MALI BACKGROUND A landlocked West African country with most of its land in the desert, Mali is sparsely populated, and has a highly undiversified economy. As such, it is vulnerable to commodity price fluctuations and to the consequences of climate change. Mali has a population of 15 million and high population growth rates, but droughts have fueled food insecurity, poverty, and instability. While the economy is projected to grow by around 5% annually over the next three years, thanks to the continued dynamism of telecommunications and transport activities and the development of trade and financial services, the favorable economic outlook is subject to persistent downside risks including climatic shocks and any further decline in global gold or cotton prices. PROJECT DESCRIPTION PROJECT SNAPSHOT In March 2016, PlaNet Guarantee (PG) entered into a contract with the World Bank Group to offer solid technical support to Global Index Insurance Facility (GIIF) projects Market Launch 2011 that are focusing on capacity-building activities, with special emphasis on training and Clients 30,218 skills transfer to selected insurers. Partners - Insurers: Allianz The products currently being offered in Mali are satellite index-based insurances - Reinsurers: Allianz Re, developed in partnership with Environmental Analysis and Remote Sensing (EARS), Africa Re, CICA Re and in close collaboration with Mali Meteo and SUM AFRICA. They are drought index- - Product design: PG & EARS based on relative evapotranspiration for maize, sesame, and multicereal. The sesame Capital Insured USD 4,662,860 and maize indexes have been updated, and this year a new generic drought product was also developed, and is being offered in new regions of Mali. Insured Assets Maize, millet, groundnut, rain-fed rice and multicereal RESULTS AND IMPACTS Insured Perils Drought In the beginning, confronted with a challenging local context (a high level of taxes; a lack of agricultural financing mechanisms; weak development of the main Regulatory CIMA, Book 7 Environment on Microinsurance agricultural value chains), the index-based insurance program met with difficulties. However, innovative use of technology, for example the use of satellite information Data Rainfall Data (ANACIM) & RainFall Estimate to design products in the absence of yield and weather-station data, has helped (ARC2 RFE_IRI) to create a market. PlaNet Guarantee also employed a participatory approach to product development – conducting focus groups and working with farmers to design the products they have requested. NEXT STEPS The scaling-up strategy is based on two components: • Bundling index-based insurance products with input financing provided by commercial banks, microfinance institutions (MFIs), and input dealers; and • Mobile distribution. It is also important to implement the following steps: • Develop long-term reinsurance contracts in order to align the cost of contracts with farmers’ ability to pay; • Address structural financial illiquidity in the agricultural sector. Products are often sold in conjunction with credit but farmers and cooperatives have difficulty in accessing credit because lending institutions estimate the risks of the farming activity, as well as the entire agricultural value to be too high. The index-based insurance product helps secure investment; adding additional products and services (such as risk mitigation practices) will help increase farmers’ access to credit; • Continue marketing, training, and capacity-building activities, to raise awareness on index insurance within the sector; and • Develop regulatory rules to allow for the dematerialization of insurance contracts, premium subsidies, etc. Global Index Insurance Facility is funded by PARTNER FOCUS Partner Information PlaNet Guarantee activities in Mali started in 2009 through a partnership with the African Enterprise Challenge Fund (AECF) and Allianz Mali, the local subsidiary of Allianz Africa. The aim is to develop and implement a range of index-based insurance solutions called “Keleya Nyesigui” (crop protection) that target cash- crop farmers. Working with EARS, a maize drought index based on relative evapotranspiration data provided by METEOSAT has been developed. Sesame and generic insurance solutions were introduced in 2015 and 2016 respectively. PG also provides technical assistance to Mali Meteo and several farmer organizations within the framework of a SUM AFRICA project financed by the Netherlands Space Office in partnership with EARS, for the development of local insurance skills and the facilitation of the scaling up of index-based crop insurance in Mali. Product available Rainfall or satellite-based weather index insurance (for groundnuts, maize, millet, rice, sesame, generic), area-yield index insurance (for cotton) Total Insurance 78,856 insured farmers and US$1,058,810 collected premiums in Senegal, Portfolio Mali, Burkina-Faso, Benin, and Ivory Coast. Insurance Payouts US$412,656 in Senegal, Mali, Burkina-Faso, and Benin (2015), with a 69% (2015) claims ratio (2015) Average Cost 11%, US$13 per farmer of Insurance Local insurance CNAAS, Allianz Mali, Allianz Burkina-Faso, AMAB Benin, AXA Côte d’Ivoire companies International Swiss Re, Africa Re, CiCA Re, and Hannover Re Reinsurers Contact Diakaridia Soumahoro | dsoumahoro@planetguarantee.org About Global Index Insurance Facility The Global Index Insurance Facility (GIIF) is a multi-donor trust fund that works to provide access to finance to smallholder farmers, microentrepreneurs, and microfinance institutions. GIIF supports the development and growth of local markets for indexed/catastrophic insurance in 31 developing countries, primarily in Sub-Saharan Africa, Latin America and the Caribbean, and Asia Pacific. The facility is part of the World Bank Group’s Finance & Markets Global Practice. For more information, please visit www.indexinsuranceforum.org. Join us on LinkedIn: Global Index Insurance Forum Group. Global Index Insurance Facility is funded by 2