In addition, it allows producers to sow agricultural land in the sense that the risks induced by the climate, the main nuisance factor, are less. Ultimately, this hedging instrument helps to strengthen the resilience of the latter in the face of climate impacts.
Despite its advantages, index agricultural insurance still presents challenges, particularly in terms of accessibility and understanding for farmers, delays in compensation, mapping of risk profiles, etc. To this end, efforts are necessary to raise awareness among producers of the importance of this instrument and to make insurance products more accessible to small farmers.
In this momentum of communication and awareness, the PMA-FARCC initiative led by ENDA Energie since 2019 has held a series of decentralized consultations with non-state actors (producer association, NGO, private sector, local authority) with a view to strengthening their understanding of index agricultural insurance and climate finance windows.
