The Opportunity

“Social safety nets have an immediate impact on reducing poverty and on boosting prosperity, by putting resources in the hands of the poorest and most vulnerable members of society. Safety nets facilitate access to health and education services, help households manage risk better, and encourage the poorest people to feel more confident in taking risks that could lead to higher incomes.”

— The World Bank

Microinsurance is a powerful tool in development

Microfinance in the agricultural sector has been increasing in prevalence given its potential to stimulate sustained economic growth. Risk management in particular is now an essential tool for farmers to anticipate, avoid and react to shocks (i.e. droughts and floods). An efficient risk management system improves the standard of living of those who depend on farming, strengthens farm businesses, and provides an environment that supports investment in the farming sector.

While risk-mitigation plays a key role in development, it must be an affordable system in order to successfully reduce poverty. Mobile money and index-based insurance technologies have improved access to microinsurance systems in rural markets. Despite these technologies, the problems of costly premiums and financial illiteracy remain. This means that low-income farmers, who would most benefit from risk-management systems, are unable to make use of them.

Zua addresses current microinsurance shortfalls

We’ve identified three main challenges with existing for-profit microinsurance businesses that limit their impact on development:

Transaction costs

Physical distance between smallholder farmers and financial service providers can be extensive, making it difficult to reach policyholders in a cost effective manner. Zua works directly with local NGOs on-the-ground to reduce these costs.

Financial illiteracy

The lack of financial literacy impedes understanding of varying financial products and their benefits. In connection with our local partner NGOs, Zua provides education to each farmer who is using our services.

High premiums

The problem of extremely high premiums, brought on by for-profit organizations, hinders access to insurance. Zua is a non-profit committed to development. Thanks to the support of people like you, we are able to underwrite insurance at costs well below those of for-profit institutions.

Zua’s non-profit business model was built out of a desire to tackle these issues in order to reach low-income farmers. By leveraging new technologies and donation-based peer-to-peer financing, we’ve developed and unprecedented and creative solution to the hurdles that currently inhibit microinsurance institutions from benefiting many of the world’s poorest.

Why focus on women?

An overwhelming amount of evidence points to a direct positive correlation between female empowerment in agriculture and a community’s food security. Despite gender equality being “the single most important determinant of food security”, female farmers only received 5% of agricultural extension services (i.e. training and educational programs). This has disastrous implications for global food security. Giving women equal access to agricultural resources would boost total agricultural output in developing countries by 2.5-4% (FAO).

When you empower girls and women, you can expect to see a positive ripple effect across communities. Studies have found that the empowerment of female farmers results in “better nutrition and food security for families, improved family health, education gains for children, [and] decreased vulnerability to contracting HIV/AIDS” (Landesa Rural Development Institute). Considering this, benefits extend well beyond the women themselves and are felt by entire agricultural communities.