Crop Insurance Enables Access to Credit for High Quality Seeds and Fertilizers

Edward Yohane is a member of the National Smallholder Farmers Association of Malawi, a group action committee that sells products together in the group. Through NASFAM, he gained access to the weather-indexed crop insurance product developed by the Micro Insurance Agency. As a result, the Opportunity International Bank of Malawi provided him with a micro loan to purchase high quality seeds and fertilizers. Previously, lending institutions were unwilling to offer credit to smallholder farmers because of the high risk of crop failure and loan default. The weather-indexed crop insurance product pays out if there is a drought or too much rainfall, thereby mitigating the risk faced by the farmer and financial institution seeking to lend to this sector.

Since receiving crop insurance and subsequent loan disbursement, Edward Yohane’s business has grown by more than 50%. He is now able to harvest 45 bags of groundnuts per season rather than the previous 20 bags. He plans to increase his groundnut field from 1 to 3 acres and to plant 3 additional acres of maize. Edward now has two permanent employees and employs 10-15 day-labourers during peak season.

Protecting Family Assets after a Tragic Loss

Enrico Leonoras, a native of Zarraga, Iloilo in the Philippines, worked as a construction worker but dreamt of starting his own business. In June 2005, he received a loan from microfinance institution TSKI to do just that. As a member of the group loan program, his family was covered by micro insurance. Enrico paid the equivalent of $5.00 as a premium for the benefit.

After a couple of weeks of joining the program his wife fell sick with pneumonia and suddenly died leaving him the sole guardian of their only child, Ellias, who is ten months old and still in need of maternal care. With the insurance payout of $890.00, Enrico was able to provide a noble burial for his wife and has paid off their debts to his neighbours. The remaining amount ($270 equivalent) he deposited in the Rural Bank of Dumangas in preparation for his son’s schooling. While the micro insurance benefit does not alleviate Enrico’s tragedy, he is grateful that it has lessened his family’s financial burdens.

Saturnina’s Story: An Enduring Legacy

Saturnina Santocildes was 57 years old when she died from a tetanus infection. A widow for almost 20 years, Saturnina had ventured into a variety of businesses trying to earn enough income to meet the needs of her family of six. By taking a loan from TSKI, Saturnina had access to life insurance arranged by the Micro Insurance Agency.

The micro insurance benefit that the family received upon Saturnina’s death amounted to $1,800. It enabled the family to pay for the burial and avoid financial degradation as a result of the loss. The remaining money was divided equally among her five children, one of whom used the money to finance her own business. Another child was able to purchase a cow that he uses to harvest a rice field. The micro insurance benefit has allowed Saturnina’s family to remain together, her children remained in school and her legacy of entrepreneurship and hard work continued.