First Microinsurance Agency Limited (FMiA), an insurance company focused on microfinance borrowers in Tanzania, is soon going to be delivering cheap insurance services to cover health and agro-business.
The new insurance services for small-business owners and low-income earners is set to be implemented over the next five years with financing from the Bill and Melinda Gates Foundation and the Aga Khan Agency for Microfinance. It is also set to improve and expand partnerships fostered in the past amongst various financial services operators who already work with rural poor populations.
An extract from the Daily News article that cited this investment:
…By including the poor in the formal economy and providing a range of insurance services, the quality of life and economic security will be enhanced… The FMiA will involve people who are members of the Savings and Credit Cooperatives Organizations (SACCOS), cooperatives, village savings, loan associations, banks and other forms of microfinance institutions…
We’ve discussed various instances and projects involving microfinance here on Vijana FM before. However, insurance becomes just as important once a low-income entrepreneur has set up his/her business model. Due to various factors that entrepreneurs cannot control (such as government regulation, changes in climate, accidents, etc.) it becomes necessary to insure a business, especially as it begins scaling up. According to the Aga Khan Development Network website, microinsurance is still a new innovation in poor countries today, yet an increasingly necessary one.
My favorite question: What does all this mean for Tanzanian youth?
This means that youth who have previously borrowed from cooperative organizations such as the First Microfinance Bank to implement small businesses will now have access to insurance services. This will most likely increase the lifetime of their products and services.
This also means that youth who have not previously been involved with borrowing and setting up small businesses can now do so with a safety net in place.
Most importantly, I think microinsurance schemes provides an indirect means to protect intellectual property. Of course, IP is mainly protected using copyright law and business registration, but in the context of rural Tanzania, ideas mean just as much as resources. That is, a new idea to tackle a problem is as important as the resources (human resources included) necessary to implement the idea. So if resources are protected (as in the case of microinsurance schemes), ideas are protected as well.
Having said this, here is some food for thought:
- The article cites only 3% of Tanzanians having access to any type of insurance. How can we be sure that new and improved insurance services for the working poor will be accessible to them?
- Given microfinancing and microinsurance schemes, is there a need to store “lessons learned” on a common, accessible platform in rural Tanzania?
- How many working youth work for businesses with insurance?
Related links:
- Daily News article: Insurance Services for “Poor” Coming
- Aga Khan Development Network on Microinsurance
- Bill and Melinda Gates on Financial Services for the Poor
- December 2009 press release of partnership agreement between The First Microinsurance Agency Tanzania (FMiA) and the Savings and Credit Cooperative Union League of Tanzania (SCCULT)
- Wiki article on Microinsurance
- Previous Vijana FM articles on Microfinance
