Global Parametrics, a CelsiusPro Group company, has partnered with One Acre Fund, an agricultural service provider offering financing and training to smallholder farmers, to provide financial protection to such farmers in Zambia and Malawi against the financial strain of losing their crops due to drought.
Together, One Acre Fund and Global Parametrics developed a water-balance index to calculate payouts, benefitting from data collected and verified by One Acre Fund from individual farmers. The index measures the balance between rainfall and evapotranspiration over a specific period, yielding a measure of the availability of water for crops. The index relies on weather data from independent third parties.
This season, payouts for droughts caused by the El Nino phenomenon have already been issued, benefiting approximately 77,600 smallholder farmers in Zambia and Malawi with payments exceeding MWK1.41bn ($812,600).
Risk capacity for One Acre Fund’s smallholder loan portfolio is provided by the Natural Disaster Fund (NDF), managed by Global Parametrics. The NDF, a public-private partnership funded by UK and German governmental entities, is mandated to provide risk capacity for parametric solutions that enhance climate and natural catastrophe resilience for poor and vulnerable communities. The NDF shares risks with Hannover Re.
Climate change is severely impacting smallholder agriculture in Zambia and Malawi, reducing farm productivity due to unpredictable rainfall and drought. One Acre Fund Zambia has been proactive in helping farmers build resilience by communicating the effects of El Niño and promoting drought-adapted practices, such as using early maturity seeds and growing non-maize crops.
Mark Rueegg, CEO of CelsiusPro Group, said, “Thanks to the index-based solution, farmers do not need to present proof of loss or undergo lengthy damage assessments. If the water balance index falls below a specified threshold, payouts are triggered.”
One Acre Fund
One Acre Fund is a social enterprise that supports around 5m farmers across nine countries in Sub-Saharan Africa with agricultural services including high-quality inputs, extension, training, insurance, and more. By providing these tools and training, One Acre Fund helps smallholder farmers reduce poverty, increase climate adaptation, and improve their harvests, enabling them to grow their way to prosperity.
CelsiusPro Group
CelsiusPro Group is dedicated to helping both private and public organisations understand and mitigate the financial impact of climate and NatCat risks. Its InsurTech platform integrates climate data and risk modelling to develop advanced solutions that enable insurance companies and brokers to distribute and manage tailored parametric insurance. Through its consulting services, the group provides end-to-end insights on physical climate risk assessment, disaster risk finance, and structuring and risk modelling for insurance schemes. Its subsidiary, Global Parametrics, seeks to mobilise and deploy risk transfer capacity through various financial instruments and vehicles.