Thirty-six year-old Habyarabatuma Phocas lives with his wife and four children in Kamonyi District, Southern Rwanda. A smallholder farmer by trade, he grows maize on a 2.5-acre plot. Habyarabatuma understands the growing threat of extreme weather all too well, having lost his crop to drought several times in the past. Whenever that happened, it left him without money for inputs like seeds and fertilizer, and forced him to cut back the amount of land he could plant in the subsequent growing season, shrinking his income further still. Selling off the family’s few goats for cash to reinvest in the farm was sometimes the only option. It was a precarious livelihood.
In 2014, when ACRE Africa introduced weather index micro insurance to his area, Habyarabatuma was skeptical. Nonetheless, he decided to give it a try. The timing could not have been better. That year, a drought in the first planting season triggered a payout, which allowed Habyarabatuma to invest in seeds and fertilizer to boost his maize production in the next season.
“Since I started taking insurance, I now have peace of mind and feel more confident when investing in my farm,” he says.
Insurance has brought another benefit for Habyarabatuma; it has given him access to a bank loan for the first time. Banks typically find it too risky to lend to groups like smallholder farmers and pastoralists because most of them lack collateral. Because Habyarabatuma now has insurance, which acts as a form of collateral, he can access small bank loans. When his maize crop is harvested and sold, he can comfortably repay the loan and reinvest for the next season, with more income leftover for his family than ever before. In this way, micro insurance to protect farmers from the effects of severe climate change can help create a productive cycle of self-reliance and economic security.