National drought insurance for Malawi

Malawi has experienced several catastrophic droughts over the past few decades. The impact of these shocks has been far reaching, and the resulting macroeconomic instability has been a major constraint to growth and poverty reduction in Malawi. In recent years the World Bank has been exploring the use of various ex-ante marketbased instruments to assist the Government in managing the financial risks associated with weather-related volatility in maize production. This paper describes the weather risk management tool that has been developed to help the government manage the financial impact of drought-related national maize production shortfalls.

Commodity risk management group, World Bank - 2008