Doreo Partners, Swiss Re Corporate Solutions, and Hollard Insurance Group Develop Nigeria’s 1st Weather Derivative

PRESS RELEASE: Doreo Partners, Swiss Re Corporate Solutions, and Hollard Insurance Group Develop Nigeria’s 1st Weather Derivative to protect Small Holder Farmers from the risks of climate change, providing 12,700 rural inhabitants a path out of poverty.

09/09/14. Lagos, Nigeria – Doreo Partners, Swiss Re Corporate Solutions and Hollard Insurance Group have partnered to develop and launch Nigeria’s first weather derivative. This insurance-based form of risk transfer is the first of its kind to cover small holder farmers in Nigeria, and protects small holder farmer-members of Babban Gona agricultural franchise from the risks associated with adverse weather patterns.

Weather risk protection has become critical for small holder farmers in Sub-Saharan Africa, especially in light of the dramatic increase in the occurrence of adverse weather events due to climate change. The weather derivative enables small holder farmers to overcome a critical barrier to the adoption of new yield-increasing technologies, such as improved seeds and fertilizer. Without weather risk protection, a small holder farmer could be pushed further into poverty when adverse weather events impact their investment in new yield-enhancing technologies.

“This is a monumental step for small holder farming in Nigeria. For the first time, a small holder farmer can invest with confidence in their farm, knowing that in the event of increasing risk of drought due to climate change, they are protected by some of the world’s leading insurance companies.” Kola Masha, Managing Director, Doreo Partners.

Although they are modern financial instruments, derivatives are increasingly structured as weather insurance tools to protect small holder farmers, due to their high levels of efficiency and relative low cost. The weather derivative pays if a proxy for rainfall measured by a satellite hits a certain predefined threshold, thereby indicating a dry spell.

The adoption of risk mitigation mechanisms such as the weather derivative has provided thousands of Babban Gona farmers the confidence to adopt agricultural best practice methods. This increased investment has raised their yields to up to 5 times the national average, more than doubling their incomes, and providing approximately 12,700 rural inhabitants a path out of poverty.

“I am very pleased that we are able to offer income protection for farmers in Northern Nigeria. This is a region with high unemployment, and so this work is an important contribution to growth opportunities and stability” Christina Ulardic, Head Market Development Africa, Swiss Re Corporate Solutions.

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DP

Doreo Partners is an impact investment firm with a proven track record of exclusively investing in profitable, high growth, early stage businesses that improve the livelihoods of Nigerian smallholder farmers. Doreo’s investment strategy is driven by the team’s passion to provide a private-sector driven solution to Nigeria’s leading social challenge: spiralling youth unemployment. For more information about Doreo Partners, please visit www.doreopartners.com or contact Chinwe Osuji atchinwe.osuji@doreopartners.com.

BG Logo

Babban Gona, an agricultural franchise developed by Doreo Partners, inspires and enables hardworking small holder farmers reach their full potential. This is accomplished by providing a sustainable, private sector channel for cost effective delivery of enhanced agricultural technologies, credit and services that optimize yields and labour productivity, while simultaneously improving market access. For more information about Babban Gona, please visit www.babbangona.com or contact Chinwe Osuji at chinwe.osuji@doreopartners.com.

Swiss Re

Swiss Re Corporate Solutions offers innovative, high-quality insurance capacity to mid-sized and large multinational corporations across the globe. Our offerings range from standard risk transfer covers and multi-line programmes, to highly customised solutions tailored to the needs of our clients. Swiss Re Corporate Solutions serves customers from over 40 offices worldwide and is backed by the financial strength of the Swiss Re Group. For more information about Swiss Re Corporate Solutions, please visit www.swissre.com/corporatesolutions or follow us on Twitter @SwissRe_CS.

HUG

The Hollard Insurance Group is South Africa’s largest privately-owned insurance group, established in 1980. Its core philosophy is about doing things differently in order to make a positive change in the lives of its customers, partners, suppliers and the broader community. In September 2013, it launched HUGinsure, its partnership with D. Capital Partners Ltd, a member of the Dalberg Group, that brings the risk management capabilities of the insurance industry to the social impact sector by measuring and managing risks associated with the funding of social impact organisations. For more, please visit www.HUGinsure.comwww.hollard.co.za or www.dalberg.com.

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