MAHENTO

Insurance Vital, But No Magic Bullet to Fight Drought in Africa

More developing countries urgently need insurance to cushion their farmers against weather extremes that can worsen poverty, but it is no magic bullet to ward off the escalating impacts of climate change, experts say.

The burning question of how to stop drought becoming a major crisis — especially in Africa — has caused many to eye insurance as a possible answer.

“People think sometimes that insurance is the solution for everything. It is not correct,” said Mohamed Beavogui, director general of the African Risk Capacity, an African Union agency that helps states plan for natural disasters and climate change, and provides them with insurance through its company, ARC Limited.

“Insurance is … [for] when you have done everything you can and there is still a risk you cannot cover,” Beavogui said.

Planning for those risks — such as the number of people a government would be unable to help in a crisis — is vital, he told Reuters.

As climate change bites harder, bringing with it worse droughts and floods, demands on donors’ purse strings are likely to grow, and experts say development gains — especially in Africa — are at risk of being rolled back.

Last year, southern African states appealed for $2.9 billion in aid when the region was hit with its worst drought in 35 years, affecting 39 million people. Now, drought in the continent’s east is pushing millions into hunger.

Insurance can be triggered more quickly than international aid, which can take months to fund. ARC’s cover is based on a pre-agreed plan for how the government will use the payout.

Since ARC Ltd began issuing policies in 2014, eight nations have taken out insurance and four — Senegal, Mauritania, Niger and Malawi — have received payouts totaling $34 million.

The index-based insurance offers maximum coverage of $30 million per country per season for drought events that occur with a frequency of one in five years or less.

But while drought last year left 6.5 million people in Malawi in need of food aid, Malawi did not receive an ARC payout until January.

Malawi took out insurance based on a crop — long-cycle maize — that, as it turned out, most farmers did not grow in the 2015/2016 season. Long-cycle maize survived the drought, while the short-cycle maize most farmers grew did not.

In the end, ARC’s member states agreed to an $8.1 million payout for Malawi — the amount it would have received had the government requested short-cycle maize as the base.

“It means that we shouldn’t rely only on data the government gives us,” Beavogui said. ARC will now also check what farmers are growing with research centers and extension services, among others, he added.

Jury still out

Insurance companies that pay out directly to farmers are still few and far between in many developing countries, and they offer limited services.

Where they do exist, they mainly serve commercial farmers because the poorest cannot afford to pay premiums without help from a donor or government, said Andrew Shepherd, director of the Chronic Poverty Advisory Network, based at the Overseas Development Institute, a London-based think tank.

“The jury is still out” on whether insurance can make the poorest farmers more resilient to drought, but it can play an important role in preventing wealthier farmers from becoming impoverished, he said.

“All the focus by governments, and often donors, is on getting people out of poverty, and not on preventing people from falling into poverty,” he said.

India is one of the few developing countries with a national insurance scheme for farmers, including those with as little as one cow or buffalo, which works through local agents, said Shepherd.

Senegal has two kinds of insurance — macro-insurance through ARC, and micro-insurance — both of which paid out when bad drought hit in 2014.

The Compagnie Nationale d’Assurance Agricole du Senegal (CNAAS) — set up by the government, insurance companies and international agencies — targets most farmers in rain-fed crop areas with index-based insurance products.

In 2014, Senegal’s ARC payout reached people and livestock with aid, getting help to herders within three months, said Mathieu Dubreuil, micro-insurance adviser at the World Food Program (WFP).

“It was a good match” between ARC which pays out in a crisis and micro-insurance schemes that pay out more often, he said.

WFP, which offers small-scale insurance for farmers, is also exploring taking out ARC insurance, which would give an additional payout to countries, disbursed either by WFP or through the government.

Vicious cycle of hunger

In Malawi, farmers are waiting for the April maize harvest to bring an end to months of food shortages.

“If we are not careful, we will have a vicious cycle of hunger,” said Wycliffe Kumwenda of the National Smallholder Farmers’ Association of Malawi, representing more than 100,000 farmers.

Uninsured farmers are condemned to line up for food aid — time taken away from cultivating their fields — while hunger saps their energy, he said.

There is some insurance for Malawian tobacco farmers, but many do not know about it. Premiums are a problem too, as is the ability to make a claim, Kumwenda said.

“We need to install proper instruments that can capture weather parameters like rainfall [and] temperature,” he said. “Most of the met stations are not reliable.”

That makes claims hard to justify, putting off potential insurance providers, he added.

As climate impacts are expected to worsen in the coming years, potentially pushing up the cost of premiums, ARC is developing an Extreme Climate Facility (XCF) which will give countries access to finance for climate change adaptation.

“You have to insure what you cannot cover, and at the same time you have to prepare and adapt,” said Beavogui. “My real fear is we don’t do it quickly enough.”
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Corruption, Lack of Opportunities Challenge Job Growth in China’s Rust Belt

As China’s economy slows to growth rates not seen in more than a quarter of century, the country’s Communist Party rulers are under increasing pressure to create jobs.

Millions enter the workforce each year, and as China tries to reduce overcapacity in steel and coal industries a growing number are looking for work after being laid off.

China’s northeast is reeling from the impact of zombie enterprises, debt-laden companies who have let overcapacity run amok and are now facing massive layoffs, and it is struggling to keep young workers and talent at home.

Stay or go?

At a recent job fair in China’s northeastern city of Shenyang, the capital of Liaoning province, many say they are concerned about the slowing economy and its dampening impact on jobs.

“The outlook now for jobs is not as good as a few years ago and I think that’s because the economy is not that great,” said Shenyang resident Wang.

The job fair was one of several that Saturday and it was packed with hundreds, if not several thousand job seekers. Some were struggling to find work and unqualified for the opportunities they sought.

Another resident named Wu said he was not finding the kind of work he was looking for at the fair because many opportunities were in the services sector.

“I am worried about finding work. If I can’t find a job here, I’ll most likely go somewhere else to work,” he said.

Wang from nearby Jilin province said he was looking for steady work, something stable and closer to home.

“The jobs I worked in the past would change every three of four months, from one location to the next, from Shenyang to Changchun and other places,” Wang said. “Pay was better by comparison about $870 to $1,450 a month, but there were no benefits.”

Favors, money

During his annual work report to China’s legislature on Sunday, Chinese Premier Li Keqiang said the world’s second largest economy aims to create more than 11 million new jobs this year. He also talked about the importance of the northeast to the Chinese economy. Li was party secretary of Liaoning from 2004-2007.

But while the northeast has long been on the government’s priority list, policy measures appear to have done little to change the overall environment. Heavy industry and state owned enterprises have long dominated the region’s economy, contributing to an ongoing exodus of talent to other parts of the country, analysts said.

For many university students, going somewhere else is the only option, even for those who eventually want to come back and make Shenyang their permanent base.

“I hope to go somewhere better and then bring some of those good practices and experiences back to Shenyang,” said a music student named Han.

But medical student Ni said he plans to head back home to the south after he graduates, because, as he put it, the mindset and environment there is more open.

He said in the northeast, “Whether it is the government, schools or hospitals there is too much focus on connections and favors. What you can do is not important and there is no room to put your talents to good use.”

Bad reputation

Liaoning has also been forced to confront corruption in a very open way.

In 2016 it was the slowest growing province in the country, the only one to see negative growth. Last year, it’s leaders made a rare admission, revealing that between 2011 – 2014 the province’s figures for economic growth were faked, in some cases by more than 20 percent.

And a vote-buying scandal was disclosed as well, the worst since the Communist Party came to power.

Liaoning officials have pledged to put an end to the practices and spoke openly about the scandals at a meeting Sunday in Beijing.

“We’re overly reliant on heavy industries. Innovation and creativity is lacking. The impact on the [economic] environment is not good and talent is not being put to its best use,” said Li Xi, Communist Party boss in Liaoning and spokesman for a delegation to this year’s annual Twin Sessions meetings of the National People’s Congress.

Last year, almost half of the Rust Belt province’s representatives to the NPC were caught up in the scandals. Li Xi said the election of officials who bought their way into office, many of them prominent businessmen, had an impact on “personnel arrangements by central authorities.”

While some are hopeful the government’s pledge to clean up the environment will bring about change, the region’s heavy emphasis on infrastructure as a model for jobs and growth has most waiting for clearer signals.
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Former Malawi Home Affairs Minister Arrested for Alleged Fraud

In Malawi, the head of the former ruling party is expected in court Tuesday on allegations he fraudulently granted citizenship documents to more than 50 foreigners in 2013 when he was minister of home affairs. 

Uladi Mussa surrendered himself Monday at the office of the Anti-Corruption Bureau, or ACB, in the capital Lilongwe.

“So since he came in today, this morning, to hand himself, our investigators have just sent him to the police station for safe custody,” said Egrita Ndala, an ACB spokesperson 

Mussa is accused of taking bribes in exchange for issuing Malawian passports to foreigners during his time as home affairs minister under the previous administration.

He told a local radio in Lilongwe that he feels his arrest is politically motivated.  He denies any wrong doing.

“I do not know anything, why they have been hunting for me,” said Mussa. “The issue is very strange to me because that is one of major functions and responsibilities of a minister of home affairs.”

Mussa said, as the minister, he was signing the citizenship applications following the approval from police and immigration officials that an applicant had met all the necessary requirements.

This is the second arrest in this case.  Last Wednesday, the ACB arrested former chief immigration officer Hudson Mankhwala, who is now out on bail, on charges of neglect of official duty and abuse of office.  He has also denied the charges.

The ACB’s Ndala defends the bureau’s investigations.

“We do not just arrest.  An arrest will come after we have done a background work in investigation.  And we have been working in prevention,” said Ndala. “We have been working with public education, about their role in the fight against corruption, but otherwise that is our mandate according to Corrupt Practices Act.” 

The Anti-Corruption Bureau has made the local news quite a bit lately.

Two weeks ago, the president fired his agriculture minister after ACB investigators found cash worth nearly $200,000 in the minister’s home as part of a probe into a recent maize procurement from Zambia. 

Investigations into that matter continue. 
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Withdraw From Paris Agreement, Lose Economic Opportunities, Europe Tells US

European leaders are pursuing a new tack in their bid to dissuade the Trump administration from pulling out of the landmark Paris Agreement on climate change. Withdraw and miss out on economic and commercial opportunities in clean growth, the Europeans are warning Washington policy makers.

In back channel discussions, the Europeans are emphasizing a lower carbon future is now inevitable and a United States that’s not fully on board will lose out in terms of energy innovation and clean energy job creation.

Others are dangling the prospects to American energy innovators and climate researchers of tax advantages and government subsidies, if they leave the United States and relocate to Europe.

Last week, the European Union’s environment commissioner held meetings in Canada to discuss ways to ensure the agreement is implemented, even in the face of a U.S. withdrawal from the 2015 climate change accord that binds nearly every country to curb global warming.

“Canada and the European Union are committed to implement Paris, defend Paris,” EU Climate Action and Energy Commissioner Miguel Arias Canete said in the Canadian capital, Ottawa.

In January, a former top aide to President Donald Trump, Myron Ebell, who led transition efforts on the Environmental Protection Agency, told reporters in London Trump will keep his campaign promises and will “definitely” pull America out of the 194-nation Paris climate agreement.

Diverging views

According to The New York Times, however, the White House remains fiercely divided over Trump’s campaign promise to “cancel” the Paris Agreement.

In an article last week, the newspaper said senior adviser Stephen Bannon and new EPA administrator Scott Pruitt are urging Trump to fulfill his campaign pledge to withdraw the U.S. from the agreement, but Secretary of State Rex Tillerson and the president’s daughter Ivanka are arguing withdrawal would have damaging diplomatic ramifications.

Pruitt is a former Oklahoma state attorney general who is skeptical of arguments that human activity is contributing to global warming.

European and Canadian officials say they are still hopeful of persuading the Trump administration not to withdraw from the agreement. Playing on President Trump’s determination to boost the U.S. economy and add more high-paying jobs to the American workforce, they are using transactional arguments in their bid, arguing the United States will lose the opportunity to become the world’s clean energy superpower.

Economic opportunities

In a phone call last week, Canadian Environment Minister Catherine McKenna told Pruitt serious action against climate change opens up major economic opportunities. “I emphasized that our government is committed to the Paris Agreement. We’re committed to taking serious climate action, and that we see that as a real economic opportunity,” McKenna said at a joint press conference with the visiting European energy commissioner in Ottawa.

“The opportunity is in the trillions of dollars when it comes to clean technology. So we think this is a clear economic opportunity, but we need to work at it and we need to bring everyone along,” McKenna added.

Some European leaders hope to attract American energy innovators to Europe as the Trump administration cuts federal budgets and subsidies for clean energy.

Macron’s invitation

Emmanuel Macron, one of the front-runners to succeed Francois Hollande as French president, says innovators impacted by Trump administration cuts in U.S. federal government budgets should relocate to France.

In a recent tweet, he said, “Please come to France, you are welcome, it’s your nation, we like innovation.” He added, “We want innovative people, we want people working on climate change, energy, renewables and new technologies. France is your nation.”

Macron isn’t alone among European leaders eager to attract American energy innovators and climate-science researchers. German officials told VOA they are eager to do the same and will offer preferential tax rates for innovators and start-ups, and funds for researchers.

European research initiatives are advertising themselves with any eye to attracting Americans. According to the Daily Planet, a news portal of a European clean-energy initiative, Climate-KIC, a partnership of universities, businesses and public bodies, “talented American students” are welcome to apply for the initiative’s summer school that takes students on a tour of some of the continent’s most renowned research institutions, startup incubators and businesses.

Under the Paris Agreement, every nation that has signed on to the accord provides details on how it will contribute to reducing planet-warming pollution. The Obama administration pledged to implement by 2025 a 26 percent cut in U.S. carbon pollution from 2005 levels.

The United States would likely be unable to reach that target under regulatory rollback plans by the Trump administration, including on coal-fired energy plants.
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