Microinsurance Conference 2009- Dakar

Nov. 2, 2009

Well, it’s hot and beautiful here in Dakar, and nice to leave behind the cold rains.

I began my travels early on Saturday driving to Chicago. I finally arrived in Dakar at around noon on Sunday (6 p.m. in Dakar) I've attached the view from my room

I am incredibly jet-lagged, exhausted but thrilled to be here. I have already made some important contacts, and gained valuable insights.

One of the things I noticed is that people working in this “space” are now using the term Financial Inclusion more than microfinance or microinsurance. I like that and it aligns with some insights that I have had about our Ghana project, to the point that I am retitling the paper from a study on weather-indexed insurance in Ghana to Enhancing Sustainable Access to Capital For Farmers in Ghana Through Indexed Insurance.

First of all, I think it better depicts the scope of the project as we considered much more than just the weather-indexed product through our interviews with farmers, banks, and other stakeholders in Ghana. It also better describes what the goal of such a product should be, sustainable access to capital for farmers in Ghana. Increasing insurance isn’t the goal by itself because insurance is just a mechanism for allowing that, and micro-insurance may not even be the best tool as insurance at the meso (financial institution ) level, or macro (governmental) level might even work better to achieve that goal. It is even broader than agricultural risk management which considers both pre and post loss actions which could be done to reduce the risk of farming and make farming a more attractive activity for loans from banks and microfinance institutions. And enhancing sustainable capital via agricultural risk management through alternative crop production, dry season crops, better inputs, better technology, and better education certainly should be helpful, but without the ability to get capital these actions are still of limited value. Also, access to capital from loans by governments and NGO’s is certainly welcome, they should not be categorized as “sustainable” access, as the donors may not have the financial capability or will to always provide those loans, thus a more sustainable access to capital is required. Enhancing financial capital for farmers might include development of a financial market where farmers could purchase hedging instruments to help provide access to loans. But even enhancing the financial markets is incomplete if the regulatory environment and government policies militate against capital access. For that reason, political voice and power should also play a role in access to sustainable capital.

I plan to pass along this insight of refocusing the goal to be sustainable capital access to some people here who are more knowledgeable about these things than I am to get their response.

Hopefully, will have a few more insights tomorrow. Back to working on the paper. Would like to get this finished by the end of the month.

Jim