Ghana Trip 2009

Weekend Around JoBurg

2011-02-17T06:32:00.000-08:00

After meeting with everyone over the past few days I decided to see more of the cultural aspects of SA especially in the Joburg area. My first stop was the Apartheid museum in Joburg near the traditional black township of Soweto.

The museum is a multimedia experience telling the story of the birth of South Africa, the era of apartheid, (which lasted for abut 50 years and ended in 1990) and the era of political violence between 1990 when Mandela was elected president in 1994It inclused stories of he people who died fighting to bring democracy to South Africa. It also chronicles the life of Nelson Mandela and his abilty to reconcile a divided country. During one politically intense time in which a beloved friend of Mandela was killed by a racist, he urged people at a mass rally to "Throw their weapons into the sea".

The museum has a representation of the small cell where Mandela was kept from 1964 until 1982 when he was moved to another location. One of my favorite quotes from Mandela that illustrated his character and belief in the potential for reconcilation are:

"I always knew that deep down in every human hart, there is mercy and generosity"

He also understood that revenge against his oppressors would not lead to a free country. On the front of the museum is his quote which says:
"To be free is not merely to cast off one's chains, but to live in a way that respects and enhances the freedom of others." Mandela 1999.

There is a theme park across from the museum that looked a lot like a Six Flags type theme park you would see in the states.

The next day I went to Rhino and Lion park outside of Johannesburg. I've included some photos from that visit. I also uploaded a video where the family I was travelling with encountered a white lion walking toward them. You can hear the kids excitement as the lion approaches. That was pretty cool. I uploaded that to You Tube.
http://www.youtube.com/watch?v=GO5sEsEimdE

All in all, this was an incredible trip. I have a pretty good idea of how to structure the internship now.

I'm back home now and recovering from jet lag. Last night I dreamed of South Africa.

-Jim

Sandton City

2011-02-11T12:27:00.000-08:00

Today was an interesting day for Africa. Mubarak's resignation was a subject of conversation here in SA. It led to further discussions on political risks and how they can be managed.

I spent the day in Sandton City which is the financial and commerce center of JoBurg. Sky rise businesses all over. Looks like downtown financial hub of a major midwestern city. As mentioned in earlier blog two days ago. This barely existed 20 years ago. It was just countryside.

Today was probably the best day for figuring out how we will be organizing the internships. I met with NedBank and found a treasure trove of ideas on managing risks across the organization. I've never seen such a well- designed and documented ERM program. I met with the risk management team and we came up with some ideas for ERM case studies that I will be working with them on later.

When I got to Nedbank I was introduced to the risk management team and they brought me a binder on how risk is managed at NedBank. It was full of jaw-dropping detail on how the universe of risks are identified and managed across the organization. It is at least a generation ahead of anything I've seen in the states on ERM,( which isnt saying a lot since we are remarkably still in our infancy on ERM in the states). It was inspiring to see an organization that had a organizational culture that valued risk management and sustainable prosperity over short term quarterly earnings. (I keep mentioning culture don't I but I think this corporate culture comes from a larger national culture. That's my working hypothesis anyway).The investments they made in risk management did not pay off immediately but have over years yielded tremendous benefits to all stakeholders. They were so open with wanting to help with this internship project and help in the development of the next generation of leaders that I truly felt overwhelmed with the sense of good fortune in finding such great partners in this program. Our students and their future employers owe a debt of gratitude to these folks. I'll be back to work with them on case studies. They have some great ERM stories that we can turn into case studies. I think the students should start with this firm when they come here to learn about risk management in SA.

Next I met with Alexander Forbes. A broker/risk solutions firm that provides risk engineering, risk financing, and of course market broking services. This should be the second firm the students visit. They have a breadth of expertise across industries and will allow the students to begin to think like consultants before going out to the business clients to assess their risks. Another great partner for this.

MANDELA SQUARE

I finished up the day and walked through the shopping mall (see photo) to get to Nelson Mandela Square which is surrounded by restaurants.I ended the day at the famous Butcher Shop restaurant in Nelson Mandela Square with Gert and his wife. An nice T-Bone steak, Hensa Beer, and finally South African Amarillo Creme to top off unbelievably productive day. Tomorrow I go to Apartheid Museum. So this is a nice place to end the day. Mandela Square with children black and white playing in the fountain under the fatherly gaze of Nelson Mandela's statue.
Cheers.
jim

Long Day of Surprises

2011-02-10T18:43:00.000-08:00

February 10th

Today was a long day (meetings from 8:30 a.m. til 9:30 p.m.) with travel to other cities and full of pleasant surprises.

I started off the day meeting with group risk managers that were doing some extremely innovative pooling of disparate risks from different industries. The surprise was how they had made a profitable business doing things counter intuitive to what is done in the states. They had great ideas for internships for our students including developing case studies. I met with the CEO of a company who is perhaps the most visibly passionate person I have met about how his company contributes to the triple bottom line (people, planet, and Prosperity.). The surprise was the product they manufactured. I met with the director of risk for one of the largest public utilities in the world.Surprisingly her passion was around energy conservation and sustainability. Finally I drove past thousands of government subsidized housing neighborhoods that had been built as part of Mandela's initiative to provide homes to poor people. It was uplifting to see this transformation that replaced the types of houses seen in my previous blogs in other countries. They are simple homes but pleasant. They have used the taxes from businesses that have grown dramatically in SA. Most of the businesses I saw in Sandton City did not exist 20 years ago. Just very dramatic growth and huge opportunities here.

Started off the day driving through town (in a Los Angeles type traffic jam) to Group RIsk Management Services. They are doing some really innovative ways in helping their clients assess and manage risk. It is comprehensive and cutting edge. We discussed how they were able to pool risks from different industries to make them more appealing to the insurance underwriters that may not have wanted to insure them as a stand alone risk.
They had great ideas on how to make the learning experience interesting and relevant for students including developing case studies, taking students on field trips to their clients (including mining operations), and showing students how they model risk.

After that was lunch and then off to Pretoria (administrative Capitol of SA) where we met with the CEO of a multimillion dollar company that has at times employed as many as 6000 people. I noticed the recognitions on the wall for their meeting the most widely recognized international safety standards (OSHA 18001) and quality standards ISO 9001. The company has several government ministers on its board (which had impressive corporate governance structures in place). The CEO was passionate about safety, product quality and creating jobs. We met with him and the executive risk manager. The CEO personally took us on a tour the plant and went through the quality inspection of the products. He knew the employees in the plant by name and joked with them along the way. They obviously knew him and enjoyed working with him. The employees were visibility eager to share their passion for safety and quality too.
They were proud of how few injuries they had. In fact they had the lowest rate that any of us had ever heard of. Back in his office he enthusiastically discussed the need for emphasizing more than just profits. He gave examples of how they helped employees, their families and the surrounding community. He loved animals and enjoyed that they had spring bok and impala that grazed on their campus. (Which is just outside the suburbs as you can see in the pictures). The surprise- they manufacture munitions and the breadth of risks exposures they have are unparalleled. Students will actually see munitions made and detonated in a specially designed building. Hmmm. Perhaps my personal bias but my surprise was hard to conceal. I'm not sure what I expected but this is truly an amazing experience for students that I expect they will talk about for a long time.

On way home I passed several neighborhoods of traditionally poor black homes. The shacks that once existed have been replaced by the homes like the ones you see in the photo. Under the short time Mandela was president more than 700,000 homes were built for the poor and this has grown much more since. There are still shacks (referred to as infromal settlements and often made up of foreign Africans)just outside of Joburg . The development started by Mandela has really made transformed this country.

Finally came back to Joburg and met with executive director of risk for the major public utility and her husband for dinner. She was passionately about discussing sustainability in a truly authentic way (not just a PR stunt like I see too often). Providing energy to a fast growing company like SA in an environmentally friendly way has some spectacular challenges but she was very adamant about how it could be done.
She had perhaps the best ideas on how to select and structure teams for the internships and we spent a lot time brain-storming ideas to help make sure the students had an unforgettable learning experience. She will be a great asset to the program. Had a great meal in Italian restaurant and walked around afterwards still awed by the detail of replicating a Tuscan village (all the way to down to a clothes line with clothes hanging out the window).
It is a bit disney-esque. They refer to it is "funky/trendy"

It's late. Off to bed.
I miss my family terribly but am looking forward to tomorrows meetings.
JIm

Trip to South Africa

2011-02-09T13:32:00.000-08:00

February 8th, 2011

Well, I'm back in Africa or at least that's what it says on the map. After a 10 hour flight from London I landed in Johannesburg at 6:30 this morning. (Which was 10:30 p.m where my family is). I have to say that so far since I've landed in South Africa it looks a lot more like the States than the Africa I've traveled in and before and blogged through in 2009.

This time I am in Johannesburg to set up internship experience for 2-3 students from ISU. Students will spend three weeks in country in and around Jo burg with 2-3 SA students. Funding for this provided by an SA foundation and benefactors interested in attracting talent into the risk management area in SA.

From airport I took a multi-lane freeway to Sandton City, then on to MonteCasino Hotel. It's owner is one of the benefactors supporting program. I caught a glimpse of Alexandra, an historically impoverished black and mixed race aera that Mandela spent time in. There they were building brick homes along the freeway so it was hard to compare to what I had seen in other parts of Africa.

The hotel/casino is an enormous 80 hectare complex made up to look like a Tuscan village on the outside and the inside. (It is quite surreal). The inside looks like you are walking through an Italian village in the evening or the afternoon depending on which side of the complex you are in). The ceiling is painted and lit to look like an early evening sky. Students from US and SA are going to be blown away by this place. I am.

There is a Piazza (square) right outside my window with a water fountain that has synchronized water and light show. There is a connected performing arts theater that is currently featuring the Riverdance (next week Dreamgirls)and inside the hotel is a 15 screen cinema including the largest 3D screen in the world.

There are several other live comedies and plays going on inside in smaller venues in the complex. And oh yes there is a casino in there somewhere but it wasn't easy to find with the dozens of shops,restaurants, bowling alley, bookstores, etc.

Later morning I met with our hosts Gert and Naresh to discuss the details of the student internship. They showed me around the area including a wild bird sanctuary that the hotel hosts as part of it's corporate social responsibility. Some really pretty birds in there. There were groups of school kids there when I went through. It's a popular field trip for schools. Social responsibility it built into every strategy of every company I have encountered in SA.

I went out to dinner with Naresh at Sandton City in the Nelson Mandela Square and found a huge shopping mall but still only a few signs of Africa as I know it.

Tomorrow I will be meeting with Gert and Naresh and other risk managers to discuss the format and learning objectives for the internship.

I'm still trying to figure out the culture myself (its very different than anything I have experienced before) but everyone has been wonderfully friendly and helpful. I think that first assignment for students will be to report on the culture and how it interacts with risk maanagement goals of organizations here. I think it has a huge impact just as it does in our culture in U.S. which I had not really considered before. Need to come up with a way to measure that on national basis.

Well, it's 8 hours ahead of Chicago so I better get to bed. Long day tomorrow. Will try to answer individual emails tomorrow.

Cheers,
Jim

Microinsurance Presentations

2010-04-22T08:01:00.000-07:00

Since my presentation at CNA on our research on Microinsurance in Africa, which was broadcast on their corporate network nationally, )and can be viewed by clicking on following)CNA Microinsurance Broadcast
The CNA broadcast was rewarding in that afterward several young professionals in the studio audience at Chicago location came up and asked how they could pursue careers in this area.

I have had the opportunity to present on the topic of Microinsurance in Africa at several industry events. I am always amazed at how interested industry professionals are in this topic. At Chicago luncheon event I made sure to end on time at 1:30, I eventually had to stop the questions at 2. I found out several people were sent there by their companies (international insurers and brokers) but for others I think it just captured their imagination, and they saw hope in how businesses (and capitalism in general) can have a noble purpose, and can be constructive, beneficial, and imaginative. I think people working in corporations in this time need that. At a presentation for the Casualty Actuarial Society I had senior actuary come an ask, how can he could be involved.

I'd love to have the time just working with volunteers and others in helping to develop this.
Please go to my wiki at Microinsurance Research for my powerpoint presentations and our Katie School research and white papers (which on this date are out for peer review).

Photos are from recent presentations.

Microinsurance Conference - Final

2009-11-07T00:43:00.000-08:00

Wow, I am back in the States now. Was just too busy to finish blogging from Dakar. That was a good thing. The second day I met even more people interested in our Ghana project including a number of people getting ready to begin work there. So I really feel like we have a lot to offer them and see some very realistic possibilities for partnerships.

The second day featured a presenter who is working on an indexed-based insurance product like ours except for livestock in northern Kenya. What I loved about his project was that he was educating the prospective customers of the product about insurance through and insurance game. That really made me a great idea to develop a game to help explain insurance and our product too in Ghana.

Also saw some presentations on the demand for microinsurance in general and learned that there was an inverse relationship between perceived need for microinsurance by a household and remittances received (money sent to them from a family member outside the community). Evidently, that family member is viewed as their "insurance" if something goes wrong. (I guess it would be interesting to find out if that family member sending the money to their family back in the village feels the same way).

Overall, we saw that indexed-insurance, like what we are working on, still has a lot of work to be done, including figuring out how to sell it, and at what level to sell it to: Government or government bank (Macro level), rural banks or microfinance institutions (Meso level, or individuals (Micro level). My opinion is still that the meso level has the best potential. But I spent the last few hours of the conference running several different ideas passed people on alternative product and am interested in beginning to work on that. I just shared the idea with our team on campus and think it has potential and could eliminate some of the problems of a "traditional" indexed-based insurance product. Will see after we start crunching the numbers if that will work. Stay tuned.

The other thing I got from the conference was just how well health insurance seemed to be developing. Still lots of challenges but growth was impressive and programs were working well passed there pilot stages now. It was interesting that almost all the health insurers were mutuals.

The day concluded by looking at intersection and synergies of microfinance institutions and microinsurers. Currently most microinsurance is delivered through them, but there was a stated need to move beyond that, while at the same time continuing to improve how MFI's work with microinsurance.

I still have to get through all my business cards and return emails for people I met there who want to exchange ideas or work together. Overall, it was an incredible experience and well worth my time.

Faithfully Submitted,
Jim

Microinsurance Conference Dakar- Day 1

2009-11-04T01:28:00.001-08:00

The photo is of the conference center auditorium at the hotel here is Dakar. It is an impressive facility that resembles the U.N. delegates conference area.There are headphones to use to translate for the audience members, as many of the speakers and conference attendees speak different languages.

There are about 400 people at the conference, from all over the world.

Today's plenary sessions covered the background of microinsurance and the potential impact.
Some key points include:
^Millions of low income families in the world are unprotected from risks of accidents and illnesses. Insurance to working poor and low income households is only about 2 percent.
^About 130 million people in the world have been thrown into poverty as a result of the latest financial crisis.
^Microinsurance is just one tool for helping the poor. They still need investments in education, and health insurance is underutilized tool.
^The working poor deserve security, equity, dignity, and social justice. This includes access to health care, education, and child care.
^Microinsurance can promote the working poor to efficient manage their risk
^Poverty intervention needs to foster interaction with private industry it cannot be just governments.
^Education and regulation of microinsurance is important because this is an uneducated population. Requires close cooperation between the industry and regulators
^Never give up on more financial inclusion

Some of the challenges include:
^Only about 2 percent of the poor have some kind of insurance protection.
There is a:
^Lack of market confidence in the product. There have been examples of insurers not providing the service or payments expected.
^Lack of education of populace on insurance
^Need for regulation that ensures good behavior and solvency but does not hamstring innovation
^Need for risk management services in addition to insurance (but insureds may not be able to afford so there is a need to coordinate with NGO's and governments offering these services).
^Need for a lot more partnering to help move microinsurance forward.
^Need for better-designed and delivered products.

Perhaps the best part of the day was all the great contacts I made and people I met. I am just so impressed (and quite honestly humbled) by the talent and commitment of the people working in this area. I met with people who had authored articles I had read and relied upon for our research, and met some other people who were working in providing funding and technical support. It truly is inspiring as they are so authentic and mission focused. People who just "get it", who understand the interconnectedness of humanity and need for developing sustainable solutions.

I am so grateful I have had the opportunity to meet with them, and I hope work with them in the future.

Well, looking forward to the next conference day.

Faithfully submitted,
Jim

Microinsurance Conference 2009- Dakar

2009-11-02T06:42:00.000-08:00

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

Microinsurace Conference in Dakar

2009-10-31T08:01:00.000-07:00

I am traveling to microinsurance conference in Dakar.

I looked at the list of attendees and I am looking forward to meeting a lot of the other people, whose work I've seen, but never met.

Hope to get some new ideas, and make some new contacts to further help in the development of a product that helps deal with agricultural risk in Africa. With climate change this is becoming a huge issue, and each day the research shows more and more the effects of climate change on Africa.

We have completed the first phase of analysis. The correlations with rainfall and crop yield in northern Ghana were not as strong as I was expecting but we used data from last 15 years which is the most variable time period. However, the reality is that that time period might reflect better the next 15 years as opposed to data over the past 50 years, which other correlation studies in other countries use.

Anyway, thanks to Mukthar Mahdi, Genevieve Amamoo, and Alsliddin Odilov for all their hard work over the past few fews on the analysis.

For the other team members on the project, I will keep you posted on the contacts I make and info. I learn from the conference.

Later,
J

Presentations

2009-09-29T13:01:00.000-07:00

October 19, 2009

The project is moving along nicely. We now have data from 40 different weather stations and have run correlations between rainfall and crop yield for maize, rice, millet, sorghum, and yams.

As a reminder the overview of the project can be found at:

http://www.katieschool.org/outreach/Microinsurance.shtml

Because of the complexity of the models we have decided to focus on northern Ghana (north of Kintampo Falls) where there is only one rainy season.
I have now had the opportunity to present twice this month on our project to two different groups. One was a nation-wide broadcast to a Chicago-based insurer, the other was for a group of Germans in town as part of the ISU Management Development Institute.
These speeches and presentations can be found at

http://connect.cob.ilstu.edu/groups/katieinsuranceschool/wiki/31d6d/Microinsurance_Trip_to_Ghana.html
Based on feedback that we got from a prospective reinsurer, we have decided to focus on maize, and look at significant deviations which could affect credit defaults for farmers. The ultimate product would be for banks and eventually microfinance institutions that loan money to farmers.
We are in the process of finishing up the analysis and doing the write-up.

Stay tuned,
Jim

Blog 18- First Blog Since June 2009 Ghana Trip

2009-07-12T17:22:00.000-07:00

As I promised in my Ghana trip summary I would add to this blog as new developments occur that warrant updates. There have been a few fairly dramatic developments which have occurred with respect to interest of insurers and reinsurers in providing this product based on our data, but I will save that until the deals have been inked.

Following the President's visit to Ghana, I was interviewed by WJBC, the local CBS affiliate about out project in Ghana, and the role of ISU. A podcast of this can be found at:
http://wjbc.com/Tabid/7997/default.aspx?AID=7620
That is an overview of the program.

With this blog, I also wanted to leverage the opportunity created by President Obama's trip to Ghana to help us reiterate some of the points we tried to make with our project, and draw attention to the country of Ghana, its political stability, economic development, and its incredible people . As I stated at the beginning of the project, I also wanted to change perceptions of Africa of this endless visual of starving people looking for help, to an image of a vibrant world of commerce and modern technology, proud of its traditions but also embracing the modern world.

One of my purposes of blogging every day as I travelled was to illustrate that I could do it, and that an Internet cafe and technology was prevalent even in the farthest reaches of an African country. I also posted photos of the business people I met in their modern offices with their mission statements, value statements and employees of the month, just like we see here. I had included photos of shopping malls and cell phones. People in thatched roof huts using cell phones recharged from solar power.

I recently read Bono's op-ed piece in the NY Times on July 9th, entitled Rebranding Africa, and I thought, yes of course, that's what I meant. It's rebranding a continent. Changing misconceptions and showing how Africa can be a partner. Here is the link to his article.

http://www.one.org/r?r=200&id=1058-3926312-mPaZ7yx&t=3

As was covered in the news media, President Obama went to Ghana and made another stellar speech in Accra, Ghana. What resonated with me was that he wanted Ghana, and Africa not to be seen as some recipient of perpetual handouts, but instead "as a partner in building capacity for transformational change." From my encounters, that is what the people of Ghana want too. Something that is more sustainable than traditional foreign aid. That is why they embraced the idea of microinsurance so easily. Microfinance had worked well, this was just a logical extension.

In his speech he mentioned the need for farmers in Ghana to increase their own production, and for those who followed this blog, you will know that one of the major findings of this project is that insurance can be developed to help get farmers to produce more through managing their risks. One of the barriers preventing farmers from increasing their own capacity is the difficulty in managing the risks, and the natural consequence of this difficulty in accessing credit.

President Obama also mentioned that Africa has especially suffered the unfortunate consequences of climate change. (Climate change that the developing world has contributed substantially to). As you may have read in previous blogs, the farmers' traditional timetables for planting and growing have been disrupted, and this has increased their risks. But I believe that this risk CAN be managed. It isn't for all farmers, at all times, and in all regions, so a risk spreading mechanism like insurance can still work, and also as I mentioned, better dissemination of long range forecasts to farmers could also help them out.

Our purpose in developing this insurance product is to help manage the risks of crop loss associated with rainfall. Our likely first product will be for drought in the northern region (but future products may have triggers for both too much and too little rainfall, as flooding has become of problem in some regions). We will likely focus on the market of the banks and microfinance institutions first, in helping them manage their loss from loans to farmers, as the inability of farmers in African to get credit for new inputs, and new techniques that would move them from subsistence farmers to true income-producing farmers selling to the entire world, is stifling these efforts. A product to help provide insurance to those who give loans to farmers is probably a good place to start (although with convincing evidence, I may still be persuaded that direct insurance for the farmers is feasible in the short run too ).

Anyway, if you didn't get to hear President Obama's speech here it is. http://www.youtube.com/watch?v=QkNpUEWIhd4&NR=1

The four areas he felt that Africa needs to emphasize are democracy, opportunity, health, and peaceful ways to resolve conflicts. Ghana is a great role model for all of these and the reason we chose Ghana as our first country to study microinsurance potential. Our project is focused more on the opportunity part, and building sustainable economic capacity for low income people, but a number of microinsurance projects in other countries in Africa, such as in Uganda, have been successful and should be replicated elsewhere in Africa.

Afterwards the President and his family flew to Cape Coast, Ghana to tour the former slave castles. When I was there last month, I videotaped the tour and I posted them on Youtube this week so that those who are interested in learning more about the slave castles history can get it. It is one of many sites that should be seen when touring Ghana, which we did on a Saturday while in Ghana. I uploaded some of our rare "tourist videos" to Youtube, in addition to the interviews we had related to microfinance and microinsurance.

Here are urls for those.

Cape Coast Slave Castle Video Overlook
http://www.youtube.com/watch?v=BtdrynGMsRs
Cape Coast Slave Castle Tour Male Slave Dungeon
http://www.youtube.com/watch?v=5g8NaD3iAe4
Cape Coast Castle Tour “Door of No Return”
http://www.youtube.com/watch?v=uP1ySdxyP5k
Cape Coast Castle Tour Prison Cell
http://www.youtube.com/watch?v=bkWgD-d9ek4
Cape Coast Castle- Tour Keep Memories Alive
http://www.youtube.com/watch?v=yvxfeVj95zk
Outside Cape Coast Castle
http://www.youtube.com/watch?v=8lTM1U5R9n0

Cape Coast also has some beautiful beaches and as I mentioned, has cool things to do like going to the Global Mamas tour of the batik making. These are women empowered by fair trade, and microfinance. (I think that they also have a potential for being microinsurance clients as their families become more and more dependent on their growing levels of income. ) I took videos of that too, but the Global Mamas own video was better so I will only include this one of my own, and direct you to their site for more. My colleage at ISU and asst. professor of marketing Horace stamping his batik (As part of the Global Mamas tour you get to do your own batik)
http://www.youtube.com/watch?v=AanSkTaM9Cw
While the batiks dried our driver retrieved a ripe papaya. Very inventive and sustainable tool. ;-)
http://www.youtube.com/watch?v=g49rTy9XfZE
The last stage is actually “cooking” the batik
http://www.youtube.com/watch?v=QwRX4Xrcgg0

Day 5 of my blog has other photos from our short time at Cape Coast too, but this should give you a feel. The Cape Coast was usually a destination for every student study abroad program that we encountered travelling through Ghana, usually their last day or two before they returned home.

I am so glad that President Obama chose Ghana to visit. Evidently for the same reasons we chose Ghana, political stability, friendly people, and a model of economic growth. And a place where we could take students for a study abroad and feel comfortable about it.

I hope to have some wonderful news about the projects progress within the next two months.

Again, please check out the Katie School wiki at http://www.katiepedia.com/ for more on microinsurance under the tab for insurance and sustainability.

Faithfully submitted,

Jim Jones

Director, Katie School

Illinois State University

http://www.katieschool.org/

One More Stop on the Way Home

2009-06-10T23:46:00.000-07:00

Overview
I am blogging from the Heathrow Sheraton now preparing to head home later today. Our last day of the trip related to Africa was yesterday, and it was a fitting end. Time will tell, but it was quite likely the most important meeting we had for making this project into a long term program with outcomes for ISU, our students, and faculty. More details in a moment.

I will be reviewing overall blog and making some edits on names, spellings, and accuracy but I will preserve the observations I was making along the way as I actually saw them. I now have a clearer understanding, and some of the perspectives I had at the time were...,let's say, limited. I now see things more clearly and I would like to change some of what I said to make my observations appear more informed. But I think it is important to recognize that there each day we are learning (or should be) new ideas and gaining new perspectives that change our paradigms, our beliefs.

I think it is easy to think that what we believe now is what we have always believed. But if we are honest with ourselves we would see how much our core beliefs have changed over time, as we gain new perspectives. In Ghana they have a word Sankofa (literally meaning "go back and take"). It teaches the wisdom in learning from the past in order to build for the future. I think that to remain true to what I felt at the time is important. If I make any edits for the purpose of clarification now, I will note that it came at a different time.

I am grateful that I had a colleague, Horace, there with me. I think that made my observations more objective. Every evening we sat down and debriefed the days events, sometimes for several hours over dinner.

I hope that these blogs challenged some of the things you may have thought about Africa. That it is technologically in the stone age, or that they are all poor and in constant need of of a handout from those of us living in rich countries. Or that we have nothing to learn from them. I hope that people will see the fallacies of those assumptions as they read through my blogs, and see the photos I posted.

I already miss Ghana. It truly is a place of where modern meets traditional. A place where cultures blend, almost seamlessly. My favorite photo illustrating this was the photo of an Islamic man, in a thatched-roof village outside of Tamale, sitting on a motorcyle, with his cell phone in hand. I miss the places we saw, the food we ate, and especially the friends we made. I am comforted by a line from Frederick Beuchner's book "Telling the Truth" it reads:
You can kiss your friends and family good-bye and put miles between you, but at the same time you carry them with you in your ear, your mind, your stomach, because you do not just live in a world, but a world lives in you. I can honestly say, Ghana lives in me now.

If you want to find out more about the topic of microinsurance please see our Katie School wiki

at http://www.katiepedia.com/ and search under the topic of microinsurance. I keep that updated with research and papers on the topic. I have gotten good feedback on the You Tube videos that I posted on Day 12 on Ecotourism and Day 8 on the value of microfinance for women in Ghana.

Day 12- Baobab Financial Services http://www.youtube.com/watch?v=FOcIdw61j1Q
Day 8- Larabanga Ecotourism http://www.youtube.com/watch?v=H9THYjEVEC4

Here is the blog from yesterday.

One Stop to Go
We finally left Accra at around 11 p.m. headed for London. We ate a nice dinner on the plane, love British Airway meals, and then tried to get some sleep. We arrived at London at around 7 a.m. and then got a bus for Cheltenham, which is about two hours outside of London, to the home office of Microensure http://www.microensure.com/.

The history of Microensure was that it was established in 2005, as Microinsurance Agency (MIA) , the insurance agency of the international microfinance organization Opportunity International, a faith-based non-profit headquartered in Oak Brook, IL

They have packaged life and non-life microinsurance products in Ghana and have microinsurance operations in numerous developing countries. They successfully provided microinsurance in Uganda, and worked with World Bank in financing a weather-indexed insurance product for Malawi. MicroEnsure acts as a broker between regulated local insurers, reinsurers, and microfinance organizations and the farmers who purchase the insurance. They currently work with 40 different microfinance organizations, including their founding organization, Opportunity International. They provide product development, and the IT back office support for loan and insurance applications, and claims payment information for insurers and reinsurers. They see there role as helping to make sure that the insurance is affordable for the bottom billion (people who can only pay a few dollars a year).

One of the other key concepts that they relayed to us was that the best thing that microinsurance was doing was moving the risk from local people to the international reinsurance market, which can more easily spread and diversify the risk. I see the value of this, and I wonder how to work that concept with the risk retention concept I considered in earlier blog re. Agogo region. Figuring out how to integrate those two will be on my mind for some time, I suspect.

MicroEnsure recently received $24.5 million from the Gates Foundation for the purpose of faciliatating microinsurance, and weather-indexed crop insurance around the world. They have an office in Accra and are working on developing products for Ghana, including indexed insurance for crop loss.

We compared notes and reassuredly found that we had several similar findings. We both saw the importance of helping the agricultural sector because so much of the population (over 70 percent) somehow rely on that sector. We also agreed that the most important part of addressing this sector is to get farmers more credit. As mentioned in earlier blogs, banks and microfinance institutions are reluctant to expand their loan portfolios to include morefarm loans, as the are currently viewed as risky.

We discussed their approach and strategy, which was a bit different than what we were considering (I feel like I shouldn't go into too much detail on that publicly as I am not sure what they considered public information) but the result would be the same, greater willingness to provide credit for farmers.They have had success with their approach in other countries, so it may very well work out in Ghana. They certainly have the resources to overcome many challenges, and in fact have a good track record of doing just that in Malawi and India.

After about two hours of sharing observations and brainstorming ideas we came to the conclusion that we really should be working together. There are things we can be doing at ISU to support them and they have a lot to offer ISU, including providing data to help accelerate our research and development of student and faculty involvement in microinsurance, including student internships and study abroad programs to Ghana. We see a role for our students in helping with the pilots they run. This includes, the needs analysis, helping with initial product development ideas, providing education about insurance to farmers (and others) in Ghana. There would also be a number of projects students (agribusiness and actuarial science) could conduct on campus. In short, this could be an enormous win-win for both organizations.

On our way home from Cheltenham, we had the simultaneously feelings of being completely wrung out and exhilirated.

It was a long journey in many ways. One that I will never forget.

Faithfully Submitted,
Jim

Day 15- Leaving Ghana

2009-06-10T05:18:00.000-07:00

Day 15-Our Last Day
Day 15 was busy and we had two important meeting before our 10:40 p.m. flight.
I suppose it is time to reflect on lessons learned.
First, having connections and a car (with a driver) are almost necessities.we can't overemphasize the value that Mr. Mahdi Abdullah had on this trip in providing all three.Thanks. We hope that the lessons learned, people we met, and discussions we have had will lead to something that will benefit your country. (Thanks again Mukthar).
Second, there are so many things that happened before and during this trip that seem to me to be way beyond coincidence. The latest one being the discovery that Mr. Mahdi, and the Paramount Chief we met yesterday were once next door neighbors. For the record, the trip to the Agogo was planned independent of Mr. Mahdi, in fact weeks before we had even met him. We just learned that last night that they had been neighbors, when we went to Mr. Mahdi's house. So I have to give credit to that Force that made all this happen and pulled so many people together. That is something I will never forget.

Our last day in Ghana
We started off the day meeting with Dr. Danso-Manu downtown in Accra.She handed over two USB sticks full of data on soil maps and rainfall data. It was nice to get the data in hand literally. She physically goes out and gathers the data with USB sticks.We were hoping to get at least half the 40 stations in Ghana that we had identified. Unfortunately, we only got 12 weather stations. Dr. Danso-Manu apologized, but the people she was working with had not gotten all the data input. Evidently, they are still transferring some paper data to electronic format for several of the stations. Well, it was good to have to get started.A little disappointing but at least we have some preliminary data to work with.

We then met with the Director of Research for APEX Bank again. This time formally and in detail. He and his staff were very receptive. We went through what we had learned travelling across the country, about the lack of credit for farmers.He understood that the rural banks are reluctant to loan to farmers because of the risks. He was a bit concerned about whether we would be able to get the data. I told him about the data we had collected, and the data that exists at KNUST and he was thrilled to learn that. I still had some concerns myself, given that we didn't get all the data we wanted either. While I was talking, my phone kept ringing. I ignored it the first two times since I didn't want to ruin the moment there with the APEX folks, but the third time I answered. Incredibly, it was Dr. Danso-Manu with more data.On her way home in a taxi she got a call that 17 more stations were now ready.I relayed that to APEX and they were as pleased as I was to hear the news. She brought another USB stick to us while we were there at APEX. (APEX told me how important this was to them. They had even travelled to India and met with people from other countries to try and develop something like this but the data was always the rub. (I realize that for investors to have confidence they are going to want the data ready and easily accessible.I think that his is just a transitional time and I expect that in a year or so, it will be easier to access.In the mean time, I am accepting (and if I am honest, benefiting from) the mysterious and arcane way is gathered. That will change in the near future I'm sure.

We ended the meeting with APEX agreeing to write a letter of support for us in our future proposals, and wants to introduce us to the Ministry of Agriculture in Accra.They made a contingent agreement to run a pilot for a product with reduced limits of financial exposure to see how the product performs. In addition to a simulation, I think a pilot with lower limits might work, and local insurance companies might actually be willing to underwrite that initial pilot.

We finished the formal day at 3 in time to get in some last minute shopping. Needed to catch up on shopping for a few little items to bring back from Africa before heading off to the airport.

Tomorrow we arrive in London at 7 and then take a bus two hours to Cheltenham to meet the CEO of Micorinsurance Agency -Microensure. They are the insurance part of Opportunity International based in Chicago and with microfinance offices around the world.

Faithfully Submitted,
Jim

Day 14- Trip to the Mountain to meet Paramount Chief

2009-06-09T08:08:00.000-07:00

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.

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

Day 12-Eco-tourism Day 13- Sunday Day of Rest

2009-06-07T09:44:00.000-07:00

Day 12 and 13 Overview
It is Sunday and I am at the Miklin hotel in Kumasi. This is the first day that we are really just resting. We went to church nearby (a Roman Catholic church) at a school and it was as I remembered from 20 years ago. A mix of liturgical music and local music with drums. Very nice.

We have had a LOT to be thankful for this trip. Was glad we got to go to church even though the English language version started at 7 a.m. (and they do an enhanced two hour version that leaves plenty of time to offer your thanks :-)) After church we went to the market in search of good (brand name batteries). We ran out as we were leaving Mole. (That caused me to miss photo of mosque from 1653 (Oldest buidling in Ghana) except with my disposable. The local variety made in China, doesn't hold a charge. Horace went through a box of twenty in two hours in the park. (Okay, I'll stop whining.)

Anyway, I found some good Energizer batteries and got a good photo or two of the Kumasi Kejetia market (10,000 vendors over area of covering 36 acres. The largest in West Africa). Only about half that many were there this afternoon because it is Sunday. Interestingly, the topic of fire insurance for market vendors is now being discussed following a fire at the market last week. (Remarkably the last major fire before that, which like this one, was also a partial fire, was 1995.) So, maybe there is some kind of a product for fire that could be developed? (Wish there was a way to partition the market better to prevent a total market loss. They also need to monitor how many people tap into one outlet. In fact they might consider a more highly protected area for appliance vendors where they would pay a fee for electricity and close fire protection.)

Okay, well let me tell you about yesterday now. Tomorrow will be back on the circuit looking at farming and technology in a village outside of Kumasi.

Day 12- Ecotourism.

After the trip to the farm, we left Tamale and on the way home stopped over at Mole National Park. It is a bone-jarring two and a half hour drive from Tamale. Wanted to check that out as a possible stopover for students on a study abroad. We ran into another group of students from the University of Utah. The faculty who has been doing this with them for the past five years said that they stay in Kumasi (at KNUST guesthouse) and do public health activities in local villages. He also had some great ideas on how to structure and internship/study abroad.

The only reasonable option to stay, is the Mole Motel. It is authentically rustic. But what it lacks in accommodations, it makes up for in its view. It overlooks watering holes and these watering holes were where the animals will eventually congregate (especially in the dry season. )

You could see animals from the hotel. The sun was setting as we pulled in, so once again the fatigue of the day’s journey was replaced by the feeling of gratitude for being able to see yet another breathtaking view of the beauty that exists here in Ghana. No doubt the ten minutes of sunset over the Mole (pronounced Mo-lay).was worth the hours of difficult roads.

The next day (Saturday and actually Day 12) we did a 6:30 a.m. walking tour with a guide. (Got up early to see the game more active, also needed to make it to Kumasi before nightfall. Our guide was great in helping us to track animals and in explaining the eco-tourism part of how the reserve worked with local villages to conserve the land and help find employment for those villagers who could no longer hunt or farm on their traditional land which was now the protected game reserve. The park has several hundred elephants scattered over 4800sq Km. We were hoping to see elephants up close in the wild. I saw some 20 years ago when I was in a photo safari car but never met up with any while I was just walking around in the forest.

Turned out we had a great tracker. Not all the groups were as fortunate. I include my favorite photos of the elephants. I really enjoyed this even more than the elephants in Kenya that you would drive to see. These elephants were in the forest and tracking them down to photo them was an enjoyable challenge. A lot of antelopes and other smaller game along the way too. We almost literally (ran into a troop of baboons on our way of the park. All my batteries were dead so I was using the disposable, but they were pretty close. I think that this would be a worthwhile stop for a study abroad. It seems like all the universities spend a night or two here.

Afterwards we went to the nearby Village, Larabanga, which has the oldest building structure in Ghana, and perhaps West Africa. It is a mid-17th century mosque and is now the center of ecotourism for this muslim village. The eco-tourism project was established by a Peace Corps volunteer and they did a really nice job with that. The guides who greet you, and there will be several, range from 4 year s old to 18. They have a tight marketing campaign. (It would actually make for a fun exercise for business students to note all the different marketing and sales techniques that are employed. Impressive.)

I videotaped this and put it up on You Tube http://www.youtube.com/watch?v=H9THYjEVEC4 , to give them a little more PR. They work hard and deserve it, and it does help the local community which was displaced by the reserve.

The story of the mosque itself as well as the story of the Peace Corps volunteers' role in developing ecotourism for the community were both worth hearing. Given it’s proximity to Mole National Park, the town has a lot of potential for developing ecotourism.

Faithfully Submitted,

Jim

Day 11-Trip to Chief Abdulah's Farm

2009-06-07T09:04:00.000-07:00

Overview:

I am running a couple of days behind on blogs as we have been travelling in some more remote areas. It is now Sunday afternoon and I am at a hotel in Kumasi catching up on my Friday and Saturday blogs. The Day 11 and 12 activities involved some serious four-wheeling and it took something out of us. But the many farmers and villagers who live in those remote areas get around on much less comfortable terms than in a 4x4 Landcruiser.

Day 11- Trip to the Chief’s Farm

Today we decided to take a look at the actual production of crops like cassava and yams. The trip was about 50 km outside of Tamale and it took us about 2 hours. The photo at the top shows the long road to the Chief's farm. It does seem to go on forever.

We went passed the fields where they were going to be growing maize and rice but the Chief was holding off on planting because the rains are coming about two-three weeks late this year.

He knows that, based on meteorological reports.

Unfortunately, a lot of farmers have already started based on traditional timetables. As mentioned in the previous blogs, this information is something that the chief tries to communicate to farmers who have loans with him, at their weekly meetings. I met some U.S. Dept. of Agriculture people who are trying to find ways to get the word out via mobile telephone (since most farmers would have that). That might be something to consider in underwriting for crop loss too if such a product were developed. The farmer needs to have access to the updated climate and weather information. (That would be a nice value-added for purchasing insurance too. Would help reduce losses and benefit the farmer.)

I included a photo of the cassava being grown and then the other photos is cassava being sold at the market. (This is a traditional crop and is not really considered a "cash crop". It takes about 15 months for cassava to reach maturity. Most of the other crops take a few months.)

Transportation is an issue on everything and one reason that farmers don’t get very good prices for their crop. Most farmers have no easy way to get them to market because the roads are so challenging. It seems like an improvement in infrastructure could make a huge difference in what farmers could get to the market without spoiling. (If a multi-peril crop insurance product were developed for smaller farmers), it would have to be designed and underwritten with that in mind

On the way to the village we saw some interesting contrasts. I included a photo below of a Muslim man adorned in flowing, brightly colored, full-length clothes on his motorbike in a thatched room village. (That scene was repeated many times.)

Motorbikes are used frequently by farmers in the north (as are bicycles).

Faithfully Submitted,

Jim

Day 10- Meeting with The Chief and the Ministry of Agric

2009-06-04T10:10:00.000-07:00

Day- 10 Overview

I can't believe that I am actually caught up on my blogs today. I did two. One early this morning and one now. Two excellent meetings. The meeting with the Chief was another inspiring one. I am just humbled by the talent of the people here in providing developmental solutions. The Chief's shop is one that should be looked at and replicated. It rained today (YEA!!) the farmers really needed that, even though it was short and late. But it kept me in town and we weren't able to get out to the farms. But I got out this second blog instead, and got to eat some local cuisine. Guinea Fowl in Groundnut Soup (tasted a bit like a peanut sauce that was spicy). Was also able to find some more research I couldn't locate in the states. (Google sometimes needs a little more detail and I got that detail here.) If you didn't catch blog Day 9, check the archive. It was a good one.

:-)

I added a driving through town scene. Motorbikes are very prevalent here in the north, especially here in Tamale.

Day 10- Tamale Ministry of Agriculture
We met with the Ministry of Agriculture in Tamale. We met with the Northern Regional Director of Ministry of Food and Agriculture. After we described the project he then brought in his entire team of employees. I took that as a good sign. We asked him first about the percentages of people who actually do farming for a living (i have heard and seen different percentages). He said it varies by region. Could be as high as 70 percent in northern regions, but as low as 40 percent in some southern regions.
We described our mission and potential rainfall insurance product to see if there was a need. He said that there is a huge need for such a product because the issue is that the farmers can’t enough capital to make significant improvements because agriculture is so risky. The banks and microfinancial institutions can't have too a large a part of their portfolio in agriculture (which we learned from info. in previous blogs). He thinks that a product that would help reduce the variability of loss would give them more incentive to provide loans to farmers.

At a small level he didn’t see a need for a rainfall insurance product. For those farmers the preferred risk management tool is crop diversification. However, some of the farmers that are growing mono crop cash crops (like rice) might be interested. They are usually more sophisticated. Might be rolled out to informal group of farmers. Might also be a need for farmers who have livestock.

There are informal “insurance” mechanisms. They gave an example of a project sponsored by (Millenium Development Authority) (MiDA) where they provided input and then the farmers agreed to contribute one bag of maize for every acre they have. This goes to a common fund to help pay for group members who suffer a loss.

They suggested other partners that might be interested such a product be Assoc. of Church Development Project and the Stambick(sp?) Bank (S.A. Bank). Maybe companies who rely on cocoa producers too?

Consequences of crop loss

This is a question we have posed to everyone. Here are his thoughts.
Depends on the severity what the consequences are:
Example:

Severe
· Girls runaway from home.
· Families pack up and travel.

Intermediate
· Will sell their labor to other farmers at below market rate.
· If all else fails the sell off animals in the following order, goods (chickens and guinea fowl), then goats, then sheep, then cattle. If you see farmers selling cattle for food it indicates that it is catastrophic for the farmer. (There is probably an economic index in their somewhere).

We presented two options of insurance. The Rainfall Insurance Product for more sophisticated buyer who understands the trigger and who it works. Then possibly a different product for small farmers (which I went into some detail to explain) and they thought that both sounded like they would be accepted in the market once.

We then met a group of Indian consultants from OLAM
OLAM Nigeria Lmtd.

They are looking to bring Rice production services to Ghana. They partner with banks, NGOs, and US AID. They won a U.N. World Bank Business Award. One of his concerns about Ghana is the lack of crop insurance. Unlike in Nigeria where they have crop insurance. The insurance is multirisk. It is for only registered coops in Nigeria. It is 5% premium. For $600 of inputs for rice the premium would be $30. But the farmer only pays 2% of the 5%. Or in this example $12. The state and federal pay the rest of the premium because they benefit from the farmers getting insurance.
The multiperil risk is rainfall (drought and flood), birds, pests, and disease. Although the general manager suggested that rainfall (drought or flood) is really the most important part of the product.

According to the Managing Director of OLAM, last year the insurance paid out $180,000 for 50,000 acres. This is the Nigerian Agricultural Insurance is part of Nigerian Government and was in conjunction with US AID. The payout this year was $220,000. Will have to check out what that is in terms of the premium they collected.

Meeting the Chief
Met with Nana (Chief) Yusif Abdulai. He is the Managing Director of the Northern Rural Development Bank an Association of Financial NGO’s. They do Microfinance ++. They have been around since 1997. The + includes education on financial literacy, health (HIV/AIDS,maternal health, Malaria,), technical crop assistance for farmers associations. They have 4500 men and women who have Susu accounts. They make loans strictly to women ranging from GHc100 ($75)to GHc 1000. Like most vendor loans we have seen, theirs are four month loans. This was the longest running and most well-organized of all that we have met so far. Really well designed and executed.
They loan to vendors, farm producers and processors, hair dressers,etc. Their process is to form solidarity groups into associations. Then they require education (financial literacy, record keeping, health, etc) of 6 weeks before they give the loan . This education helps the women succeed in their businesses and thus be more reliable creditors. All loans are given to an association of women. An association is comprised of 30 women with five solidarity groups. The way it works is that the solidarity group first guarantees the loans for each of its members and then if the group can’t pay all the loan, the association must step in to pay. (They do have a contingency in case there is an association default risk. They measure success not only in terms of repayment but also in terms of women who grow their business to the point that they can get a bank loan and then become a part of the formal financial sector.

One of the innovations that the Northern Rural Bank has undertaken is to provide a storage facility for farmers to store their crops immediately after harvest because the price they can get at harvest is very low in comparison (about Ghc18 for a bag of maize to a price of Ghc60 if they hold on to it for a few months.) They give the farmer an advance on their loan which represents the market rate at harvest time. (This would be all the many farmers would get). However by storing the grain until mid season when the prices go up more than four times they can just use that difference to pay off the loan. The Chief learned this from Boulder Microfinance Institute Workshop he attended in Italy.

They see a need for an insurance product for property loss (fire and theft) for their market vendors. It needs to be set up well, designed in terms they understand, and then provided with a great deal of education. We discussed what that might look like and he like the design.

The education that they provide is for financial literacy, health (malaria, diarrhea, HIV/AID).

However, they have one hugely value-added for their farmers, something we have heard before a need for (We heard that need expressed here at our meeting in Sunyani.) but until now, have not heard of a financial institution providing- That is weather information. They give weather information to farmers during their weekly meetings. This helps their farmers to plant at the right time. We heard that from several people one problem farmers have is that they don’t get the tv or radio weather forecasts. So they are planting based on previous timetables, which may not apply under current climatic conditions.

They have a history of working with volunteers and study abroad students.(Max of three at one time). The typical stint is for 2-3 weeks. The students stay with host families in Tamale.They then go out and do the training at the Susu meetings. He said that they can provide the content (although they do have materials from Microfinance Opportunities (a D.C. organization I visited a year ago) but they said the advantage the students have is that they draw a crowd and people listen. Given the topics that they would like to have covered it might be good to have a multidisciplinary mixed team of Agriculture,Nursing, and Business students even if they provide content for the training materials.

Here are some phrase words I have picked up that may help you navigate around:
Greeting in morning (da-si-ba) Response: n.naa
Afternoon greeting (n.tiray) Response n.naa
Evening greeting (annuwula) Response n.naa
How are you? (Kawula) Response Alaafay (or al-off-ee) I’m doing fine
Thank you (em-Poo-Hair)

Faithfully submitted,
Jim Jones
Director-Katie School of Insurance
Illinois State University

Day 9- Freelancing it in Tamale

2009-06-04T03:41:00.001-07:00

Day 9 Overview
We are running a little ahead of schedule and so we did a little freelancing and met with people not on our itinerary. In doing so, we got some great additional insights and made some valuable contacts. Last night when we were debriefing in the restaurant (which is what we do each day), Horace pointed out that it was like the United Nations branch office here at Mariam. There was a table from from India, China, Denmark, U.K, and us (and one large group that was a combo of many countries. In overhearing the conversations they are talking about their research ideas on education, women’s empowerment, health care, or their investment ideas. Lots of people evidently see opportunities in Ghana.

Today we met with a microfinance institution, an NGO doing education in the rural villages, and the U.S-Ghana Millennium Development Authority here in Tamale.

I was glad to see a comment on one of the posts, related to farming techniques that might be able to be adopted here. I will ask the Ministry of Agriculture when we meet with them today, what techniques are being used.

Finally, to our great surprise, there is a consortium of three Ivy League Schools that have formed an NGO, and are reportedly offering rainfall insurance product to local farmers. When we first got to Tamale, I met a Danish woman who is working on her thesis, and she said she saw a group offering that. I thought for sure she was mistaken since none of the officials, including the insurance commissioner, knew about this. Evidently, they are offering this rainfall insurance policy as a “field experiment” and do the sales, underwriting, (and I presume claims) themselves. So it is not an official product yet. More about that later. Here is the Day 9 blog:

Day 9- Tamale –Freelancing It
MASLOC
Our first meeting was with MASLOC Microfinance and Loan Center. This is a government run operation that provides micro credit and small loans to groups and individuals. (They defined a micro credit loan as less than GHc1000 ($750) and a small loan as Ghc1100 to GHc2500. One of things that they do (which we have heard from other rural banks and is where the American NGO I mentioned in previous blog had erred) is to have flexible payment schedules for farmers, recognizing that farmers, unlike market vendors, get income at longer intervals. They have loans that can be extended up to two years. They have nineteen administrative districts. Over 65 percent of the people in the district are farmers. The interest rate for micro creditis only 10 percent. The small loan is offered at prime rate (currently 21.5%).
Mesloc provides loans for both groups and individuals. They didn’t really see a need for credit life insurance because if a person dies the other members pay. )Groups can be 5-25 individuals. Interestingly, with respect to individual loans they still don’t see a need because they require another person to act as guarantor. They actually underwrite the guarantor looking at bank statements, doing a background check, etc. (They did agree that in this arrangement there would be a need for life insurance for creditor from the guarantor’s perspective (who has an insurable interest in life of creditor).

The question that they asked us, which is ABSOLUTELY critical was who would be the policyholder for a rainfall insurance policy?

I explained that we had kicked this question around with everyone we met as we travelled through Ghana. We went through the customers such as Rural Banks, a group of microfinance centers (like themselves), best farmer association, APEX or ADB, perhaps processors for crops, maybe even companies like ADM or Nescafe whose suppliers may be affected by rainfall. They agreed, and said that they did not think that small, peasant farmers would be good customers of this product for several reasons. We had heard that sentiment expressed throughout Ghana as well.
Also, like everyone else we have met, they see a HUGE need for education and gave these ideas:
1. Best farming practices (I went through example of Peace Corps in Forikrom, and showed them photos and they thought that was exactly what was needed (they liked the photos of your gardens Greg!) They see a need for those demo farms to help farmers mitigate their risks throught crop diversification. The Ghana Ag extension office doesn’t have the resources to go out and do all the training so they see need for that kind of training.
2. Financial literacy and insurance education. Insurance concepts are not known or understood. (They suggested radio ads during prime time when farmers are listening as one means for education)
3. Training of the trainers. (So they would be very interested in having ISU students act as trainers on bookkeeping, basic insurance principles, etc.)
So in short they strongly support the initiative of rainfall insurance product, to the appropriate customers. See photo of team members.

IBIS
Because of the need for education in the villages we decided to stop and talk with a local company well-respected for it’s education of people in villages, especially those who are illiterate. IBIS is a Danish NGO focusing on educating poor people, especially children, on literacy, empowerment of women. We met with Zakaria their executive director. I asked him what the consequences were when there was a crop failure. He gave an example of 2007 where the rains came very late. There was drought when the farmers first planted, then some farmers planted again, and still lost all their crops. For those who planted a third time, they got flooded out. So the whole year was shot. This led to families to not eat well, and to not sending kids to junior high and high school. Here are costs that they must pay:
1. Costs for transportation (most rural villagers do not live near junior highs and must pay for transportation, plus something for lunch since they kept come home to eat,
2. PTA fees,
3. Girls’s hygiene products,
4. Uniform costs (All students wear uniforms).
5. The other big cost is opportunity cost of losing labor. There are some jobs that are seen as only jobs for kids. ((i.e a 45 year old man is more likely to enroll a son or daughter to shepherd cows and goats, than to do it himself. And this keeps them out of school.

One of the concerns is moral hazard. He thinks (as others have) that payments need to be made in kind not cash. We went through an extensive discussion on how one might have insurance for something like school fees in the event of a crop failure and how that product might be designed and rolled out. (like having conditions of child attending school regularly). We need to take a look at results of an effort done by Catholic Relief Services. They paid families to keep girls in school. And based benefit in-kind (food) on the girls attendance record . So a farmer’s allotment of funds was based on kid’s attendance. He thought that was successful. Maybe something like this could be developed for micoinsurance.

The big question was asked, “Could farmers afford to pay an insurance premium?”. The answer was yes, if they saw the value and the payment could be made in crops, not cash. He gave an example of sharing that currently occurs. If one farmer, in good standing, suffers a loss the rest contribute. BUT they don’t contribute money for school fees. Another example is that a village contributes to a local teacher by making contribution to a local teacher.

One issue they we asked about was cost of funerals in the north. He said that a lot of farmers defer funerals until they get to harvest. We had heard that the guests make a contribtion. Turns out the contribution is only about Ghc1, which doesn’t cover cost of funeral. (Example have to feed and lodge out of town relatives in town for funeral). Most funerals up north are attended by 100 people.

In short there is a huge communal spirit. So this could be a good foundation for teaching of insurance.
How to teach insurance
He did say education needs to be 1) pictorial (because of illiteracy), 2) must have active participation of student and 3) based on concepts they already know, like sharing of losses currently done in villages. The change might be getting them to think of contributing to shared group before a loss rather than after a loss.

Millennium Development Authority.

While we were visiting with IBIS , we saw a sign for Millennium Development Authority (Part of US AID). I remember from a meeting with Ed Mason a couple of years ago, with US AID, that they awarded grants through in-country operations. So that became another stop. Good thing too as it is true that the local authority is the one that gives thumbs up or down. So it was nice to talk with them too. So I talked with them about the rainfall insurance product for banks and microfinance institutions, and possibility of a crop risk sharing program for small farmers. They thought this was a GREAT idea. They called up a local agricultural director who we met with and he agreed. We will be meeting with Ministry of Agriculture in the morning.

They like the idea and they also work with the rural banks on their projects. They reiterated something that I have heard from several different sources. – This only succeeds if there is education. I gave him examples of how it could be rolled out (which was based on previous information received from those working directly with farmers) and they liked it and seemed to think it could work. They said that one issue that is different than the traditional for of group retention, is that with pure insurance, you pay money and only those with a loss get anything.

This IS VERY foreign concept, and would be met with mistrust. So I proposed another model and that woud be a hybrid product (with more details than I want to cover in a blog) and they liked that.
They gave us great contacts on another person, an Indian businessman, who does hedging on market pricing fluctuations of crops.

Rainfall Insurance Mystery Company
We then learned of another organization who is supposedly offering a rainfall insurance product to small farmers. Nobody had many details. But that they have an office in town. Turns out that it is an American NGO that was formed by a consortium of three Ivy League universities. They have an office here and in Accra. We found that they too have set up a blog except unlike this blog there is not a way to post a comment or email the researchers in charge. But evidently the product is based on rainfall from a product developed in Mali. They are evidently running the company as a field experiment. Selling, underwriting, and (hopefully) paying claims.

If you have been following this blog and the comments made from previous contacts you would probably offer the following questions:

How do explain rainfall insurance (with it’s inherent basis risk) to illiterate farmers who don't understand basic insurance principles ? (I think I have worked through in my head how to present insurance or at least risk retention groups pictorially but rainfall insurance would be challenging. I am interested in seeing how that was accomplished.
I like the idea of doing some simulations (especially with larger sophisticated buyers) and a pilot product, but explaining that something is a field experiment and not an actual product, would also be challenging and I am eager to see how that was accomplished.
I think that it is great that there are other organizations interested in a financial solution to this vexing problem, as it is really important to the country.
What are the unintended consequences of starting with such a product? Could you kick the underinsured when they are down? Do they get the wrong impression of insurance overall if this is their first experience and it doesn't pay out?

There are a number of academic papers on rainfall insurance. Pros and cons. I just read one while surfing here at the Kalong, entitled Rainfall insurance and vulnerability: Economic Principles and Cautionary Notes by Jonathan Morduch at New York University.

http://www.nyu.edu/projects/morduch/documents/rainfall%20insurance.PDF

Tomorrow we will meet with the Ministry of Agriculture and Ag extension services in the Northern region.

Faithfully submitted,
Jim Jones
Director- Katie School of Insurance
Illinois State University

Day 8 Tamale Microfinance, Microinsurance, Susu

2009-06-02T14:36:00.000-07:00

Day 8- Tamale Rural Banks, Microfinance, Savings, and Susus
Today was another great fact-finding day but it was also the most inspiring. I was very emotional at the end of the day when we met with the Baobab Thrift and Susu. I have seen a number of great activities that are going on to help alleviate poverty, but this one seemed to be the most sustainable and have the greatest impact. It was hard to keep our eyes dry. I met two great organizations, but the second organization,Baobab Savings and Susu which provides a savings and microcredit facility for women who have table-top market operations was one of the most inspiringof all the many activities I have observed, and I think has the greatest impact and most sustainable concept. If I had money, I would use it to help these kind of operations.I think that a lot of governments and NGO's are realizing this and supporting those activities.

I got some great video footage of the actual operation. (You can see this on You Tube at:

http://www.youtube.com/watch?v=ZCckKV_djb0

They made disbursements to the women today by chance (one of only three times each year) and we got to witness it. The photos on this blog show the women receiving their money. Instead of signatures they use thumb prints. You can see them placing their thumb prints on the papers to accept their money. I found the best Internet Cafe in Ghana, the Kalong Cafe just around the corner from the hotel. Very fast. I uploaded a video of market scene to Day 6. Added a bunch of photos and did two posts. Did some Internet surfing to find out what organizations are here in Tamale in case we have some time on Friday.

Day 8

First Meeting:Bonzali Rural Bank Ltd. Kumbungu
We met with Paul Atsu Fiawoo Deputry Director and Head of Credit and Mike Tizaaee managing director .
They provide loans to rural groups both agricultural and commercial. Mostly commercial (only 15 percent agricultural) because the risk is too high with that agric. sector. Their typical loan is 18 months. They charge a little over the prime rate. They can loan money at a lower rate if they get grants for specific sectors, like farmers. For example they got a grant from Community Bank Rural Development and the used this to offer loans to farmers at a lower percentage than market rate. The current project related to farmers and loans is resulting from a US AID Millenium Challenge grant. The Millennium Challenge development grant goes to the main bank overseeing the rural banks. They in turn make loans to the rural banks to provide loans to registered groups of farmers (small farmers who have an average of 5 acres). The Ag Extension officers identify the groups to give loans to. They are typically in areas where poverty is endemic. The grant also provides for development of business plans for those groups.

The Bonzali Bank also assesses the group. They give loans to existing customers who have savings accounts for at least six month. Another role of the extension officer is to train farmers to move from traditional subsistence farming to commercial farming. If they have a 100 percent repayment then they get the grant from the Millenium Challenge.This could eventually lower rates charged to farmers in the future.

What do they do with bad loans?. They usualy reschedule. Usually A 4 month extension. They work through the chiefs whenever they are organizing groups. The chief becomes the de facto "underwriter" in identifying the best risks.

Microinsurance Initiative
Bonzali is just now getting into microinsurance following some training by GTZ, a German Technical Organization , with ILO as partner (the organization that funded us for this trip) , introduced training for microinsurance for people who have loans with the banks. Paul has gone to Accra and went through training on microinsurance at Ghana Insurance College. His instructor was Michael McCord, President of Microinsurance Centre (in Wisconsin). Michael must have done a good job as Paul was very enthuiastic about the potential to do this. The two products they offered by rural bank, through State Insurance Company (SIC), was credit life insurance and invalidity (disability) insurance if person is hospitalized for more than one month.

They affirmed that people NEED to be educated about insurance. They also endorsed the idea of starting with Best Farmers, and then getting smaller farmers to buy in later. Thinks it would be a good idea to have a training facility up north. Consider University for Development Studies here in Tamale. Potential partner for student for student involvement.

Baobab Thrift and Susu
Called and then met with Managing Director Manisu Sulemona. He arranged an entire impromtu meeting with all of this team. He was really proud of what they had accomplished, and with good reason wanted to share. He introduced us to his team of nine workers (up from three a year ago) and head of Director of Microfinance Zakaria Abukasi Sadiq. Not only did they accommodate us with a meeting of all their employees, they opened up their books(quite literally) and showed us the progress the women have made over the year. They have photos of each of the women next to their accounts. They use thumb prints in lieu of signatures. They work with 85 Community Credit Associations. Each of these has 25 women.

This was without a doubt the most inspiring or all of visits. We actually got to see the women get their money. We lucked out and came on payment distribution day. This was not a bank. It was a credit and susu (small savings and loan) that was established by two individuals. They work almost exclusively with women. They provide three things.
1. Facility (mechanism) for microsavings and susu accounts
2. Facility for microcredit
3. Education to women on financial literacy and health education

(Note: A susu account is a very interesting concept. But is prevalent throughout Ghana. I have not seen it in other countries. The way it works is that a group all throw money together at periodic time. They then choose one person to get all the proceeds. They then rotate to the next person until everyone gets a chance to get the payoff. I am not sure how the rotation is chosen, maybe randomly, but it seems to provide an incentive to pool funds. The person, usually a woman, can then do what she wants with the proceeds. Maybe start a bank account or buy goods to start her own tabletop operation.

Baobab brings everything to the village. Women set up their susu and thrift accounts in the village near their homes. Baobab sends out people to make the collections and make the disbursements in the village/neighborhood.

They make small loans to women ranging from Ghc300 to Ghc600 to women ($225 to $400). They charge . One percent of the loan goes back to the group that they can use for any purpose. However, they will often use the fund to pay for a member that is struggling and in risk of default. The way it works is that five women form a solidarity group. They then merge with four other solidarity groups to from a Community Credit Assoc. Loans are made to the group and are the responsibility of the group, and individuals members can receive up to Ghc600 ($400) each. If a member defaults then the other four in the group must make up the difference. (So this affects who you pick and who you keep in your group).

Currently they do not see a need for credit life insurance to protect them against risk of default. They don’t have defaults, so they don’t see a need for the product.

An observation made is the unintentional consequences. In fact, they are quite skeptical of the value because it could create a moral hazard. Women would get the impression that if they don’t repay their loan, some insurance fund will take care of it. They are concerned about this creating a counterproductive mindset.

They are currently seeking a Ghc90,000 investment to expand their operation.

We went out to the village to see how the money was distributed. Got some great photos and video of interview with Mr. Sadiq of the operation. I posted to YOU TUBE my interview with him. http://www.youtube.com/watch?v=FOcIdw61j1Q

At the weekly meetings of the group they have education on health issues. For example how to prevent diarrhea so that they don’t have to spend their money on drugs resulting from drinking bad water.

According to the director of the microfinance, although this is a women’s group enterprise the men also benefit and are accepting of the concept because at the end of the day, it provides more food, certainly more nutritious food to their family. The money also pays for school fees and other items like that. The men appreciate this revenue, eventhough it does make the women more equal in terms in family decisions.

Mr. Sadiq expressed his gratitude for us stopping by. He said it was very meaningful to recieve the affirmation that they were on the right path. He quoted an African proverb to me to explain:
The one who makes the road can not tell if it is crooked or straight. But only someone watching from afar can tell. They certainly appear to be making a straight road.

In short, it was a great day.
Faithfully submitted,
Jim Jones
Director-Katie School of Insurance
Illinois State University

Day 7 Techiman, Forikrom, Sunyani

2009-06-02T01:22:00.000-07:00

Day 7- Understanding the Farmers
Today was another incredibly enlightening view. We met with small farmers who are the ones who are really suffering from some of the climate changes. We learned their concerns and what might work in terms of improving their risk management of crops. (And what they told us was something that foreign organizations working with farmers here really need to hear because some of them are doing great and others are actually counterproductive.) We also met with two NGO’s (one local and one from the U.K) who are working with the farmers at this level, and got their perspective too. Finally we met with a young Ghana college grad who is doing just some amazing work in small business development. His organization seems to have it right. We then drove to Tamale. Stopped at the Kimtaba Falls. See photo. As we got farther north we saw more thatched roof structures and mosques.

Meeting at Forikum.
Around 7:30 a.m. we met in a small village where Peace Corps volunteer Greg Yeich lives and works as a an environment worker helping farmers with their crops. We learned that they are dealing with some changes in the when the rainy seasons. I now understand that at this point the issue seems to be, less the change in the amount of rainfall, but the timing of the rain. This is vexing the farmers because if they plant too soon, on their traditional time tables, and the rains come late, their crops fail. (That is an incredibly important variable in designing a rainfall-indexed insurance product). The crops they grow in this area are maize (corn), cassava, yams, and some onions and tomatoes. Most of what these farmers (who own 2-10 acres) grow is eaten by them. Some surplus (when they have a surplus) goes to market. There is a push by government to try to get subsistence farmers to grow crops for sale as well. Greg showed us some recently introduced new alternative agricultural income that had proven to successful. Examples include bee-keeping (wildly successful), cashews, mushrooms, and dry season vegetable gardens, plus some livestock farming (cows, goats,chickens).The gardens where Greg had his crops was one of the few that was fenced in.(To keep the goats out). He used bamboo materials to construct it and you can see that in the photos. This enables him to farm close to his house. Many of the local farmers plant a ways out of town because if they plant close to town the goats eat their crops. The local farmers may actually not be able to afford the nails needed to construct the fences. We found out that the cost for farmers to get loans to buy their inputs (seeds, fertilizers, etc) has around a 30 percent interest rate. That is prime rate here for all loans.

The farmers are concerned about taking out loans from banks because if they have a loss and don’t pay they can be taken to court, and even end up in prison. Some of the banks have flexible time schedules that would allow a farmer to repay later if they have a loss. But according to the group we talk to, one bank, reported run by a well-known American non-profit organization was very inflexible. They took the farmers to court immediately and so the farmers had to leave the area or face criminal prosecution. (Also, another way that some lenders deal with delinquent loans is through local nanas (chiefs) rather than the court system. I was glad to hear that one American organization, Heifer International, was very well-respected and their efforts seem to do a lot for farmers. (They provide a cow, chicken, goat, bee, etc. with the stipulation that the farmer passes along the offspring to another farmer. This seems to work very well according to the group I spoke with.)

The Forikrom Farmers Group
The Forikrom village is about 5 families of 5000 people (Yes, there are about 1000 in each extended family). The Forkikrom Farmers Group I met with was a group of twenty farmers (men and women) and was formed in 1992 as an effort to replant trees near a river. (The local farmers had planted too close to the stream, and lost the shade provided by the trees. The stream dried up. So they mobilized and replanted trees, and the stream once again returned to its regular flow. Since they had formed together they decided that it was a good idea to continue as a group and looked for other activities to do. About this time a retired South African military officer, who everyone just calls Mr. Rankin, was on a church mission trip for his church. He taught the local people how they could grow different crops in the dry season, with different techniques. They just needed to grow them near the river (or do some rain water irrigation) and so he trained this group and they went out and trained others. This is still occurring to this day and his legacy lives on. The only challenge to this is that it is very capital intensive. It costs about $500 for an acre to grow onions, carrots, tomatoes, cabbages. That will pay off in more than $1000 in income, but coming up with the $500 is a real challenge for most farmers at this level.

One of the things that Greg has been working with the group on is alternative crops like cashews trees (which will produce in a couple of years), mushrooms, and bee keeping (which takes very little capital and is really taking off). The beekeeping ended up leading to a form of insurance. The way it works is that each of the twenty farmers will contribute one jar of honey to the group. They then sell this and but the money in a bank. They expect that the following year one or two of the farmers will have crop losses. When that occurs the group gives the money to these farmers who suffered the loss. That works really well. What is interesting is that because this new alternative income is kind of viewed as “surplus” they are willing to make that contribution. However, the other groups who have not yet adopted the new alternative crops seem less willing to voluntarily set aside part of their traditional crops, like maize, for “insurance” purposes. They see the need to hold on to this. They just don’t seem to view it the same way. However, some of the Nanas (chiefs) have this “insurance” system in place and require each member to contribute some maize to the village at harvest, to be saved in the event that there is a crop loss. This practice seems to vary by village, so I am meeting with some local Nanas to find out how common this “traditional” form of risk retention group is. It actually offers a great educational opportunity if it is not that common. And it might be a good time to introduce the concept as they introduce these new alternative incomes (which are still viewed as surplus) and more likely to be directed to a new form of group “insurance”.

The Nanas are really the ones to start with. They need to approve the idea and in talking with people they are the front line defacto "underwriters" as they will help direct rurual banks to the best farmers groups to give loans to, and quite possible the best groups to insure (as that becomes a possibility).

We then drove about an hour to meet with Nana Adams executive Director of local NGO and Greg’s supervisor and Julliette Lampo Director of Concern International. They both said that there is a huge need for some type of insurance to help farmers. They concurred with some of the suggestions made by the crop experts at our brainstorming session at KNUST about how to roll out such a product and who should be target market.

Understanding Small Business Development in Ghana

After that meeting we met with an amazingly impressive young man Kwaw Adams, (son of Nana Adams) who had just graduated from college and was working with helping small businesses develop. He walked us through an extensive process of how they chose business sectors to concentrate on in a particular location (i.e Poultry-egg production, ceramics, and hospitality) and how they went about selecting those sectors. Very well thought out. Then they advertise for businesses to help get started. They then go through an extensive process of screening, doing a SWOT analysis, doing business development plan, arranging capital with local banks (and they have a way of even choosing the banks to work with), and then providing educational training to make sure the entrepreneurs thrive. In their first pilot group of 2007 they chose 28 businesses. 25 are still operating, and because they do working capital analysis, he knows that those are doing well. This is supported by the foundation for an American company doing mining in Ghana, and they focus on communities where there are mines, but this model could work anywhere.I took about 10 pages of notes on that. I will tell you one major lesson for development. It all hinges on good record and bookkeeping with the small businesses. Without that foundation. It is not sustainable. Can't get bank loans, can't diagnose business problems etc. without good records. We asked if he saw a need for insurance. He said absolutely. First pension and health insurance. This is offered through the government. Cost is about $10 a year. The businesses need to develop a bit more, but that is something he plans to talk with them about and would like to meet insurers willing to work with his businesses. He started a second group of 28 this year.Interestingly, he noted that there was a credit default risk product that was started by some church called Economica Church Loan Fund. They require farmers to put up some additional money for default risk insurance. But if they pay their loan off on time, they get the money back. That seemed to work according to Kwaw. Will be interested in hearing if any other institutions do this.

Well,we pulled into Tamale at night. It was really HOT as everyone had warned. HOT Tamale. It is actually pronounced Tom-ah-Lay. Funny, when we pulled into the hotel their was a group of students (11 of them) from Michigan doing study abroad. Health Education. The lobby of the Mariam was full of Americans. Not what I expected to see when I pulled into a hotel in northern Ghana. Will try to post some photos later today.

Faithfully submitted,
Jim

Day 6 Trip from Accra to Techiman

2009-06-01T15:23:00.000-07:00

Day 6- Trip to Techiman
I am blogging from hotel in Tamale, because I didn't get into Techiman in time to go to Internet Cafe. It is a bit slow here at hotel so will have to go to town to post photos, probably.

Anyway, here is Day 6 Blog (My original post had Day 5. I am losing track of days now). Please check out the video of market scene I uploaded from Internet Cafe once I got to Tamale.

Today we drove (instead of flying) to Techiman (7 hours of driving) to meet with Peace Crops Volunteer, Greg Yeich, working with local farmers, NGO’s and Care Universal. The idea is to spend the night in Techiman, then get up early and meet with Greg and the others. It was a Sunday, so the traffic was very light in the morning. Almost everyone here, at least in the Ashanti region where we were travelling, goes to church on Sunday. We stopped at what they call a Rest Stop and had lunch. The picture included is from that stop. Our driver, is in the middle. He is the one wearing a tie. We are the slobs.

At the rest stop, I had a dish called Foo Foo, made from Cassava and mixed with plantains or yams depending on the region and then served with soup or gravy). Same as when I was in the Peace Corps in Gabon, except that here they put the Foo Foo right into the soup where in Gabon they served it on a separate plate and you dipped it or poured the gravy over it. The locals were amused that I was eating Foo Foo, and laughed again when I finished and told them Mdasi (Thank You).
From there we passed a few markets, (see photos). I also took a photo of the traffic to give you a sense for that. I am glad that I had a driver and he was driving a rental.
Next we visited the Palace of Asantehene, the King of the Ashanti’s. They are a very powerful tribe in Ghana. We went to the museum of the Ashanti King, which was the original palace built by the British, after they burned the old one down 30 years earlier (it’s a long colonial story) . Anyway, it was a great cultural experience. The Ashanti King has a lot of political power and is an advisor to President of Ghana. He still wields a lot of influence. To his credit he has used is notoriety to go around to his subordinates the local chiefs, and others, and seek contributions for an education fund to send need students to school.
After that it was on to Techiman. We got in late so I couldn’t get to the Internet Café in time. Just had dinner and got ready for a 7 a.m. meeting tomorrow.
Faithfully submitted,
Jim

Day 5- Cape Coast- Slave Castle Tour, Global Mamas Batik Making Tour

2009-05-31T01:17:00.000-07:00

Day 5- Saturday at Cape Coast

We took advantage of the little time we had at the hotel we stayed at, the Coconut Grove and walked around. I bought an interesting bracelet there it is very popular design. It is called GYE NYAME and it means Accept God (I am editing this post with the correct interpretation. It is "EXCEPT GOD" meaning all other things fail Except God, God is supreme and overcomes all situations) I heard it phonetically and got the interpretation a bit off the first time. ) I used the same design when we went out to do Batik making.

You can see it on the wooden design in the photo on the batik design tool too.

The people here are very religious. I am not sure the percentages but there are a Christian churches on every street corner it seems like. Just about every denomination. And a number of mosques do. Lots of Islamic people as well. They get along well and seem very tolerant of each others faiths. Here are photos from Coconut Grove, Making Batiks, and Cape Coast Slave Castle.

We met with the women who make Batiks for Global Mamas. This is the organization that does internships for students. Batik means to design with wax. They start off by putting a wax design on a cloth. Then you take the cloth and you mix in the dyes with two important chemicals. The one chemical opens up the cloth fibers and the other makes the dye adhere to the fiber. Without those the cloth dye would fade out. After that you dye the cloth and lay it out on the grass to let it soak into the fiber. Then you take out all the excess dye and then another process where the wax is removed. Then you cook the cloth. Let dry and then you have your batik. We actually tried doing the wax part. Well, let's just say we wouldn't make it as Batik makers.

Both the women in the photos provide their Batiks to Global Mamas in the Cape Coast for export to the U.S. and were extremely grateful, and loyal, to Global Mamas for the market. Georgina is actually a teacher at Wesley Girls School and teaches how to make different traditional clothes.

While the cloth was drying we went back into town to Cape Coast Castle. It is one of three castles in Ghana. It was designed by the British specifically for the purpose of slave trade. It was really emotional. The guy took us to the places where the slaves were kept and showed us how they were locked up and dispatched. Really unbelievable what people can do to each other.

After that we headed back, got our Batiks and headed back to Accra for the night.

Sunday we are headed for Techiman. Out contact there is Greg Yeich is our contact there. In one of numerous serendipitous events surrounding this whole grant and trip to Ghana, he was sitting at a table next to me in D.C. I overheard him say something about Ghana and interrupted him and explained my interest in the weather indexed insurance for farmers. Turns out he was on break from Peace Corps experience in Ghana and he works with farmers. So we are now meeting with the NGO's and farmers that he works with. Pretty cool.

From this point forward the blogging will become a bit more challenging. But I will try to keep up.

Bye,

Jim

Day 4- Trip to KNUST and Cape Coast

2009-05-30T16:30:00.000-07:00

Day 4-Road Trip to Kumasi and KNUST We had such a long day that I am running a day behind on blogging. We left Accra at 5 a.m. to go to Kumasi which is about 4 hours away. We made our meetings there and then drove to Cape Coast. We didn’t get into the hotel until about .8:30 p.m. (By the way, Cape Coast is where President Obama is coming in July.) It is the former capital of what was once called the Gold Coast during Colonial times. It was worth the drive though. Horace and I ate dinner and listened to the ocean waves crashing in. I woke up the next day and walked outside to this incredible view. Please see photos.
http://picasaweb.google.com/africanjones2go/AfricaPics#

At dinner we ran into a group of students from the University of Georgia who are in Ghana on a study abroad/internship experience. We talked with their coordinators and they had some great ideas for setting up something similar with ISU. They have been doing it in Ghana for 10 years and have had great experiences with students from all disciplines. Okay, well here goes my official blog:

We had a driver take us from Accra, the capititol, to Kumasi where we planned to meet agriculture faculty at the Kwame Ncrumbah University of Science and Technology (KNUST) in Kumasi. http://www.knust.edu.gh/

Kumasi is located in the Ashanti region near the middle of the interior of Ghana. KNUST has an agriculture department there with about 35 faculty members including some who are researching climate change and its effect on crops in Ghana. We thought that they would be excellent research partners on any project related to weather-indexed insurance for crops. We met with the crop science experts, as well as the department chair and five other faculty members. We ended up in about a 90 minute brain-storming session that really churned out some great ideas about variables we should consider in collecting data, what organizations would be interested in purchasing this kind of product, and how to develop it over time. We all ended very excited about the prospects of working together. One low-hanging fruit is just sharing data. They have crop data from the 1960 to 1990 but had not been able to get funding to purchase the electronic data since that time. We purchased and collected the data for the past 12 years. So this in and of itself would be a great reason to partner with them. And I was really impressed with their insight and their questions. They have some great ideas for data analysis too. We are going to have some missing data but I have confidence our actuarial colleagues back at ISU can help deal with that. (Right Krzys? :-).Dr. Quansah did I nice job of facilitating the meeting. We will be working with him and his chair, to get an MOA between the two universities. Aslihan, they are particularly interesting in working with you and potentially other in our Ag. department. They currently have an MOA with Rutgers studying traditional medicines and the way they are grown.

After our meeting we went to the Kumasi market. See photo of mask maker I bought something from. The market is the largest in West Africa with over 10,000 vendors. Unfortunately, there was a fire there the day before. Remarkably this is a rare occurrence and fortunately it didn’t spread that far before it was put out. Maybe there is a need for microinsurance there? I was surprised to find a microinsurer at the Cape Coast when we got there. Need to find out more about that. Most of the day was travel time. So just read and mainly slept and watched the countryside. A long day.Bye,Jim

Day Three Accra

2009-05-30T00:10:00.000-07:00

Day 3 Accra

Today was really encouraging, even inspiring. We met with people who are doing some tremendous work here in Ghana, and really making a difference in the lives of people here. They all seemed genuinely concerned for helping lift others out of poverty. In general, that seems to be a theme throughout Ghana and perhaps why it is more successful than other countries, they really seem to believe that each person is his brother’s keeper.

Global Mamas
Our first visit was with Executive Director of Women in Progress and Co-Founder of Global Mamas. http://www.globalmamas.org/Global Mamas is a Fair Trade organization established by two former Peace Corps volunteers here in Ghana. They mainly export to the U.S. One of them works here and the other in Minneapolis. They work with hundreds of women locally who make some really beautiful handcraft items. Hope to show you that as I will be travelling to Cape Coast to see them doing Batiks when we visit the slave castles Saturday. They export these goods to 400 organizations in the states . They also have retail location in Accra and Cape Coast but they work with women from all over Ghana. There is model is based on them (personally) providing all the capital upfront for the women. (No success getting grants from the U.S despite years of growing success. They see a need for their women to get financial education especially about savings and insurance, because these women now provide for their families, and extended families, who are highly dependent on their income, they have virtually no life insurance. They would be excellent candidates for microinsurance. They have been doing internships/volunteer experiences for several years. They have a complete framework in place where they employ student interns and volunteers and match them with business opportunities. Two students from Indiana University are working on marketing, and website design for some of the women who supply global mamas with goods. They are working on marketing Fair Trade as the intern/volunteer. They see the potential for a program on financial literacy and insurance being added to their existing lessons they conduct on bookkeeping for the women.

Insurance Commissioner's Office
Next we went to the National Insurance Commissioner’s OfficeWe met with THE actuary for National Insurance Commissioner. (He was formerly an electrical engineer but passed all his actuarial exams self-study here in Ghana in four years. Very impressive person, and there are many like him. Currently all the company actuaries are external. They want to set up an exchange program with us. One student actually is a math major and MBA teaching currently who wants to come to ISU. --Hey, Krzys we need to get SOA or CAS to donate textbooks to for the to study. Currently they have to share them all over. And they have nice facilities where they could run review sessions.)

We learned that there were about 40 insurance companies. Microinsurance has been approved for about four years now. They review the rates and forms and even marketing materials. The fastest growing market is funeral expenses coverage because the cost to host a funeral can cost thousands of dollars. They is very popular but the penetration of life insurance is only 2 to 6 percent (depending on who you ask). Motor insurance is required in Ghana.
Met with researcher there who thought the weather indexed idea was good start. They would like to see it expand to other perils like loss from pests . (They would like a formal MOA to continue discussions and would like us to meet with the insurance commissioner. )

Insurance Company Visits
Next we met with Star Life Insurance Company COO. They have done microinsurance for market vendors for about one year. They have a very interesting sales system. It is sold literally marketplace to street vendors by agents. They advertise by having trucks drive by using megaphones to market vendors. They walk through t he market and collect at the various stalls.

The interesting innovation is that they have partner with a bank to do a mobile bank. These are like portableATM’s where the market women deposit their earnings in mobile bank, and pay their insurance premium at same time. Sells to greater Accra Agents who were collecting the premium are all recent college grads. (One key is to have collection that is somewhat flexible like allowing the women to make payments at different times as long as they make the entire payment within a given time period whether it is collected weekly, even daily). (What might the future hold? Other potential agents besides street market agents, are training people like taxi drivers, dressmakers, and fishermen. People who have a lot of interaction with others.) Again the issue that there is little understanding in population about the value of insurance, especially life insurance was made. One thought is to have the industry join forces through a joint marketing effort. There is already a Ghana Insurance Association and a Life Ins. Association that could be the vehicle for this. Perhaps radio dramas? At any rate he sees consumer education as critical.

Next we met with CEO of GLICO. Glico is top life insurance provider and has been working with Care International on microinsurance for about 5 years. He stopped all meetings and brought in his entire team to meet with us. They are listened to us and expressed some interest in the weather-indexed insurance product idea. We later talked with Cynthia who handled the microinsurance program. One of the people we met had been an Assoc. prof. of economics at Virginia Tech. He moved here 10 years ago, and suggested that we should contact IBIS in Tamale a Dutch NGO. GLICO requested we send them a formal letter outlining how we might work together.

We then met with State Insurance Company Life, the oldest and largest company, and spoke with their Head of Life Marketing. He gave us a lot of information about microinsurance in Ghana. They have offered life insurance to “informal” r underserved, market for about 4 years. They actually send agents into the market and collect DAILY to the plan. The most preferred life product is one that has an investment component to it, because after a period of time the insured can then take use that to take out a small loan against the policy to grow business.
After awhile the insured will then be interested in larger loans. But to take out larger loans SIC partnered with banks. (The challenge is that the traditional banks don’t really want to mess with hassle of smaller accounts.) They collect money in groups of ten. SIC insures the entire group. Premium is collected from group but the claim payment is made to individual member. They work with ACCION, Opportunity International for distribution in order to defray distribution costs. Advertisement is trucks with speakers and next they plan radio ads. He also confirmed that there is very low market penetration and sees the need for industry-wide consumer education. Says Radio ads must be in local languages. Sees potential in a weather-indexed product. Would like to meet again on June 9th.

APEX Bank

Finally we met with Apex , the banking entity that is over all rural banks, and spoke with the Head of Research . They have 600 rural banks. They are also working with concept of microloans to portfolio and using group lending model. They provide education to the rural banks.
They were KEENLY interested in the weather insurance product. They are very excited by this and see this product is potentially very valuable. Protecting against default from the farmers that they make the loans to is something they want to be able to do. In fact they were so interested in the concept, that he had flown to India on World Bank grant and met with people from Malawi to explore crop insurance models. They would like an index for north for too little rain and in the south and north for too much rain. They want to meet with us again before we leave. They see a need for risk mitigation techniques like irrigation more than just insurance. They said Ghana should be doing more grain crops. Said we need to contact SPEED Ghana. SPEED has given loans for rural bank in Tamale. http://www.speedghana.org/index.php?opt=subcontent&Menid=4&Itemid=7
We travel to Kumasi tomorrow to meet at the University of Science and Technology with their department of agriculture. Should have some good photos as we will be travelling by car.Bye,Jim

Off to Kumasi at 5 a.m. then to Cape Coast by night

Accra Day 2

2009-05-27T21:36:00.000-07:00

Photos at http://picasaweb.google.com/africanjones2go/AfricaPics#

We began today with a trip out to the University of Ghana to meet the professor we have been working with in collecting rainfall and crop data. Photos of the University of Ghana and us our meeting on a patio at a campus restaurant (under an umbrella). The campus is huge!! They actually have taxis that just take people around campus.

As we talked, I realized how fortunate we had been in choosing to work with her. I located her through an actuarial grad student from Ghana. She had been her math professor in her undergraduate studies. (Thanks Genevieve!!).

As she went through the data with us, she told us the story of how it was collected, where the data came from, and how reliable each data set was. (Turns out that there are different types of rainfall collection stations (synoptic, climate, agro-meteorological, and simple rainfall stations and data integrity depends on which one it comes from. ) She has written a book on data collection and was explaining how things have changed in that so much more of the information is available in electronic data form now rather than just recorded in books. This was certainly a currently at this transitional stage is a story unto itself. At this point we arguably have the most comprehensive and data set available in Ghana.

I think it is promising that given the electronic data now available, and how the data could become easily accessible in the future with a few enhancements in the system (such as adding new, faster computers at certain collection points and formalizing the data collection protocol) a market could develop as investors could rely on the ability of the system to provide quick feedback on the data in order to determine the appropriate level of indemnification. In addition to a private contract, Ghana has a developing stock market that might also be able to provide some capital. Will look into that later.

For the rest of the day, a business developer in Ghana, who happens to be the father of yet another actuarial student at ISU that works with me (yes the odds of that are quite fantastic), took us around in his air-conditioned car. (Thanks for setting this up Mukthar!!!). Our first stop was with an executive at Bank of Ghana who talked to us about rural banks. The bank of Ghana provides loans to these banks that in turn make loans to the various communities throughout Ghana. A typical rural bank might be comprised of about 2500 loans. This would be broken down into around 100 groups, with about 25 members in each group. The group usually has some common interest such as farming, or handcrafts, or small stores. The average amount of a loan is 200 CETIs ($150). Most of the people receiving loans are women. Each of the 25 members selects their executive, secretary, and treasurer. The group meets once a week to collect their payments (principal and interest) and they usually handle the situations where some person falls behind. The Ghana bank then collects the loans payments from each of the groups weekly. Although the default rate on loans is very low, the bank is interested in the concept of having some kind of an indexed-based product to provide protection to rural banks, especially in the north where the rainfall is a bit more variable. They set up a meeting with us for tomorrow to meet with the APEX organization that has loans from many banks like Bank of Ghana loans, including some from the government itself. The postcard view of downtown Accra with the impressive, ship-shaped building and the ocean in the background was taken from the bank. The building in the picture is their performing arts theater. I left one of our nice ceramic coasters with the rendering of the ISU College of Business building on it. It was a perfect gift as it could be used as a paperweight too. They still have fans and open windows there, so they have lots of paperweights.

Our next stop was at the Social Security National Insurance Trust (SSNIT) where we met with an actuary who had gone to school at Ball State. is like the SSA in the U.S. He explained that 18 percent of the income of workers is set aside for retirement benefits, disability (which they call invalidity) benefits, and survivor benefits. What was most interesting is that they have recently set up an “Informal Pension System” that permits small, self employed people to contribute to the system and receive benefits. The way it works is that some employees of SSNIT go around and educate the people in the local markets about the program. The government places such an importance on these people enrolling them in the system that it pays a commission for enrolling people in the Informal Pension System. It struck me that this distribution system (which currently only exists in major cities) could be used for private life insurance too. The problem in the past was how do you distribute micro insurance? The administrative costs are too high. I will be talking to companies about this option later in the week. I met the mom Genevieve’s mom who works at SSNIT. (Your Mom says “Hi” Genevieve :-)). SSNIT is an organization that would be a good place for ISU actuarial students to work and do a study abroad/internship. It would be a great experience and valuable for everyone.

We met briefly with SIC, the largest and oldest insurance company. The CEO had to go to
another meeting so we had to reschedule that for the next day. I was impressed by how much it looked like a regional mutual company you might see in the U.S. It had nice friendly people, dressed in business suits (they actually dress much more formally than we do in the U.S. especially in air-conditioned buildings like this). I guess that is the British influence. They had their mission statements, vision statements, and photos of “Best Worker” on the wall. I could definitely see our students doing summer internships in a place like that. Will meet with them again tomorrow.
The talk among local people is the impending arrival of President Obama. He will be here June 10th. The World Cup Finals. The really big news was the Champions League Finals between Manchester United and Barcelona. Lots of people in the restaurant tonight watching the game.
Bye for now.
Jim

Day 1 Overview

2009-05-26T15:10:00.000-07:00

May 26
Accra, Ghana
Just before bed time.

We had our first day in Accra. We went to Accra mall. (Similar to mall in Bloomington except with palm trees). We bought a phone ($20). Went to Osu market and bought some "formal" African clothes for meetings ($18). We went to Internet Cafe for some quick blogging. Then strolled around the Kwami Nkrumah Circle market (a mile of open air vendors ). Then took taxi back to hotel to meet with our contact who is arranging for us to meet with insurance companies tomorrow.
All of this is cataloged in photos at:
http://picasaweb.google.com/africanjones2go/AfricaPics#
Enjoy!

Some observations along the way:

People here are really helpful. Everyone was so willing to go out of their way to show us around, introduce us to people, and make sure we had a good experience.
The taxi cab driver complimented us on our negotiating with him from his original offer to take us to town for 7 Cedis to 5 Cedis. He took us all around and was very helpful.
Everything is fairly inexpensive.
Many taxi drivers are from war torn countries (Ghana is very welcoming of foreigners and they can find employment easily as taxi drivers) but they don't know where anything is. (Bring a cell phone and a map).
We heard American country and western music in the restaurants (the music world is definitely flat).
They recycle everything (and even make goods from discarded materials) I hope you wont mind the potato chip bag coin purse as a present, and they are very energy conscious (with shutoff switches on every outlet).

Tomorrow is our first real day. Will have some substance to report back later.
Bye from Ghana.
Jim

Arrived In Ghana

2009-05-26T02:58:00.000-07:00

Day 1-May 26
Dateline Accra, Ghana
We arrived in Accra last night around 8:30 p.m. local time. We are five hours ahead of folks at ISU. The plane from London was packed. I was surprised at how many people were actually wearing business suits and sports jackets, especially since we were heading to place where it was 90 degrees (at night).Most of passengers were African but there were a few Americans going there working on projects in Ghana. I sat next to a twenty-something guy who works for Open Society Institute that promotes transparency in government (Ghana is a leader in this),and behind me was an engineering student who had developed a way to make bikes from bamboo that have the tensile strength of carbon steel. He is trying to find an investor to actually build the bikes here and ship to U.S.Only a senior in college.
Horace and I arrived without difficulty at hotel. Nice place. Inexpensive by American standards. I am blogging from restaurant connected to hotel. It is all wireless. Answered my emails earlier this morning.Very easy. Will be heading to town to exchange money, buy a wireless phone, and then make a couple of contacts. Tomorrow will be first full day of meetings.Bye for now.
Jim

Welcome to Ghana Trip 2009 blog

2009-05-22T06:51:00.000-07:00

Welcome to my Ghana trip blog. I hope to continually update this blog as I travel through Ghana beginning May 25th through June 11th. The background on this trip, our grant, and our rationale are included in the section on the side entitled, About The Trip and Katie School Project.

We have two overarching goals for this trip.
1) Help collect data and information that will support our initial grant-funded project related to developing an indexed-based insurance project that could be used to manage risk for farmers for crop losses. I have a number of people supporting us on that including Dr. Aslihan Spaulding, an assoc. professor of Agribusiness at Illinois State University, three ISU actuarial students (two are even from Ghana), the ISU actuarial program director Dr. Krzysztof Ostaszewski, FSA, CFA, CERA, MAAA . and Dr. Danso-Manu, Chair of Math Department, at University of Ghana in Accra and Dr. Charles Quanseh, professor of agriculture and crop science at KNUST the University of Science and Technology in Kumasi. The following abstract summarizes this part of our project and the rationale behind it:

Extreme weather events impede development of agricultural production and place developing countries at risk. As the backbone of many African countries, agriculture represents 37 percent of Ghana’s GDP and 56 percent of the labor force. Climate change leading to adverse weather events such as drought and flooding now place these developing economies in even greater peril.

Currently very few pre-event risk mitigation solutions exist. Traditional individual indemnification insurance mechanisms are challenged by high transaction costs, adverse selection, poor distribution, and other challenges which have increased the costs and reduced the availability of protection. Furthermore, post-event response in the form of emergency aid, debt forgiveness, and grants are at risk following recent economic crises. Such public capital does not usually help create independent private solutions and can be inequitable and untimely.

However, one possible solution is weather-indexed insurance, a financial product based on local weather indices (like rainfall) that are correlated with local economic loss, morbidity, and mortality. This type of financial product yields payouts based on pre-determined indices which historically is correlated with economic loss and humanitarian need. This type of protection would provide greater economic stability for agricultural production and the economies of countries relying on this.

This project will collect and analyze weather event, crop loss, and other health and economic data in Ghana to develop a weather-indexed financial product that would mitigate agricultural losses.

Ghana’s stable government, yet vulnerable agricultural economy make it a good country for a weather-indexed insurance product. By reducing covariant risk the development of this insurance product would promote private capital to help not only farmers in Ghana, but farmers in more drought prone regions as well.

2) The second goal is to seek out information about future projects that could involve both ISU students and faculty related to microfinance and microinsurance. To that end, understand the risk management needs for the people and small businesses of Ghana is critical. We also need to develop partnerships that could be helpful in future projects. To assist me with this second goal, I will be travelling with Horace Melton, an assistant professor of marketing who has worked on projects involving ISU students working in emerging markets.

Our end goal is to have students doing internships/summer study abroad in Ghana working on sustainability issues like microfinance and miroinsurance. We believe that the educational experience from working in a developing country with emerging markets would be life-altering and invaluable.

We believe that in order for microinsurance to be sustainable it must be self-supporting and not reliant on the gifts of donors or foreign aid. Our hypothesis is that microinsurance is a viable, self-sustaining product for insurers and reinsurers for the following reasons (which we will attempt to corroborate with research in-country):
1. The potential market is enormous and insurers in Africa, especially Uganda, already have had some success on various microinsurance products including life and health insurance.
2. Early entrance into a country’s microinsurance market allows a company to build a brand image and establish a reputation among customers and prospects for reliable service and prompt payment. Microinsurance customers over time will move upscale to consume the brand’s higher value insurance products.
3. The microinsurance market may provide an immediate gateway to offer products to higher income markets, such as city dwelling wage earners who support relatives who are subsistence family farmers, and who cover their relatives’ losses from insurable events such as death of a family member or loss of crops.
4. An insurer may gain more regulatory leeway to enter a country’s market if also providing coverage at affordable rates for the country’s lower income market. The regulatory agencies may allow the firm to offer a broader portfolio for diverse markets if the insurer also includes coverage for the low income market. In fact, this involvement in rural microinsurance may even be a regulatory requirement for insurers.
5. The opportunity exists to form strategic partnerships to make microproducts more viable. Microinsurers and microlenders could use the distribution system and underwriting data of the microlender to insure assets purchased with the use of microcredit.
6. The potential for product innovation which could be applied elsewhere is immense.
7. Insurers benefit from positive publicity in their home market because of their efforts to combat poverty through sustained risk management commerce in developing countries.

We certainly wish to respect the traditional culture of Ghana and we will be meeting with tribal chiefs as well as government officials and business people to help make sure that we have an appropriate respect for their traditions and incorporate those into our project ideas. There are plenty of things that we can learn from African society that would benefit us in the Western World.

I hope you will follow this blog as I travel through Ghana meeting with people along the way.
-Jim Jones
Director-Katie School of Insurance
Katiepedia.com
africanjones2go@gmail.com