Transcript success story of financial risk transfer in malawi

Financial Risk Transfer
Metmalawi Experience
By
Adams Chavula
MINISTRY OFNATURAL RESOURCES, ENERGY AND ENVIRONMENT
DEPARTMENT OF CLIMATE CHANGE AND METEOROLOGICAL SERVICES
PO BOX 1808
BLANTYRE
MALAWI
Tel: +265 1 822014 (o)
Mobile: +265 888 877784
Fax: +265 1 822215
Email: [email protected]
Presentation at first meeting of WMO Expert Advisory Group on Financial Risk Transfer
(WMO Headquarters, Room 8 Jura, Geneva, Switzerland, 13 – 14 December 2011)
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Outline of Presentation
• Role of Metmalawi in Financial
Risk Transfer
• Success story of WII in Malawi
• Lessons learned and Challenges
• Recommendations ,Conclusions
and way forward
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ROLE METMALAWI IN FINANCIAL RISK TRANSFER
• Mandated sole custodian of weather,
climate and climate change data and
information in Malawi.
• Provide high quality meteorological data
historical and near real time to support
financial risk transfer markets – basis
risk assessment and monitoring WII
contracts
• Respond to demand for Weather Index
Insurance by investing in weather
infrastructure - from zero AWS prior to
2005 to a total of 63 Automated weather
stations by 2011
• Maintain a network of weather stations,
automated and conventional
• Quality control of data, Data rescue,
Data cleaning
• Climate risk assessments, mapping and
education awareness
• Member of task force on Weather Index
Insurance in Malawi
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SUCCESS STORY OF FINANCIAL RISK TRANSFER IN MALAWI
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Has demonstrated Public – Private Partnership in Financial Risk Transfer
markets – started as WB initiative now working under joint nationalTask Force
WII provides a win – win situation for all the players in Malawi. For instance:
For smallholder farmers through Micro level Insurance:
 Provides a way to protect their livelihoods and improve access to finance
 Has unlocked credit facilities for them to access to high yielding seeds and
fertilizers
 New weather stations have allowed more farmers to access weather index
insurance and input financing
For the government of Malawi through Macro level Insurance:
 Provides Govt of Malawi contingent financing for national level drought
 Provides some predictability to drought financing and buys time for other
emergency responses to take affect and provides government a level of autonomy
For Banks and MFI
 Before the pilot Opportunity Bank did not lend to agriculture, but now is using
lessons learnt from pilot project to expand lending book.
 More banks are willing to lend smallholders if weather risk is insured.
For Metmalawi:
 Has enabled expansion and upgrading of network of weather stations to support the
growing markets
 Has facilitated procurement and installation of automatic weather stations
 Has demonstrated use of weather information and products to assist smallholder
farmers and the government to adapt to Climate Change
 Has helped to improve service delivery of Early Warning Systems, data and
forecasting capacities
 Raised the profile of Metmalawi
For insurance Association of Malawi.
 Expansion of the risk retention capacity through risk transfer to the international
markets
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Lessons and Challenges
• Automatic Weather Stations are not cheap
• Need for capacity building in maintenance
of AWS and Data Management
• Automating communication between the
Server and AWS would facilitate Data
Collection
• Integration of Data from Automatic Weather
Stations to main Database
• Increasing costs for Airtime may not be
sustainable
• WII require a dense and secure network of
weather stations –at least a station every
20Km
• Lack of digitized Data
• Lack of historical weather data in
agricultural areas
• New weather stations needed for scaling up
WII
• Farmers not ready for a stand alone
product
• Lack of awareness WII and little trust in
insurance companies
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Recommendations
 Need financial support for Data rescue and digitization
 To upscale and ensure sustainability - weather risk
insurance markets require the presence of a dense, secure,
high quality automated weather station Network
 The spatial variability of rainfall and the lack of rainfall
stations with reliable long-term records are limitations that
will need to be addressed if scaling up of WII is to be
successful
 Need training in Climatic Risk Assessment and mapping for
better planning and monitoring.
 There is need for capacity building for maintenance of AWS
and integration of data from Automatic Weather Stations
with ClimSoft database management system
 Need more financial and technical support for weather
infrastructure development
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Thank you very much
for your attention
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