SCRIPT Tuesday
INTRO: Rageh describes how he has covered many natural disasters in the world including famine .. the one thing they have in common is that they are only brought ot the world’s attention when people are suffereing terribly.. starving, displaced from their homes.. UN and NGOs have to hawk round begging bowls asking for aid based on the levels
CAMPAIGN AD/MUSIC
WFP HORN OF AF DROUGHT STARVING KIDS
It’s something we’re used to.. pictures of Africans made destitute and desperate by drought. Displayed on our TV screens to raise money.
WFP LORRIES DRIVE IN
Weeks later the funds are forthcoming, months later the aid arrives and people receive what they need to survive.
SKY TO WFP FLAGS ROME/MUSIC
The United Nations and donor governments have tried to address this over the years but agencies like the World Food Programme, one of the UN’s biggest spenders, have been operating in the same way for decades.
RW ON BIKE
But change is in the air.
Richard Wilcox is out to shake it up. He was a member of Bill Clinton’s administration and was invited into WFP with the aim of blowing a fresh wind of commercialism and financial discipline into the business.
RICHARD INSIDE
WFP financing has been nothing but bookkeeping he says – yet it’s a two billion US dollar business.
RW V/O
9.7:00 THE BIG IDEA IS FINANCING , HUMANITARIAN FINANCING.
IN VIS…BEFORE WE STARTED THE PROGRAMME 2 YEARS AGO THE ENTIRE AID AGENCY WORKS ON A CRISIS HAPPENING, ASSESSING THE DAMAGE AND THEN ASKING FOR FUNDS AND WHEN THEY COME YO START MOVING. ITS VERY INEFFICIENT. NEED IT WHEN DISASTER STRIKES.. KEY IS FINANCING..
HIS TEAM
He’s gathered a team of economists around him to change that.. all under 40, all with commercial financial experience.. they’re something quite new for WFP..
INTROS:
3.12.20 I’M JO SYROKA A QUANTITATIVE STRATEGIST WORKING IN WEATHER RISK MANAGEMENT
4: 21.30 I’M YOSHIKO X INTERNATIONAL CORPORATE LAWYER
14.37.00 I’M ULRICH HESS SENIOR ECONOMIST
RW AT DESK
Introducing radical new financial processes means Richard driving through new methods of working across WFP… and shaking up the whole way people think about the jobs they do..
9:35 PLANNING.. TRY TO THINK THRU BUSINESS PLAN, CONTINGENCY ETC. DIFFICULT FOR MANAGERS TO START WITH BUT WE ARE ATTRACTING NEW PEOLE AND THE OLD PEOPLE HERE HAVE THE SKILLS BUT JUST NOT CHALLENGED.
PEOPLE MILLING AROUND CORRIDORS
As you’d imagine, it is being looked on with suspicion in some areas of the organisation, and by some of the donor governments who provide the funding for WFP
NEIL V/O
5.44 IN ANY BUREAUCRACY A LOT OF RESISTANCE TO NEW IDEAS.. WFP RELATIVELY FLEXIBLE COS EMERGENCY ORGANISATION….
IN/VIS IN THE END THE WFP COULD BE RECEPTIVE,, BUT DONORS SKITTISH.
CLOUDS/MUSIC
The team is into blue skies thinking… and they’re experimenting with various financial techniques.
Their latest radical idea is to insure Ethiopia’s poor subsistence farmers on the international financial market.
SKY TO ETHIOPIA VILLAGE.. WIDE SHOT PLOUGHING
They want to take out a weather insurance policy on behalf of people in villages like Waja Washboula.
RICHARD
9.10.00 ((WHEN THE EXEC DIR CAME IN 2003 HE ASKED US TO LOOK AT)) WHAT FROM ANALYSIS OF THE PRIVATE SECTOR IS USEFUL..)) ARE WE GLOBAL LOGISTICS ORG LIKE DHL? PROJ MANAGER LIKE BECHTEL? OR INSURANCE CO. REALLY WE ARE LIKE AN INSURANCE CO. MUST HAVE FUNDS AVAILABLE WHEN NEEDED WHEN DISASTER STRIKES,
CLOSER PLOUGHING
In Ethiopia every 8 or 10 years there’s a calamitous drought that destroys millions of farmers livelihoods.. and brings them and their families to the point of starvation They can be left destitute for years. Richard has these people’s livelihoods in his sights.
HOTEL EXTR
At a hotel in the Ethiopian capital Addis Ababa local govt and donor bigwigs have come to hear Richard explain how he hopes weather insurance will work. It starts from a very simple premis..
RICHARD LAUNCHES THE IDEA
THE LINE OF REASONING IS TO MAKE FUNDS AVAILABLE WHEN NEEDED AND NOT JUST WHEN THEY CAN BE WHEN MOBILISED.. AVAILABLE AT THE SAME TIME THAT THE BENEFICIARIES NEED THE SUPPORT.
Ulrich Hess explains that the team plan to pilot the weather insurance project for 70 million farmers. He says that that despite the UN presence on the ground these farmers are still carrying the risk of disaster on their own shoulders.
ULRICH PRESENTATION
WE SHOULD BE MANAGING RISKS INSTEAD OF CRISIS – THIS REALLY SUMS IT UP. … (AND ESSENTIALLY BRING IN THE FINANCE TO
25.07 IMPROVE SMALL HOLDER PRODUCTIVITY AND RESILIENCE AGAINST DROUGHT.
Yoshiko Makino, the corporate lawyer, explains the weather derivative market. It’s not well known as it’s only been operating for 8 years and is still at the cutting edge of financial trading – it’s a bit like high stakes gambling ..
YOSHIKO
31.15 IT IS A FUTURES CONTRACT.. PAYING TODAY FOR SOMETHING THAT MAY OR MAY NOT HAPPEN IN THE FUTURE..
YOSHIKO
FARMER CAN TAKE INSURANCE AGAINST LACK OF RAIN. OR CONSTRUCTION COMPANY CAN TAKE INSURNCE AGAINST TOO MUCH RAIN.. LOTS OF PEOPLE TAKE ON OPPOSING RISKS BALANCE OUT AND REDUCES MARKET.
COFFEE BREAK
But the farmers in Ethiopia face more than a fall in productivity or profit: bad weather can mean mortal danger here. Some members of the audience are sceptical.. but so far they’re willing to look for the positive
VOX POPS
MAN: 6:20
VALUING CLIMATE INFO IN TERMS OF MONEY FOR ME IT’S AN ADVANCEMENT
FARMERS
Farmers in villages like Waja Washboula are going to be in the pilot project.
CROWD OR FARM?
Hamou Waticha has 15 children, like all farmers around here he’s regarded as relatively well off.. he has 2 hectares of land and with reasonable rain his family can support itself.
HAMMOU:
7.19:50 WITH GOOD RAINS I CAN GET SIX TO SEVEN HUNDRED KILOGRAMS OF GRAIN EACH YEAR. IF THERE’S LESS RAIN THEN I GET LESS GRAIN.
CROWD
Hammou knows he faces risks –– he, like heads of families across the world - tries to insure himself and his family against them.. he diversifies.. spreading his assets not just relying on his land.
COW / SHEEP
He keeps as many cows, sheep and goats as he can. As farmers here don’t have access to banks, he buys livestock as a form of savings.. he puts any extra income into his animals which he can liquidate when times get hard. It is a form of insurance against bad times..
SHOP
To further diversify in case of agricultural failure, he has a tiny shop that his wife runs to earn extra cash. But even this forward planning is not enough when the rains fail completely as they did in 1984 and 2002.
HAMMOU
22.40 IN THE 2002 DROUGHT THE COWS DIED AND THE CATTLE DIED AND THE FAMILY WENT HUNGRY. WE GOT LESS THAN 200 KILOGRAMS FROM THE LAND THAT YEAR.
27.00 WHEN I REALISED THE RAINS HAD FAILED I SOLD MY CATTLE AND EVEN MY OXEN BUT THE PRICE WAS VERY LOW. I GOT LESS THAN 500 FOR MY OX. BUT THEN THE DONORS CAME GAVE US FOOD TO EAT
PARCHED GROUND
These are the droughts that Richard is speaking of. Everyone in the area is effected along with Hammou and his neighbour.. Dalou Waya... the value of livestock plummets as everyone tries to sell at the same time.. if you don’t sell the animals die
PLOUGHING
But selling the oxen they’ll need to plough the land once the rains return could leave these farmers completely destitute.
FRIEND:
34.17 BEFORE THE DROUGHT I HAD 10 DIFFERENT CATTLE. BECAUSE OF THE DROUGHT SOME DIED AND I SOLD THE REST. EVEN UP TIL NOW I’VE ONLY BEEN ABLE TO GET BACK 3 DAIRY COWS AND ONE OX. AND ONE OX IS NOT ENOUGH TO PLOUGH… YOU NEED 2 OXEN TO PLOUGH
HAMMOU AND FAMILY
It is exactly this downward spiral of continuing destitution that weather insurance should prevent. Hammou and his family would receive money immediately the rains fail … before they started suffering.. as the insurance company would be contractually compelled to pay up
16.08CHARITY IS A GOOD THING BUT IT NEEDS ADVERTISING AT PEOPLE’S WORST MOMENTS TO MOTIVATE PEOPLE TO GIVE.. THIS IS A MUCH MORE DIGNIFIED APPROACH THAN USING THEIR MISERY TO FILL A BEGGING BOWL
CLOUDS
So the question is can a developing country like Ethiopia enter the weather insurance market?
WFP FOOD BEING TAKEN OFF TRUCK
The World Food Programme is planning to insure vulnerable Ethiopian farmers against drought. So that cash for food is available at the time it’s needed. But it’s not just the farmers who benefit. It is also better for aid organisations to have access to resources as early as possible.
INSIDE WAREHOUSE
Rushing mountains of food to starving people to keep them alive is expensive. The earlier the money arrives, the cheaper it is to deliver what’s needed. And you won’t end up providing for destitute families indefinitely.
RICHARD
16.40 ETHIOPIAN GOVT APPRECIATES IDEA OF SAVING LIVELIHOODS.. GETTING AWAY FROM LATE REACTION. 2002-3 RESPONSE WAS AS GOOD AS IT GETS. V FEW DIED IN SECOND WORST RAINFALL YEAR EVER. BUT 2M MORE FELL INTO DESTITUTION SO IT IS AN EXPENSIVE PROPOSITION.
14.30BY GETTING IN HERE IN THE FIRST WEEKS WE ARE MUCH MORE VALUABLE THAN LATER..
JO AT PRESENTATION
But first you have to get a company to take on the risk and guarantee the payout. Dr Jo Syroka has the job of creating a contract which will quantify the farmer’s risk in a way that can be used and trusted by financiers, in high rise offices on the other side of the world.
JO UPSOF
……..2.7:30 FIRST THING YOU HAVE TO INDEX THE RISK.
8.00 BOTH PARTIES NEED TO UNDERSTAND AND RAINFALL IS A COMMON LANGUAGE.. EVERYONE KNOWS THAT 1M,M OF RAIN IS THE SME WHETHER MEASURED IN AA OR LONDON SO THE TRANSFER OF RISK OF FAILURE OF RAIN IS POSSIBLE.
DRIVING SOUTH / MUSIC
There are obvious links between a weather risk, its human consequences and the humanitarian aid needed when the event happens…but according to Jo Syroka the aid community’s been slow in managing risk.
She’s the World Food Programme’s link to the international weather risk market. And she’s been dispatched to find out if reliable rainfall data can be collected in the rural areas they want to insure. This will form the basis of the contract.
IN THE VILLAGE, CARS AND JO AND ULRICH
International finance is wary of developing countries like Ethiopia because it requires high quality data and a lot of it.. But rainfall data is internationally recognised and Jo is sure that Ethiopia has the capacity to fulfil international demands. She’s here in Zewai to meet the local meteorologist.
UPSOF HELLO..
JO
3.31.20 THE BIGGEST RISK THE FARMER HAS IS RAINFALL – MANY OTHERS BUT DROUGHT IS THE BIGGEST – CAN CORRELATE RAINFALL TO PRODUCT. CAN LEAD TO MODEL WHERE X MM RAINFALL TELLS YOU WHAT OUTPUT/PRODUCTION SO IF YOU MEASURE THE RAIN YOU’LL MEASURE PRODUCTION AND SO FOOD SECURITY.
WEATHER STATION
Zewai weather station is one of 26 the team chose to provide data for their initial pilot scheme. It is one of the better ones in Ethiopia and the meteorologist does provide reliable rainfall data.
UPSOF RAIN RECORDER
The contract stipulates data has to be collected every day at exactly nine am.
RADIO UPSOF
Then that data has to get to the insurance company within a set number of hours.. That’s quite a big deal in a country like this where communications are poor..
UPSOF RADIO
EXTR RADIO MAST TO SKY
First it’s radioed to the Meteorological HQ in Addis Ababa.
AA NMA OFFICE RADIO MAN JOTTING NOTES
UPSOF RADIO
Here data from all 26 stations will be collated and sent on daily to the insurance company. Ethiopia’s history of weather risks means they’ve a good record of weather data collection
ARCHIVE
UPSOF
THIS IS AA FROM 1954..ITS THE OLDEST ONE..
At the meteorological agency’s archive there’s more crucial data. The records go back 50 years. And just like any car insurer checking your previous claims, this detailed archive is used to assess the probability of an extreme weather event, to help them calculate the premium.
V/O: WE HAVE 1.8M CHARTS OF SURFACE OBSERVATONS.. 3BN STATION OBSERVATIONS.
JO
20.25 ALTHOUGH WE DON’T ASK VULNERABLE PEOPLE FOR A PREMIUM IT IS JUST LIKE HOUSE OR CAR INSURANCE.. WE HAVE THE RESPONSIBILITY OF AN INSURANCE COMPANY BUT MANDATE GREATER COS MORTAL PERIL.
CATTLE
Commercial farmers in Ethiopia, like this large scale cattle farmer, can afford to take out insurance premiums on an individual basis... But the majority of farmers can’t. For them, WFP food hand-outs have always been like a last-resort insurance. But is it acceptable to rely on this last minute begging bowl culture.
INSURANCE IS THERE TO HELP YOU DEAL WITH RISKS THAT DON’T HAPPEN OFTEN BUT WHEN HAPPEN ARE DANGEROUS TO YOU.. WFP WILL HAS MADE PROMISES
STATUES IN ROME/MUSIC
Back in Europe, the contract is ready and the team have presented it to the international insurance companies.. Nothing like this has been done before, so they were unsure of the outcome.
JO
36.30 I HAD A DIALOGUE WITH THE PLAYERS BEFORE AND THEY WERE SURPRISED AT THE STAGE THAT WE WERE AT.. THAT WE WERE READY TO TRANSACT THEY WERE VERY EXCITED, THE RESPONSE WE GOT T0P THE TENDER WAS VERY GOOD --- I WAS VERY HAPPY..
In fact 6 international finance houses offered to take the risk. In the end AXA won the contract
YOSHIKO
4.6:40 WHAT WAS WONDERFUL ON THAT NIGHT I CLOSED THE TRANSACTION WAS THE ENTHUSIASM – BEGINNING OF NEW PHASE OF FINANCING. HUGE ENTHUSIASM. I WAS WORRIED THAT WE WOULDN’T GET THE TERMS, COS WE WERE USING PUBLIC MONEY, BUT WE GOT MARKET STANDARD.. VERY HAPPY
So is this the start of a new form of humanitarian funding
FROM THE POSITIVE RESPONSE SO FAR YES I THINK SO, OPTIMISTIC!
RW AT PANTHEON
For Richard Wilcox, it’s been an achievement to prove that the international financial market will take on the risk of some of the world’s most vulnerable people. But this is only one of many tools he plans to use to bring even greater efficiency into the humanitarian aid world.
IT’S A TOOL ONE USES FOR A HUMANITARIAN END, MODERN TOOL – WE ARE QUITE PROUD OF THE FACT.. MUST USE WHATEVER WE CAN TO GET THE BEST VALUE FOR THE BENEFICIARIES.
Richard’s looking to the future now. They’ve started the ball rolling on behalf of the world’s poorest. Now he and his team hope that the ideas they’re piloting will bring an end to the begging bowl culture and ad hoc nature of aid provision for vulnerable populations worldwide.
RW FUTURE?
RW
10 – 15 YEARS FROM NOW IDEALLY GOVERNMENTS WILL BE TRANSFERRING RISK TO RISK MARKETS SO CONTINGENCY FUNDS AVAILABLE AND US EBING HERE TO HELP IF THEY ARE TOO WEAK TO MAKE IT HAPPEN. BRINGING RISKS OF VULNERABLE POOR INTO FINANCIAL MARKETS WILL LEAD TO THE GREATEST EFFICIENCY.. THAT IS OUR VISION FOR THE FUTURE.
So, Jo was able to construct her model. What was the response in the finance houses?
YOSHIKO BETTER HERE..
COFFEE TIME
But some here not so keen – western concept, CREATED IN Rome and NY not appropriate to Ethiopia – stupid to make model only on rainfall.. and why give good money to insurane co.. could be invested in the community?
RW RESPONDS
How do the Ethiopian africultural min people feel about it now that they have heard about it
BERHANY
HAMMOU AND FAMILY OUTSIDE HIS HOUSE
So now these farmers are protected.. they will get a hand out if the rains fail as soon as the contract date comes up
RICHARD
I HOPE THIS PIONEERING EXPERIENCE WILL SHOW THE WAY FORWARD ACROSS AFRICAN VULNERABLE POPULATIONS. AND HOW TO BETTER MANAGE PORTFOLIO OF RISK ACROSS AFRICA.
2.6:20OBJECTIVE IS TO PROTECT LIVELIHOODS
19.00WANT TO SAVE LIVELIHOODS AS WEELL AS LIVES.. KEEP FARMERS PRODUCTIVE.
SYNC V/O
WE ARE AN UNUSUAL SET OF PEOPLE..
14.00 THE SORT OF STUFF WE ARE DOING IN THIS PROJECT IS INNOVATIVE NOT JUST FOR HUMANITARIAN INDUSTRY BUT FOR FINANCIAL MARKETS TOO. WEATHER DERIVATIVE TOOLS ARE NEW.. NOT AVAILABLE TIL RECENTLY.
JO AT PRESENTATION WITH SCREEN
. and so
RW
13.40 TIMELINESS… ((THEY WOULD LIKE TO CLING TO COWS AND OXEN COS CAN’T DO ANYTHING WITHOUT THEM .. BUT THERE IS A FIRE SALE AND YOU HAVE TO SELL EARLY TO GET ANY KIND OF DECENT PRICE.)) WE WANT TO STEM THAT BY GETTING IN HERE IN THE FIRST WEEKS – MUCH MORE VALUABLE THAN LATER
AT THE VILLAGE WITH HORSE DRAWN CARRIAGES
Commercial farmers like these keep contingency funds to feed their cattle in times of drought.. like this. And the UN has been working on holding contingency funds to provide more timely help to at risk communities too. But Richard Wilcox’s team say that it is cheaper to take out insurance to provide that funding because it’s a very competitive marketplace and risks can balance each other out so bringing prices down
INTRO: Rageh describes how he has covered many natural disasters in the world including famine .. the one thing they have in common is that they are only brought ot the world’s attention when people are suffereing terribly.. starving, displaced from their homes.. UN and NGOs have to hawk round begging bowls asking for aid based on the levels
CAMPAIGN AD/MUSIC
WFP HORN OF AF DROUGHT STARVING KIDS
It’s something we’re used to.. pictures of Africans made destitute and desperate by drought. Displayed on our TV screens to raise money.
WFP LORRIES DRIVE IN
Weeks later the funds are forthcoming, months later the aid arrives and people receive what they need to survive.
SKY TO WFP FLAGS ROME/MUSIC
The United Nations and donor governments have tried to address this over the years but agencies like the World Food Programme, one of the UN’s biggest spenders, have been operating in the same way for decades.
RW ON BIKE
But change is in the air.
Richard Wilcox is out to shake it up. He was a member of Bill Clinton’s administration and was invited into WFP with the aim of blowing a fresh wind of commercialism and financial discipline into the business.
RICHARD INSIDE
WFP financing has been nothing but bookkeeping he says – yet it’s a two billion US dollar business.
RW V/O
9.7:00 THE BIG IDEA IS FINANCING , HUMANITARIAN FINANCING.
IN VIS…BEFORE WE STARTED THE PROGRAMME 2 YEARS AGO THE ENTIRE AID AGENCY WORKS ON A CRISIS HAPPENING, ASSESSING THE DAMAGE AND THEN ASKING FOR FUNDS AND WHEN THEY COME YO START MOVING. ITS VERY INEFFICIENT. NEED IT WHEN DISASTER STRIKES.. KEY IS FINANCING..
HIS TEAM
He’s gathered a team of economists around him to change that.. all under 40, all with commercial financial experience.. they’re something quite new for WFP..
INTROS:
3.12.20 I’M JO SYROKA A QUANTITATIVE STRATEGIST WORKING IN WEATHER RISK MANAGEMENT
4: 21.30 I’M YOSHIKO X INTERNATIONAL CORPORATE LAWYER
14.37.00 I’M ULRICH HESS SENIOR ECONOMIST
RW AT DESK
Introducing radical new financial processes means Richard driving through new methods of working across WFP… and shaking up the whole way people think about the jobs they do..
9:35 PLANNING.. TRY TO THINK THRU BUSINESS PLAN, CONTINGENCY ETC. DIFFICULT FOR MANAGERS TO START WITH BUT WE ARE ATTRACTING NEW PEOLE AND THE OLD PEOPLE HERE HAVE THE SKILLS BUT JUST NOT CHALLENGED.
PEOPLE MILLING AROUND CORRIDORS
As you’d imagine, it is being looked on with suspicion in some areas of the organisation, and by some of the donor governments who provide the funding for WFP
NEIL V/O
5.44 IN ANY BUREAUCRACY A LOT OF RESISTANCE TO NEW IDEAS.. WFP RELATIVELY FLEXIBLE COS EMERGENCY ORGANISATION….
IN/VIS IN THE END THE WFP COULD BE RECEPTIVE,, BUT DONORS SKITTISH.
CLOUDS/MUSIC
The team is into blue skies thinking… and they’re experimenting with various financial techniques.
Their latest radical idea is to insure Ethiopia’s poor subsistence farmers on the international financial market.
SKY TO ETHIOPIA VILLAGE.. WIDE SHOT PLOUGHING
They want to take out a weather insurance policy on behalf of people in villages like Waja Washboula.
RICHARD
9.10.00 ((WHEN THE EXEC DIR CAME IN 2003 HE ASKED US TO LOOK AT)) WHAT FROM ANALYSIS OF THE PRIVATE SECTOR IS USEFUL..)) ARE WE GLOBAL LOGISTICS ORG LIKE DHL? PROJ MANAGER LIKE BECHTEL? OR INSURANCE CO. REALLY WE ARE LIKE AN INSURANCE CO. MUST HAVE FUNDS AVAILABLE WHEN NEEDED WHEN DISASTER STRIKES,
CLOSER PLOUGHING
In Ethiopia every 8 or 10 years there’s a calamitous drought that destroys millions of farmers livelihoods.. and brings them and their families to the point of starvation They can be left destitute for years. Richard has these people’s livelihoods in his sights.
HOTEL EXTR
At a hotel in the Ethiopian capital Addis Ababa local govt and donor bigwigs have come to hear Richard explain how he hopes weather insurance will work. It starts from a very simple premis..
RICHARD LAUNCHES THE IDEA
THE LINE OF REASONING IS TO MAKE FUNDS AVAILABLE WHEN NEEDED AND NOT JUST WHEN THEY CAN BE WHEN MOBILISED.. AVAILABLE AT THE SAME TIME THAT THE BENEFICIARIES NEED THE SUPPORT.
Ulrich Hess explains that the team plan to pilot the weather insurance project for 70 million farmers. He says that that despite the UN presence on the ground these farmers are still carrying the risk of disaster on their own shoulders.
ULRICH PRESENTATION
WE SHOULD BE MANAGING RISKS INSTEAD OF CRISIS – THIS REALLY SUMS IT UP. … (AND ESSENTIALLY BRING IN THE FINANCE TO
25.07 IMPROVE SMALL HOLDER PRODUCTIVITY AND RESILIENCE AGAINST DROUGHT.
Yoshiko Makino, the corporate lawyer, explains the weather derivative market. It’s not well known as it’s only been operating for 8 years and is still at the cutting edge of financial trading – it’s a bit like high stakes gambling ..
YOSHIKO
31.15 IT IS A FUTURES CONTRACT.. PAYING TODAY FOR SOMETHING THAT MAY OR MAY NOT HAPPEN IN THE FUTURE..
YOSHIKO
FARMER CAN TAKE INSURANCE AGAINST LACK OF RAIN. OR CONSTRUCTION COMPANY CAN TAKE INSURNCE AGAINST TOO MUCH RAIN.. LOTS OF PEOPLE TAKE ON OPPOSING RISKS BALANCE OUT AND REDUCES MARKET.
COFFEE BREAK
But the farmers in Ethiopia face more than a fall in productivity or profit: bad weather can mean mortal danger here. Some members of the audience are sceptical.. but so far they’re willing to look for the positive
VOX POPS
MAN: 6:20
VALUING CLIMATE INFO IN TERMS OF MONEY FOR ME IT’S AN ADVANCEMENT
FARMERS
Farmers in villages like Waja Washboula are going to be in the pilot project.
CROWD OR FARM?
Hamou Waticha has 15 children, like all farmers around here he’s regarded as relatively well off.. he has 2 hectares of land and with reasonable rain his family can support itself.
HAMMOU:
7.19:50 WITH GOOD RAINS I CAN GET SIX TO SEVEN HUNDRED KILOGRAMS OF GRAIN EACH YEAR. IF THERE’S LESS RAIN THEN I GET LESS GRAIN.
CROWD
Hammou knows he faces risks –– he, like heads of families across the world - tries to insure himself and his family against them.. he diversifies.. spreading his assets not just relying on his land.
COW / SHEEP
He keeps as many cows, sheep and goats as he can. As farmers here don’t have access to banks, he buys livestock as a form of savings.. he puts any extra income into his animals which he can liquidate when times get hard. It is a form of insurance against bad times..
SHOP
To further diversify in case of agricultural failure, he has a tiny shop that his wife runs to earn extra cash. But even this forward planning is not enough when the rains fail completely as they did in 1984 and 2002.
HAMMOU
22.40 IN THE 2002 DROUGHT THE COWS DIED AND THE CATTLE DIED AND THE FAMILY WENT HUNGRY. WE GOT LESS THAN 200 KILOGRAMS FROM THE LAND THAT YEAR.
27.00 WHEN I REALISED THE RAINS HAD FAILED I SOLD MY CATTLE AND EVEN MY OXEN BUT THE PRICE WAS VERY LOW. I GOT LESS THAN 500 FOR MY OX. BUT THEN THE DONORS CAME GAVE US FOOD TO EAT
PARCHED GROUND
These are the droughts that Richard is speaking of. Everyone in the area is effected along with Hammou and his neighbour.. Dalou Waya... the value of livestock plummets as everyone tries to sell at the same time.. if you don’t sell the animals die
PLOUGHING
But selling the oxen they’ll need to plough the land once the rains return could leave these farmers completely destitute.
FRIEND:
34.17 BEFORE THE DROUGHT I HAD 10 DIFFERENT CATTLE. BECAUSE OF THE DROUGHT SOME DIED AND I SOLD THE REST. EVEN UP TIL NOW I’VE ONLY BEEN ABLE TO GET BACK 3 DAIRY COWS AND ONE OX. AND ONE OX IS NOT ENOUGH TO PLOUGH… YOU NEED 2 OXEN TO PLOUGH
HAMMOU AND FAMILY
It is exactly this downward spiral of continuing destitution that weather insurance should prevent. Hammou and his family would receive money immediately the rains fail … before they started suffering.. as the insurance company would be contractually compelled to pay up
16.08CHARITY IS A GOOD THING BUT IT NEEDS ADVERTISING AT PEOPLE’S WORST MOMENTS TO MOTIVATE PEOPLE TO GIVE.. THIS IS A MUCH MORE DIGNIFIED APPROACH THAN USING THEIR MISERY TO FILL A BEGGING BOWL
CLOUDS
So the question is can a developing country like Ethiopia enter the weather insurance market?
WFP FOOD BEING TAKEN OFF TRUCK
The World Food Programme is planning to insure vulnerable Ethiopian farmers against drought. So that cash for food is available at the time it’s needed. But it’s not just the farmers who benefit. It is also better for aid organisations to have access to resources as early as possible.
INSIDE WAREHOUSE
Rushing mountains of food to starving people to keep them alive is expensive. The earlier the money arrives, the cheaper it is to deliver what’s needed. And you won’t end up providing for destitute families indefinitely.
RICHARD
16.40 ETHIOPIAN GOVT APPRECIATES IDEA OF SAVING LIVELIHOODS.. GETTING AWAY FROM LATE REACTION. 2002-3 RESPONSE WAS AS GOOD AS IT GETS. V FEW DIED IN SECOND WORST RAINFALL YEAR EVER. BUT 2M MORE FELL INTO DESTITUTION SO IT IS AN EXPENSIVE PROPOSITION.
14.30BY GETTING IN HERE IN THE FIRST WEEKS WE ARE MUCH MORE VALUABLE THAN LATER..
JO AT PRESENTATION
But first you have to get a company to take on the risk and guarantee the payout. Dr Jo Syroka has the job of creating a contract which will quantify the farmer’s risk in a way that can be used and trusted by financiers, in high rise offices on the other side of the world.
JO UPSOF
……..2.7:30 FIRST THING YOU HAVE TO INDEX THE RISK.
8.00 BOTH PARTIES NEED TO UNDERSTAND AND RAINFALL IS A COMMON LANGUAGE.. EVERYONE KNOWS THAT 1M,M OF RAIN IS THE SME WHETHER MEASURED IN AA OR LONDON SO THE TRANSFER OF RISK OF FAILURE OF RAIN IS POSSIBLE.
DRIVING SOUTH / MUSIC
There are obvious links between a weather risk, its human consequences and the humanitarian aid needed when the event happens…but according to Jo Syroka the aid community’s been slow in managing risk.
She’s the World Food Programme’s link to the international weather risk market. And she’s been dispatched to find out if reliable rainfall data can be collected in the rural areas they want to insure. This will form the basis of the contract.
IN THE VILLAGE, CARS AND JO AND ULRICH
International finance is wary of developing countries like Ethiopia because it requires high quality data and a lot of it.. But rainfall data is internationally recognised and Jo is sure that Ethiopia has the capacity to fulfil international demands. She’s here in Zewai to meet the local meteorologist.
UPSOF HELLO..
JO
3.31.20 THE BIGGEST RISK THE FARMER HAS IS RAINFALL – MANY OTHERS BUT DROUGHT IS THE BIGGEST – CAN CORRELATE RAINFALL TO PRODUCT. CAN LEAD TO MODEL WHERE X MM RAINFALL TELLS YOU WHAT OUTPUT/PRODUCTION SO IF YOU MEASURE THE RAIN YOU’LL MEASURE PRODUCTION AND SO FOOD SECURITY.
WEATHER STATION
Zewai weather station is one of 26 the team chose to provide data for their initial pilot scheme. It is one of the better ones in Ethiopia and the meteorologist does provide reliable rainfall data.
UPSOF RAIN RECORDER
The contract stipulates data has to be collected every day at exactly nine am.
RADIO UPSOF
Then that data has to get to the insurance company within a set number of hours.. That’s quite a big deal in a country like this where communications are poor..
UPSOF RADIO
EXTR RADIO MAST TO SKY
First it’s radioed to the Meteorological HQ in Addis Ababa.
AA NMA OFFICE RADIO MAN JOTTING NOTES
UPSOF RADIO
Here data from all 26 stations will be collated and sent on daily to the insurance company. Ethiopia’s history of weather risks means they’ve a good record of weather data collection
ARCHIVE
UPSOF
THIS IS AA FROM 1954..ITS THE OLDEST ONE..
At the meteorological agency’s archive there’s more crucial data. The records go back 50 years. And just like any car insurer checking your previous claims, this detailed archive is used to assess the probability of an extreme weather event, to help them calculate the premium.
V/O: WE HAVE 1.8M CHARTS OF SURFACE OBSERVATONS.. 3BN STATION OBSERVATIONS.
JO
20.25 ALTHOUGH WE DON’T ASK VULNERABLE PEOPLE FOR A PREMIUM IT IS JUST LIKE HOUSE OR CAR INSURANCE.. WE HAVE THE RESPONSIBILITY OF AN INSURANCE COMPANY BUT MANDATE GREATER COS MORTAL PERIL.
CATTLE
Commercial farmers in Ethiopia, like this large scale cattle farmer, can afford to take out insurance premiums on an individual basis... But the majority of farmers can’t. For them, WFP food hand-outs have always been like a last-resort insurance. But is it acceptable to rely on this last minute begging bowl culture.
INSURANCE IS THERE TO HELP YOU DEAL WITH RISKS THAT DON’T HAPPEN OFTEN BUT WHEN HAPPEN ARE DANGEROUS TO YOU.. WFP WILL HAS MADE PROMISES
STATUES IN ROME/MUSIC
Back in Europe, the contract is ready and the team have presented it to the international insurance companies.. Nothing like this has been done before, so they were unsure of the outcome.
JO
36.30 I HAD A DIALOGUE WITH THE PLAYERS BEFORE AND THEY WERE SURPRISED AT THE STAGE THAT WE WERE AT.. THAT WE WERE READY TO TRANSACT THEY WERE VERY EXCITED, THE RESPONSE WE GOT T0P THE TENDER WAS VERY GOOD --- I WAS VERY HAPPY..
In fact 6 international finance houses offered to take the risk. In the end AXA won the contract
YOSHIKO
4.6:40 WHAT WAS WONDERFUL ON THAT NIGHT I CLOSED THE TRANSACTION WAS THE ENTHUSIASM – BEGINNING OF NEW PHASE OF FINANCING. HUGE ENTHUSIASM. I WAS WORRIED THAT WE WOULDN’T GET THE TERMS, COS WE WERE USING PUBLIC MONEY, BUT WE GOT MARKET STANDARD.. VERY HAPPY
So is this the start of a new form of humanitarian funding
FROM THE POSITIVE RESPONSE SO FAR YES I THINK SO, OPTIMISTIC!
RW AT PANTHEON
For Richard Wilcox, it’s been an achievement to prove that the international financial market will take on the risk of some of the world’s most vulnerable people. But this is only one of many tools he plans to use to bring even greater efficiency into the humanitarian aid world.
IT’S A TOOL ONE USES FOR A HUMANITARIAN END, MODERN TOOL – WE ARE QUITE PROUD OF THE FACT.. MUST USE WHATEVER WE CAN TO GET THE BEST VALUE FOR THE BENEFICIARIES.
Richard’s looking to the future now. They’ve started the ball rolling on behalf of the world’s poorest. Now he and his team hope that the ideas they’re piloting will bring an end to the begging bowl culture and ad hoc nature of aid provision for vulnerable populations worldwide.
RW FUTURE?
RW
10 – 15 YEARS FROM NOW IDEALLY GOVERNMENTS WILL BE TRANSFERRING RISK TO RISK MARKETS SO CONTINGENCY FUNDS AVAILABLE AND US EBING HERE TO HELP IF THEY ARE TOO WEAK TO MAKE IT HAPPEN. BRINGING RISKS OF VULNERABLE POOR INTO FINANCIAL MARKETS WILL LEAD TO THE GREATEST EFFICIENCY.. THAT IS OUR VISION FOR THE FUTURE.
So, Jo was able to construct her model. What was the response in the finance houses?
YOSHIKO BETTER HERE..
COFFEE TIME
But some here not so keen – western concept, CREATED IN Rome and NY not appropriate to Ethiopia – stupid to make model only on rainfall.. and why give good money to insurane co.. could be invested in the community?
RW RESPONDS
How do the Ethiopian africultural min people feel about it now that they have heard about it
BERHANY
HAMMOU AND FAMILY OUTSIDE HIS HOUSE
So now these farmers are protected.. they will get a hand out if the rains fail as soon as the contract date comes up
RICHARD
I HOPE THIS PIONEERING EXPERIENCE WILL SHOW THE WAY FORWARD ACROSS AFRICAN VULNERABLE POPULATIONS. AND HOW TO BETTER MANAGE PORTFOLIO OF RISK ACROSS AFRICA.
2.6:20OBJECTIVE IS TO PROTECT LIVELIHOODS
19.00WANT TO SAVE LIVELIHOODS AS WEELL AS LIVES.. KEEP FARMERS PRODUCTIVE.
SYNC V/O
WE ARE AN UNUSUAL SET OF PEOPLE..
14.00 THE SORT OF STUFF WE ARE DOING IN THIS PROJECT IS INNOVATIVE NOT JUST FOR HUMANITARIAN INDUSTRY BUT FOR FINANCIAL MARKETS TOO. WEATHER DERIVATIVE TOOLS ARE NEW.. NOT AVAILABLE TIL RECENTLY.
JO AT PRESENTATION WITH SCREEN
. and so
RW
13.40 TIMELINESS… ((THEY WOULD LIKE TO CLING TO COWS AND OXEN COS CAN’T DO ANYTHING WITHOUT THEM .. BUT THERE IS A FIRE SALE AND YOU HAVE TO SELL EARLY TO GET ANY KIND OF DECENT PRICE.)) WE WANT TO STEM THAT BY GETTING IN HERE IN THE FIRST WEEKS – MUCH MORE VALUABLE THAN LATER
AT THE VILLAGE WITH HORSE DRAWN CARRIAGES
Commercial farmers like these keep contingency funds to feed their cattle in times of drought.. like this. And the UN has been working on holding contingency funds to provide more timely help to at risk communities too. But Richard Wilcox’s team say that it is cheaper to take out insurance to provide that funding because it’s a very competitive marketplace and risks can balance each other out so bringing prices down