The Agriculture and Climate Risk Enterprise (ACRE) is the largest index insurance programme in Africa in which the farmers pay a market premium. It is projected to reach 3 million farmers across 10 countries in Eastern and Southern Africa by 2018 (ACRE 2014). 1 Indexes have been developed for maize, beans, wheat, sorghum, millet, soybeans, sunflowers, coffee, and potatoes. There are three pillars to ACRE’s approach:
- A wide range of products based on several data sources, including 130 automatic weather stations, remote sensing technologies and government area yield statistics.
- ACRE’s role as an intermediary between insurance companies, reinsurers and distribution channels/aggregators.
- Links to the mobile money market, particularly the M-PESA scheme in East Africa which allows quick enrolment and payment of claims.
As of 2013, ACRE offered a range of insurance products:
- Insurance was linked to agricultural credit from Microfinance Institutions (MFIs). This credit was designed for farmers who wished to grow maize using improved inputs.
- ACRE offered contract seed grower insurance for large-scale producers (> 20 acres).
- Dairy livestock insurance was offered in partnership with a dairy cooperative for farmers who already own cattle or a lending institution for farmers who want to purchase them. The cover is also linked to animal care packages and vaccines.
- Insurance was incorporated into a replanting guarantee by a seed company, linking ACRE, UAP Insurance and Safaricom.
Relationship to CSA
ACRE links insurance to credit schemes that target farmers who wish to improve their crop and/ or dairy production, hence it directly supports increased productivity. As with all forms of agricultural insurance, farmers’ resilience is greatly increased through the elimination of production loss due to adverse weather conditions. In parts of Eastern and Southern Africa, where climate change projections suggest drier and more variable climatic conditions, this will become increasingly important.
Impacts and lessons learned
By 2013, the sum value of crops and livestock insured by ACRE reached USD 12.3 million; the recorded insurance payout was USD 370,405. Insured farmers invested 19% more and earned 16% more than their uninsured neighbours. 97% of the farmers insured in 2013 received loans linked to the insurance (IFC 2014). 2
ACRE. 2014. Grameen Credit ACRE Factsheet.http://www.grameen-credit-agricole.org/sites/grameen/files/acre_kilimo_salama.pdf This factsheet explains the main facets of Agriculture and Risk Enterprise LTD (ACRE), including challenges, a presentation of the business model, as well as its impacts.
IFC. 2014. Agriculture and Climate Risk Enterprise (ACRE) - Kilimo Salama - Kenya, Rwanda, Tanzania. Washington, DC: World Bank Group.http://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/industries/financial+markets/retail+finance/insurance/agriculture+and+climate+risk+enterprise This website provides an overview of factual information on the Agriculture and Climate Risk Enterprise (ACRE) project, including insurance portfolio details, challenges and success factors.