July 11, 2024
One Acre Fund and Global Parametrics partner to provide financial relief for smallholder farmers in Zambia and Malawi
  • Risk transfer capacity mobilised by Global Parametrics, a company of the CelsiusPro Group

  • Payouts distributed by One Acre Fund, benefitting 77,600 smallholder farmers affected by drought

Lusaka, Zambia, 11 July 2024 – One Acre Fund, an agricultural service provider offering financing and training to smallholder farmers to grow more food and generate a permanent gain in farm income, has partnered with Global Parametrics, a CelsiusPro Group company, to provide financial protection for smallholder farmers in Zambia and Malawi against the financial strain of losing their crop due to drought. 

Together, One Acre Fund and Global Parametrics developed a water-balance index to calculate payouts, benefitting from data collected and verified by One Acre Fund from individual farmers. The index measures the balance between rainfall and evapotranspiration over a specific period, yielding a measure of availability of water for crops. The index relies on weather data from independent third parties.

This season, payouts for droughts caused by the El Niño phenomenon have already been issued, benefiting approximately 77,600 smallholder farmers in Zambia and Malawi with payments exceeding MWK 1.41 billion (around USD 812,600).

Risk capacity for One Acre Fund’s smallholder loan portfolio is provided by the Natural Disaster Fund (NDF), managed by Global Parametrics. The NDF, a public-private partnership funded by UK and German governmental entities, is mandated to provide risk capacity for parametric solutions that enhance climate and natural catastrophe resilience for poor and vulnerable communities. The NDF shares risks with Hannover Re. 

Climate change is severely impacting smallholder agriculture in Zambia and Malawi, reducing farm productivity due to unpredictable rainfall and drought. One Acre Fund Zambia has been proactive in helping farmers build resilience by communicating the effects of El Niño and promoting drought-adapted practices, such as using early maturity seeds and growing non-maize crops.

“Putting farmers first is embedded in everything we do at One Acre Fund. With El Niño looming, we worked to find ways to cushion farmers from the devastating effects of drought on their crops, which is their main source of livelihood,” said Luke Viljoen, One Acre Fund Zambia’s Country Director. 

“Thanks to the index-based solution, farmers do not need to present proof of loss or undergo lengthy damage assessments. If the water balance index falls below a specified threshold, payouts are triggered,” said Mark Rueegg, CEO of CelsiusPro Group.

“Smallholders manage the majority of Zambia’s arable land, so supporting them and building their resilience is paramount. With our growing base of farmers, more can access innovative solutions that protect them from drought and floods,” added Viljoen. “Providing them with much-needed financial relief will help accelerate sustainable agriculture transformation and improve agricultural resilience for the nation.” 

About CelsiusPro Group

CelsiusPro Group is dedicated to helping both private and public organisations understand and mitigate the financial impact of climate and NatCat risks. Our Insurtech platform integrates climate data and risk modelling to develop advanced solutions that enable insurance companies and brokers to distribute and manage tailored parametric insurance. Through our consulting services, we provide end-to-end insights on physical climate risk assessment, disaster risk finance, and structuring and risk modelling for insurance schemes. Our subsidiary, Global Parametrics, seeks to mobilise and deploy risk transfer capacity through various financial instruments and vehicles. With these integrated efforts, CelsiusPro Group advances parametric risk transfer from the fringes to centre stage in climate and NatCat protection.  

About One Acre Fund

One Acre Fund is a social enterprise that supports around 5 million farmers across 9 countries in Sub-Saharan Africa with agricultural services including high-quality inputs, extension, training, insurance, and more. By providing these tools and training, One Acre Fund helps smallholder farmers reduce poverty, increase climate adaptation, and improve their harvests, enabling them to grow their way to prosperity.