Post by Kymberly Reid

Zua is an innovative non-profit designed to catalyze economic growth in Zambia’s most rural regions. I interviewed the two founders of the organization, Brenden McKinney and Meagan Prins, who shared the vision and inspiration that led to its development.

Let’s begin by having you both tell us a bit about yourselves.  

B: Sure! I am originally from Los Angeles, and studied at Colgate and McGill University before graduating this past year. Throughout my time in undergrad, I studied economics and finance with a focus on economic development and emerging derivative markets. It was during my 3rd year though, coming off of a summer internship working in investment banking, when I really started to think about the bigger implications of finance and its potential to fuel progress in some of the poorest countries around the globe.

M: Like Brenden, I found my niche at the intersection of finance and development. I grew up in a household where both parents worked for nonprofits and I had always been inspired by what they did. When I went to McGill, I also fell in love with finance. For a while, I struggled to find a way to marry these two passions, but the connection finally became apparent after diving deeper into microfinance and its applications within development.

How did the idea of Zua come about? What was your primary inspiration behind the project? 

M: An initial spark behind Zua came from the time I spent in the sub-Saharan several years ago. My mom works for a non-profit called Working for Orphans and Widows (WOW), which operates in Malawi and Zambia, and I’ve had the chance to visit a few times. On one of these trips, there was one experience that really struck me. One of WOW’s projects entailed working with female farmers in order to improve their crop yields. Farmers were offered superior seeds and equipment, and to our surprise, most of them turned these resources down. 

B: I remember how taken aback I was when Meagan first shared this story with me. Coming from a finance background, it was hard for me to comprehend how someone could rationally turn down an “NPV positive” project. [As an aside, an NPV positive project or investment is one that increases someone’s overall net worth; in theory, the financial benefits outweigh the financial costs.]

This is what really intrigued us and led to the beginning of our research on the topic. It turns out that academics and economists have spent a significant amount of time explaining this empirical relationship. As someone approaches the absolute poverty level, they tend to not try anything new because trying something new is typically associated with additional risk. At the absolute poverty level, downside risks entail the loss of life, and thus in the absence of risk management tools like insurance, people tend to avoid additional risks even if doing so limits their productivity and income.

This research ultimately led us to think about the ways insurance could be used to combat the problems caused by the poverty-enforcing risks that subsistence farmers deal with every day.

Can you tell us more about why you think finance in particular is important in development?

M: I think people are beginning to recognize that many traditional forms of aid are not the most sustainable means of supporting development and combating poverty. Our generation is incredibly focused on sustainability, and finding ways to fuel development with sustainability in mind is key to making a lasting impact. 

What we find interesting about finance in particular is the long-term impact it can have. For example, by providing farmers with what they need to manage risk, we also equip them with the tools they need to make investments in their businesses (i.e. investments in superior seeds or equipment), and thus increase their incomes. They can then pull themselves out of a cycle of poverty in a way that is much more sustainable than if we had simply provided them with food for a year.

What would you say has been the greatest learning experience so far?

B: Good question. I think it would have to be our realization of the importance of cultural awareness. We’ve been very fortunate to have spent time overseas, interacting with the farmers we hope to help, and have learned a great deal about cultural considerations. We have learned to question everything that we initially assume. Stumbling blocks for organizations can arise when they simply apply Western perspectives and thinking, and implement their plans overseas with the expectation that they will do well because they theoretically makes sense. This is a trap we have been adamant about avoiding, and we are fortunate enough to have Zambian partners on the ground who help us maintain the cultural feasibility of our work. 

At the moment, Zua is preparing to launch its pilot projects ahead of this upcoming growing season in Zambia. There are two communities of farmers in Chibanga and Katuba that are eager to receive insurance. In addition to these projects, Zua is coupling insurance with a loan for female farmers in Chibanga, which will enable them to purchase oxen and ploughs. Click here to find out more about these projects and how your donation can help. You can also stay updated on our progress as we approach the launch of these projects on our Facebook, Instagram, and LinkedIn pages.

Post by Olivia Zed

​Insurance, generally speaking, is a means of protection against risk, or the unexpected hiccups that life throws our way. Despite its critical importance, it is something we don’t often think about aside from when we need it. This protective shield affords us a level of certainty in the face of struggle and adversity, which unfortunately is something that most of the world lacks.
  
This sense of certainty, not the insurance itself, is what’s most taken for granted among the insured. In less developed communities, individuals’ certainty about their food and water supply, crop yield, and overall livelihood can be fleeting. A wide range of factors contribute to these uncertain conditions, but its significance lies in the effect that it has on individuals in the developing world and the role it plays in perpetuating the cycle of poverty. The cost of uncertainty grows for the world’s poorest, because without insurance and/or the necessary social safety nets, they are more prone to keeping with the familiar, even when doing so is inefficient.
 
In the context of development, Zua focuses on rural farmers in Zambia. When low-income farmers are uninsured, they are less likely to adopt new practices and more reluctant to change, even if that change presents potential for growth. To put this conundrum in perspective, imagine how or why someone without medical insurance may avoid risks to not jeopardize their health. In a similar vein, rural farmers do not want to jeopardize their crop yields. A key difference, however, is that the farmers Zua works with live in extreme poverty, and their livelihoods are dependent on the stability that accompanies the familiar. This means that even a small risk, such as investing in a new technology to increase agricultural productivity, becomes greatly exacerbated. 

Through providing this sense of certainty, microinsurance can be an incredibly powerful tool for development. By mitigating agricultural risks, such as droughts and flooding, and facilitating access to a wide range of financial services, Zua empowers farmers to increase their productivity and ultimately break free from the cycle of poverty.