Risk-Contingent Credit for Resilience

Climate change, and particularly weather extremes, severely challenge agricultural production and food security, and raise production risks. Agricultural risks - particularly those associated with drought - are a major contributor to low agricultural productivity in Sub-Saharan Africa, both directly through compromising crop yields but also indirectly by lowering investments into production inputs, which would be lost during droughts. This project will pilot risk-contingent credit (RCC), a financial product that embeds within its structure an insurance protection which, when triggered, offsets loan payments due to the lender. Randomized controlled trials will allow to assess the impacts of the RCC products on agricultural productivity, resilience, and nutrition in Kenya and Ethiopia. The IAMO team will contribute to increasing the accuracy of the weather indices used for the RCC products by incorporating key environmental variables from remote sensing data along with measurements from weather stations.

• International Food Policy Research Institute (IFPRI), USA
• Natural Resources Institute, University of Greenwich, UK
• Haramaya University, Ethiopia
• Equity Bank, Ltd, Kenya
• Kenya Commercial Bank (KCB), Kenya
• APA Insurance, Kenya
• Debub Global Bank (DGB), Ethiopia
• Oromia Insurance Company (OIC), Ethiopia
• Agri-Food Economics Africa, Kenya
• Global Resilience Partnership (GRP), Sweden

• Federal Ministry for Economic Cooperation and Development (BMZ)