Day 14-Oveview
Today was a fascinating day in learning how the traditional tribal system works, and how it might be engaged to help facilitate crop loss mitigation strategies. We met with a Paramount Chief, who is just one level below the King, at his palace in Agogo, a city on a mountain in the heart of the forest of Ghana.
We expected to receive good information from the Paramount, and we came prepared to ask some questions, present our mission, and seek guidance. We did not expect to become a part of a 700 year old tradition for hearing of new ideas and make a formal presentation to a tribal council of elders, who gathered from around the region to hear our ideas.
I would have loved to been able to just observe all the intricate protocols of that tribunal, unfortunately, all my attention was focused on how to present this rather complicated idea to a group of influential klan leaders, most of whom, did not speak our language. Based on this meeting, we had a meeting with a local rural bank to discuss their role in what we had discussed.
Here is the blog
Meeting the Paramount Chief
We left Kumasi, and drove about 90 minutes up to a mountainous region, to the town of Agogo to meet the Paramount Chief of the region, Honorable Nana Akuoko Sarpong. Although Nana Sarpong was raised to be chief, and heir through his uncle, his mother insisted on his becoming educated and he became a lawyer and eventually Minister of the Interior (among other roles) in the government. He maintained his connection to the community, fought for their causes, and still to this day has a farm in the community and is working to help the farmers in his area through getting a rural bank located in his region, and engaging in reforestation to undo the damage done by multinationals over the past decades. He also, while respecting traditions, has brought a high level of technology to the village. He has a very high tech facility where students come from all over the region to do computer training. (an interesting place to learn Java script).
We arrived at the palace after the drive up the mountain from Kumasi.
We entered the Paramount Chief's palace and waited for him in the atrium on very formal, traditional furniture. The chief entered and his assistants prepared his chair for him. The chief was very helpful in explaining the way the traditional system works and how it functions in parallel to the formal government in terms of the courts and which cases are heard by tribal system and which cases go to formal system.
He explained the hierarchy going from King to Paramount Chiefs, to Division Chiefs, to Subdivision Chiefs, to Village Chiefs. We explained our mission and asked him to help us understand the needs of his people and then try and work thorugh how we could work together. We talked for about an hour and one of the major points learned (heard again) was that the farmers lack credit that they need to improve their operations, buy inputs, and do the kind of investing they need in order to prosper. He reiterated what we heard that banks are unwilling to loan to farmers because the risk is too great. He also explained the need for a market for the goods and a place to store the harvest. He also confirmed what we heard before in that farmers have to sell and very low pricesat harvest because there is a glut of crops, and then that may not be enough to pay off the loans. (Something sold in a village for 1GHc might sell in Accra for 12GHc.)
Having a place to store would help even out the timing of the market and serve to provide the farmer was higher prices, which currently go to a middleman who has transportation and storage facilities.
We concluded that there is a need for some kind of a rainfall insurance product to protect the banks and those who provide credit. Reducing their risk should make them more willing to provide capital to the farmers.We then discussed a system that has been germinating based on observations and discussions from what we've seen with Susu groups and the potential for a farmers risk retention group. I decided to trot that concept out and he was very enthusiastic because it was based on some traditional concepts of risk sharing that farmers already understood. He thinks that would succeed. There would be a number of complexities to deal with indemnification, moral hazards, and record-keeping but those are the details to be worked out.
The general idea is that the farmers contribute ex ante (before a loss occurs) rather than sharing in members loss after a crop failure. That timing difference could make the difference in how the risk retention could be funded and eventually how an insurance product could be developed.
Here's were it got fascinating! All of this had to go before the tribunal of chiefs (the divisional chiefs reporting to him).The chief left us for about 30 minutes to discuss this with his advisors. His advisors agreed to let the idea go before the full tribunal of elder chiefs.
The Tribunal Hearing:
We were taking to a court and seated with our two chairs in the middle. We were then surrounded by the divisional chiefs, scribes, and even a tribal photographer.The Paramount Chief was escorted in with several others and seating on a throne directly in front of us.The Paramount Chief announced (in his own native language) that they were holding court, and the purpose of the meeting. This was then repeated by a man to his right. The chiefs then made their way up to swear their allegiance to him.Then we were introduced. We walked around and shook hands. Then sat down. Then all of the divisional chiefs came up to us and shook our hands again and welcomed us.The Paramount Chief then told the others what he had learned from us. He then asked for a formal presentation.Since it was all through a translator I broke everything out into pieces (similar to the presentation we do for the Russian insurance executives who come to campus).I broke it into two presentations with three parts. The first presentaton was the rainfall insurance product that would be purchased by banks to reduce their risks andmake them more willing to provide loans to farmers. Then after that I went into the second part which was the risk retention group idea which I had discussed with the Paramount Chief.This was the village concept, where a group of villages would pool parts of their harvest to provide for crop losses of members who suffered losses the following season.
Then the chief opened it up for questions (and they had a TON).They talked about moral hazard and wanted to know how that would be addressed (of course they had more interesting terms for this than moral hazard, but that was the issue). Then they wanted to understand the premium (village contribution)who would be members of the groups, the size of the group, the mechanism for resolving disputes, and basically all the thingsyou would expect people to ask. Almost all of my answers were based on what I had learned the past week in how these were currently addressed in traditional systems.
Today was a fascinating day in learning how the traditional tribal system works, and how it might be engaged to help facilitate crop loss mitigation strategies. We met with a Paramount Chief, who is just one level below the King, at his palace in Agogo, a city on a mountain in the heart of the forest of Ghana.
We expected to receive good information from the Paramount, and we came prepared to ask some questions, present our mission, and seek guidance. We did not expect to become a part of a 700 year old tradition for hearing of new ideas and make a formal presentation to a tribal council of elders, who gathered from around the region to hear our ideas.
I would have loved to been able to just observe all the intricate protocols of that tribunal, unfortunately, all my attention was focused on how to present this rather complicated idea to a group of influential klan leaders, most of whom, did not speak our language. Based on this meeting, we had a meeting with a local rural bank to discuss their role in what we had discussed.
Here is the blog
Meeting the Paramount Chief
We left Kumasi, and drove about 90 minutes up to a mountainous region, to the town of Agogo to meet the Paramount Chief of the region, Honorable Nana Akuoko Sarpong. Although Nana Sarpong was raised to be chief, and heir through his uncle, his mother insisted on his becoming educated and he became a lawyer and eventually Minister of the Interior (among other roles) in the government. He maintained his connection to the community, fought for their causes, and still to this day has a farm in the community and is working to help the farmers in his area through getting a rural bank located in his region, and engaging in reforestation to undo the damage done by multinationals over the past decades. He also, while respecting traditions, has brought a high level of technology to the village. He has a very high tech facility where students come from all over the region to do computer training. (an interesting place to learn Java script).
We arrived at the palace after the drive up the mountain from Kumasi.
We entered the Paramount Chief's palace and waited for him in the atrium on very formal, traditional furniture. The chief entered and his assistants prepared his chair for him. The chief was very helpful in explaining the way the traditional system works and how it functions in parallel to the formal government in terms of the courts and which cases are heard by tribal system and which cases go to formal system.
He explained the hierarchy going from King to Paramount Chiefs, to Division Chiefs, to Subdivision Chiefs, to Village Chiefs. We explained our mission and asked him to help us understand the needs of his people and then try and work thorugh how we could work together. We talked for about an hour and one of the major points learned (heard again) was that the farmers lack credit that they need to improve their operations, buy inputs, and do the kind of investing they need in order to prosper. He reiterated what we heard that banks are unwilling to loan to farmers because the risk is too great. He also explained the need for a market for the goods and a place to store the harvest. He also confirmed what we heard before in that farmers have to sell and very low pricesat harvest because there is a glut of crops, and then that may not be enough to pay off the loans. (Something sold in a village for 1GHc might sell in Accra for 12GHc.)
Having a place to store would help even out the timing of the market and serve to provide the farmer was higher prices, which currently go to a middleman who has transportation and storage facilities.
We concluded that there is a need for some kind of a rainfall insurance product to protect the banks and those who provide credit. Reducing their risk should make them more willing to provide capital to the farmers.We then discussed a system that has been germinating based on observations and discussions from what we've seen with Susu groups and the potential for a farmers risk retention group. I decided to trot that concept out and he was very enthusiastic because it was based on some traditional concepts of risk sharing that farmers already understood. He thinks that would succeed. There would be a number of complexities to deal with indemnification, moral hazards, and record-keeping but those are the details to be worked out.
The general idea is that the farmers contribute ex ante (before a loss occurs) rather than sharing in members loss after a crop failure. That timing difference could make the difference in how the risk retention could be funded and eventually how an insurance product could be developed.
Here's were it got fascinating! All of this had to go before the tribunal of chiefs (the divisional chiefs reporting to him).The chief left us for about 30 minutes to discuss this with his advisors. His advisors agreed to let the idea go before the full tribunal of elder chiefs.
The Tribunal Hearing:
We were taking to a court and seated with our two chairs in the middle. We were then surrounded by the divisional chiefs, scribes, and even a tribal photographer.The Paramount Chief was escorted in with several others and seating on a throne directly in front of us.The Paramount Chief announced (in his own native language) that they were holding court, and the purpose of the meeting. This was then repeated by a man to his right. The chiefs then made their way up to swear their allegiance to him.Then we were introduced. We walked around and shook hands. Then sat down. Then all of the divisional chiefs came up to us and shook our hands again and welcomed us.The Paramount Chief then told the others what he had learned from us. He then asked for a formal presentation.Since it was all through a translator I broke everything out into pieces (similar to the presentation we do for the Russian insurance executives who come to campus).I broke it into two presentations with three parts. The first presentaton was the rainfall insurance product that would be purchased by banks to reduce their risks andmake them more willing to provide loans to farmers. Then after that I went into the second part which was the risk retention group idea which I had discussed with the Paramount Chief.This was the village concept, where a group of villages would pool parts of their harvest to provide for crop losses of members who suffered losses the following season.
Then the chief opened it up for questions (and they had a TON).They talked about moral hazard and wanted to know how that would be addressed (of course they had more interesting terms for this than moral hazard, but that was the issue). Then they wanted to understand the premium (village contribution)who would be members of the groups, the size of the group, the mechanism for resolving disputes, and basically all the thingsyou would expect people to ask. Almost all of my answers were based on what I had learned the past week in how these were currently addressed in traditional systems.
1. The idea of each member contributing a jar of honey was borrowed from the farmers group in Forikrom. Chief liked this because he is trying to promote beekeeping with his farmers and it
2. Fit with traditional concept of risk sharing we just learned about (just changing the timing)
3. The organizational aspect that I presented and that the liked was based on the Baobab's women's solidarity group of five with a larger association of 25
4. The way a guarantee could be established was based on concept from Masloc
5. The way information on weather could be dissimenated was based on meeting with Chief Abdullah in Tamale.
6. As was the idea of a storage facility to prevent market gluts around harvest time and help farmers get better prices in order to more easily pay off their loans.
7. The way disputes are resolved via traditional system was what the Paramount Chief detailed earlier in out discussions and would be important in resolving (and even establishing) indemnity.
(Almost nothing besides the general concept of risk pooling was based on anything I had learned formally. If we had met him at the beginning we would have had very little of value to give him. ) . Basically, it is just about applying traditional systems (both risk management and legal traditions) that they have in place in a new way.
(There was an elaborate process for these questions to be made and how discussion could proceed and it was obvious that they had a traditional version of Roberts Rules to go by.)I was given some slack on this, but fortunately the Paramount chief gave me gestures on how I was doing. I wish I could just have been an observer. (Horace took a ton of notes and at dinner he pointed out a dozens of things going on that I didn't catch because I was so focused on the message.)
Finally after it was all over, we met again with the Paramount Chief privately. He said the meeting had gone very well.They divisional chiefs are all on board. They want to try the risk retention group part within their regions, and are interested in discussing this further and developing the details of that system.The beauty of this is that it all stays within their system. Nothing leaves. However they will be keeping records so that in a few years they will have data to show an insurer, who then might be willing to insure or reinsure the groups.(But the journey is long. So I am getting ahead of myself).
The Paramount chief took a photo with us (I knew it was formal but I couldn't contain myself after the tribunal, which is why I have such a silly grin). Next he then had one of his Divisional Chiefs go with us to the Rural Bank to talk with them and tell them about this. They were very interested, but especially interested in findind a way for them to get a loanto build a storage facility for the farmers goods to help support crop prices. This would, by itself, reduce the risk of defaults by farmes because some of the defaults are based on poor markets, and not poor yeilds. (This is a key piece to the puzzle).
After that we bid our farewells, took the road down the mountain and slept on the way back to Accra.We go into Accra in time for dinner and then began to get things ready for our departure tomorrow evening.But we had two more important meetings for tomorrow. One with Dr. Danso-Manu and the other, our second, and formal meeting with Apex Bank.
Faithfully Submitted,
Jim Jones
Director
Katie School of Insurance
Dateline Agogo
Finally after it was all over, we met again with the Paramount Chief privately. He said the meeting had gone very well.They divisional chiefs are all on board. They want to try the risk retention group part within their regions, and are interested in discussing this further and developing the details of that system.The beauty of this is that it all stays within their system. Nothing leaves. However they will be keeping records so that in a few years they will have data to show an insurer, who then might be willing to insure or reinsure the groups.(But the journey is long. So I am getting ahead of myself).
The Paramount chief took a photo with us (I knew it was formal but I couldn't contain myself after the tribunal, which is why I have such a silly grin). Next he then had one of his Divisional Chiefs go with us to the Rural Bank to talk with them and tell them about this. They were very interested, but especially interested in findind a way for them to get a loanto build a storage facility for the farmers goods to help support crop prices. This would, by itself, reduce the risk of defaults by farmes because some of the defaults are based on poor markets, and not poor yeilds. (This is a key piece to the puzzle).
After that we bid our farewells, took the road down the mountain and slept on the way back to Accra.We go into Accra in time for dinner and then began to get things ready for our departure tomorrow evening.But we had two more important meetings for tomorrow. One with Dr. Danso-Manu and the other, our second, and formal meeting with Apex Bank.
Faithfully Submitted,
Jim Jones
Director
Katie School of Insurance
Dateline Agogo
