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Conference on New Directions for Smallholder Agriculture. Nahu-Senaye Araya, CEO, Nyala Insurances The Ethiopian Experience On Micro Insurance Session 5, Breakout Session 11. Presentation Headings: I. PROFILE: Country & Financial Institutions II. NYALA’S EXPERIENCE A. MPCI

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Conference on new directions for smallholder agriculture 1323794

Conference on

New Directions for Smallholder Agriculture

Nahu-Senaye Araya, CEO, Nyala Insurances

The Ethiopian Experience On Micro Insurance

Session 5, Breakout Session 11


Conference on new directions for smallholder agriculture 1323794

Presentation Headings:

I. PROFILE: Country & Financial

Institutions

II. NYALA’S EXPERIENCE

A. MPCI

B. WICI

III. LEASON LEARNT

IV. RECOMMENDATION

V. CONTACTS

We Care We Protect


Conference on new directions for smallholder agriculture 1323794

  • Profile

    A1. Country Profile

  • Population: 85 mln. (UN 2010) – 83% Rural

  • Area: 1.13 mln. Sq. kms.

  • Life Expectancy: 56 years (Male) 59 years (Female)

  • GNP per capita: US $ 330 (WB 2009)

  • Main Export: Coffee, Hides, Oil Seeds, Flower

  • Main Food Crops: Wheat, Barley, Maize, Teff

  • Gov. Dev. Agents on Food Crops: 67,000

We Care We Protect


Conference on new directions for smallholder agriculture 1323794

A2. PROFILE Financial Institutions & Nyala’s

  • No. of Commercial Banks: 14 (3 Gov’t. 11 PVT.).

  • No. of Micro Finance: 30

  • No. of Insurance Companies: 12 (1 Gov’t + 11 Pvt)

  • Only one in Micro Insurance: Nyala

  • Nyala Insurance:

    - Small sized company

    - Turnover: About US 10.0ml.

    - Manpower: 270

    - Activities: General, life and Micro Insurance

    (Crop, Livestock, Life)

We Care We Protect


Ii nyala s experience delivery channel
II. nyala’s experience delivery channel

POLICY HOLDER

CLAIMANT

PAYMENT STATEMENT

CERTIFICATE HOLDER

We Care We Protect


Conference on new directions for smallholder agriculture 1323794

B. nyala’s Experience: 2007 to date:-

B1. Multiperil Crop Insurance (MPCI) – Crop Yield, Flood, etc

We Care We Protect


B2 weather index crop insurance wici covers drought only
B2 . Weather Index Crop Insurance (WICI) – Covers Drought Only)

We Care We Protect


Conference on new directions for smallholder agriculture 1323794

B3. COMBINED MPCI & WICI- 2007 TO 2010 Drought Only)

We Care We Protect


Conference on new directions for smallholder agriculture 1323794

B3. Associates: Financial & Technical Assistance (Past & Future)

National:

  • Commercial Banks (Dashen Bank)

  • Association of Micro Finance

  • Micro Finance

  • National Metrology Authority

  • Ministry of Agriculture

  • Co-ops & Unions

    International:

    IFPRI, FAO, OXFAM AMERICA, ILO, WB, SWISS-RE


Conference on new directions for smallholder agriculture 1323794

Lessons Learnt Future)

A1. FARMERS’ SIDE

  • Farmers with no expectation show great interest

    - Minimize the mental & physical pressure coming from Creditors

    - Use of Insurance policy as collateral improves their bankability

    - Improve their negotiating power with Creditors

  • Cooperatives/Union willing & capable to act as policy holders on their members behalf.


Conference on new directions for smallholder agriculture 1323794

Cont. Future)

  • Draw Backs

    - Lack of awareness

    - Affordability of premium

    - Questions insurers’ motive

  • Insurance products so far introduced not fully meet their needs ( Livestock/Health/Life ? )


Conference on new directions for smallholder agriculture 1323794

A2. Insurers’ Side Future)

  • Lack adequate/reliable data to ensure quantity product design/costing

  • Costing not actuarian derived

    - Unknown risks entail high premium

    - Major & reliable re-insurers show little or no interest

  • Have low human & infrastructure capacity

    - Inadequate field visits

    - Minimal training to own staff & farmers/union officials/Gov’t Dev. Agents


Conference on new directions for smallholder agriculture 1323794

A3. Government Side Future)

  • No. Regulation for Micro Insurance yet

  • MI & MF activities not integrated in the food security strategy

  • Created uneven competitive ground for financial players.

    - MF income tax exempted

    - MF’s credit collection more or less enforcable by government

  • Development Agents not being used as financial educators of farmers


Conference on new directions for smallholder agriculture 1323794

D. DONOR'S Side Future)

  • Spend too much time and money on pre studies/research

  • Obssesed with paper work

  • Give less emphasis on human & infrastructure capacity building

  • Promote short term year- to- year programe.

  • Need to revisit capability & acceptabilty of their staff


Conference on new directions for smallholder agriculture 1323794

IV. RECOMMENDATION ( Ethiopian context ) Future)

TO BE ENHANCED AND OR INTRODUCED BY THE MAJOR PLAYERS)


Conference on new directions for smallholder agriculture 1323794

A1. ALL MAJOR PLAYERS Future)(Government, Insurers, Donors, and Banks)

  • STEP UP CUSTOMER’S EDUCATION AND TRAINING

  • MAKE THE LIVELYHOOD OF THE FARMER THE FOCAL POINT FOR ALL MI AND MF PROGRAMES

  • HELP THE FARMER FROM THE MENTAL AND PHYSICAL PRESSURE COMING FROM THE MF AND INPUT SUPLIERS.

  • FORCED TO PAY HIGH INTEREST RATE

  • (OVER 2.5 TIMES COMMERCIAL RATE)

  • FORCED TO JOIN THE “G5 LOAN GUARANTEE” SYSTEM


Conference on new directions for smallholder agriculture 1323794

A2. GOVERNMENT: Future)

  • INTRODUCE LEGAL FRAMEWORK FOR MICRO INSURANCE

  • LEGALIZE COMMERCIAL BANKS AND INSURERS TO INCLUDE MI AND MF BUSINESS IN THEIR PORTFOLIO

  • CREAT LEVEL GROUND FOR ALL PLAYERS TO AVTIVELY INVOLVE IN MI AND MF AREA.

  • USE GOV’T DEVELOPMENT AGENTS AS FIELD FINANCIAL TRAINERS AS WELL

  • INCORPORATE MI AND MF ACTIVITIES IN THE FOOD SECURITY STRATEGY


Conference on new directions for smallholder agriculture 1323794

A3. INTERNATIONAL DONORS: Future)

  • MINIMIZE THE TIME AND MONEY SPENT ON PRE STUDY/RESEARCH.

  • CONSIDER A 3 TO 5 YEAR PROGRM (NOT YEAR 2 YEAR) WITH DIMINISHING SUBSIDY AMONT TO FARMERS OVER THE PERIOD

  • GIVE PRIORITY TO THE DEVELOPMENT OF STAFF OF INSURES/UNIONS/MF.

  • REVISIT THE CAPABILITY/ACCEPTABILITY OF OWN STAFF/CONSULTANTS.


Conference on new directions for smallholder agriculture 1323794

A4. COMMERCIAL INSURERS: Future)

  • ALWAYS WORK WITH RELIABLE RE-INSURANCE

  • USE CO OPS/UNIONS AS DELIVERY CHANNELS AND OR AGENTS

  • MAKE THE MI POLICY SIMPLE AND UNDERSTANDABLE.

  • SETTLE OR REPUDIATE CLAIMS AS SOON AS POSSIBLE

  • INCLUDE MI AND MF ACTIVITIES IN THEIR BUSINESS AND INTRODUCE A MINUMUM %AGE OF MI AND MF BUSINESS IN THEIR PORTFOLIO

  • INTRODUCE ALWAYS HIGH QUALITY PRODUCT DESIGN AND RISK RELATED PREMUIUM


Conference on new directions for smallholder agriculture 1323794

A5. COMMERCIAL BANKS AND CREDITORS: Future)

  • ACCEPT POLICY FROM REPUTABLE INSURER AS LOAN COLLATERAL

  • TAKE THE BUSINESS AS SOCIAL CONTRIBUTION AND OR IMAGE BUILDING IN THE SHORT TERM WITH THE VIEW OF ITS LONG TERM BUSINESS POTENTIAL AND PROFITABILITY.


Conference on new directions for smallholder agriculture 1323794

  • Contacts: Future)

  • For InformationAND OR Assistance on Micro Insurance IN ETHIOPIA

    Mr. Eyob Meherette

    CEO, Nyala Insurance S.C.

    Email: eyobm@nyalainsurance.comeyobm@nyalainsurancesc.com

    Tel: + 251 911 20 73 91

    Fax: + 251 116 62 67 06


Conference on new directions for smallholder agriculture 1323794

For comments/querRies on what has been presented HERE Future)

Nahu-Senaye Araya

Advisor/CONSULTANT

Email:yesucan.letustalk@gmail.com

Tel: +251 911 20 73 89

FaX + 251 116 62 67 06


Conference on new directions for smallholder agriculture 1323794

PLease continue helping the Future)

poor farmers

Thank you