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The impact of foreign direct Investment on the development of weather index insurance for low-income farmers in Southern Africa

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  • Mathithibane, Mpho Steve

Abstract

This paper investigates the effect of Foreign Direct Investment (FDI) on the growth of agricultural insurance markets for low-income farmers in Southern Africa for the period 2010 to 2020. Agricultural insurance products for low-income farmers are typically based on weather index insurance contracts. These insurance contracts are cost-effective responses to uninsured agricultural risk in developing economies, and are often considered part of effective ex-ante climate change adaptation strategies. The approach followed in this paper is to assess the extent of FDI transactional flows based on a literature review of past and present pilots as well as market-based weather index insurance schemes. The findings revealed that FDI is relatively low to support weather index insurance development and there exists massive scale for expansion and economic growth opportunities. The study advocates for an improved policy environment with a focus on increasing agricultural productivity among low-income farmers while promoting parallel climate change mitigation strategies, this is likely to have spill-over effects on the acceleration and development of appropriate insurance solutions.

Suggested Citation

  • Mathithibane, Mpho Steve, 2021. "The impact of foreign direct Investment on the development of weather index insurance for low-income farmers in Southern Africa," MPRA Paper 108890, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:108890
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    File URL: https://mpra.ub.uni-muenchen.de/108890/1/MPRA_paper_108890.pdf
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    References listed on IDEAS

    as
    1. Musakwa Mercy T. & Odhiambo Nicholas M., 2019. "Foreign Direct Investment Dynamics in South Africa: Reforms, Trends and Challenges," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 29(2), pages 33-53, June.
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    More about this item

    Keywords

    Foreign Direct Investment; weather index insurance; Southern African Development Community; Southern African.;
    All these keywords.

    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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