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Horn of Africa Risk Transfer for Adaptation (HARITA) quarterly report: October 2011–December 2011
Rural resilience series
For the 1.3 billion people living on less than a dollar a day who depend on agriculture for their livelihoods, vulnerability to weather-related shocks is a constant threat to security and well-being. As climate change drives an increase in the frequency and intensity of natural hazards, the challenges faced by food-insecure communities struggling to improve their lives and livelihoods will also increase. The question of how to build rural resilience for climate change adaptation is critical for addressing global poverty.
In response to these challenges, Oxfam America, Swiss Re, and their partners developed an integrated risk management framework to enable poor farmers in the drought-prone northern state of Tigray in Ethiopia to strengthen their food and income security through a combination of improved resource management (risk reduction), insurance (risk transfer), and microcredit (prudent risk taking): the Horn of Africa Risk Transfer for Adaptation (HARITA) project.
HARITA brought together a network of partners including Ethiopian farmers, the Relief Society of Tigray (REST), Nyala Insurance Share Company, Africa Insurance Company, Dedebit Credit and Savings Institution (DECSI), Mekelle University, the government of Ethiopia, the International Research Institute for Climate and Society (IRI), Swiss Re, and Oxfam America. The project is funded by the Rockefeller Foundation and Swiss Re.
Existing approaches to providing drought insurance to the poorest have not been effective owing to high administrative costs and the inability of cash-poor smallholders to afford premiums. In the HARITA team’s conversations with farmers, the farmers themselves suggested a solution; they could pay for insurance with their labor. Oxfam America worked with the Relief Society of Tigray and the government of Ethiopia to build an “insurance-for-work” program on top of the government’s “foodand cash-for-work” Productive Safety Net Programme (PSNP), a well-established program that serves 8 million chronically food-insecure households in Ethiopia.
The resulting innovation allows cash-poor farmers the option to work for their insurance cover by engaging in community-identified projects to reduce risk and build climate resilience, such as improved irrigation or soil management. In the event of a seasonal drought, insurance payouts are triggered automatically when rainfall drops below a predetermined threshold, enabling farmers to afford the seeds and inputs necessary to plant in the following season and protecting them from having to sell off productive assets to survive. In partnership with local microfinance institutions, the model facilitates the farmers’ option to collateralize credit with insurance.