The Landscape of Microinsurance in Africa
Approximately 1 billion people live in Africa, of which an estimated 60% live below USD 2 per day. These low-income households are particularly vulnerable to risks. Illness, death, natural disasters, damage to property, and accidents all can have devastating effects on livelihoods without a buffer to mitigate the financial impact. The informal mechanisms developed by the poor – rotating savings and credit associations, depleting savings, informal borrowing, selling assets, taking children out of school - offer short-term protection at longterm costs, preventing escape from poverty. Furthermore, most individuals in Africa cannot count on government safety nets to mitigate risks. Failure of informal schemes and government-led programs opens a significant window of opportunity for microinsurance. This paper provides a detailed picture of the landscape of microinsurance activities in Africa.
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