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Insurance moves ahead in Myanmar

Our insurance team is increasingly stepping outside traditional SFSA focus countries. We are now looking for the best smallholder solutions in Myanmar. Crucial support comes from Switzerland.    

Myanmar (formerly Burma) is one of the nations most at risk from climate change. The country is already vulnerable to extreme weather events such as drought, floods, cyclones and heatwaves. With climate change, these will increase in severity and frequency.

SFSA aims to help reduce the impact of these events on farmers, and strengthen their resilience. In Myanmar, we have conducted insurance feasibility studies and ‘dry runs’. Backing for these activities has come from the Swiss Capacity Building Facility (SCBF).

Dry runs test insurance products on a small scale before wider launch. In Myanmar, SFSA and partners developed offers for hybrid and commercial rice, groundnuts, sesame and pulses. We tested these in two afflicted areas. Agriculture in the Central Dry Zone suffers from frequent droughts, but also experiences floods. Farmers in in the Delta Zone tackle flooding, cyclones and salty soils.

The feasibility study examined the ‘enabling environment’ and distribution channels. We wanted to know what would aid the development of commercially viable insurance, and who could best help make it available.

Myanmar currently has a cap on interest rates. Banks are therefore particularly reluctant to make loans to clients they regard as risky – such as smallholders. Lending-linked insurance could be one way to improve farmers’ access to credit. The banks and the country’s numerous micro-finance institutions could be an ideal distribution channel, as they stand to benefit from greater security. Our study also identified other possible channels. They include cooperatives, processors, input suppliers and mobile money providers.

The Burmese insurance sector is still in its infancy. In the upcoming years, however, the Ministry of Planning and Finance created regulations on agricultural insurance and is now bringing these into effect. The SCBF has therefore decided to back our efforts to provide financial education and scale up micro-insurance over the coming two years. This support lets us test products further, and increase their availability to smallholders across the country. It also enables capacity-building in the insurance value chain, and education of smallholders so that they understand insurance is an advantage, not just a cost.