PHILIPPINE STAR/ MICHAEL VARCAS
THE World Bank (WB) is evaluating a Philippine climate-change mitigation insurance project targeted at small farmers, which it could co-finance to raise up to $358 million.
According to project information posted on the World Bank website, the package will consist of “a blended finance credit facility to significantly leverage World Bank funds. It also focuses on establishing the country’s first agricultural co-insurance pool to enable large-scale private-sector agricultural insurance. Additionally, it addresses critical ecosystem challenges related to agricultural credit and insurance, with a portion dedicated to project management.”
The implementing agency for the project in the Philippines will be the Department of Agriculture (DA), with the Department of Finance (DoF) acting as the borrower.
Total commitments from the World Bank and non-bank sources was initially estimated at $358 million as of June 5.
The insurance project will also tap $515 million in unguaranteed commercial financing and $8 million from the Global Shield Financing Facility, a trust fund hosted by the World Bank.
A decision on the package is expected by March 26, 2026.
The World Bank said the loan seeks to close the financing gap for agricultural micro, small and medium-sized enterprises (MSMEs).
“MSMEs, despite comprising over 99% of enterprises, employing more than 60% of the workforce, and contributing over 40% of gross domestic product (GDP), face a significant financing gap,” the bank said, noting commercial banks’ risk aversion and MSMEs’ lack of collateral or credit history.
It also seeks to address the low insurance coverage for agriculture in the Philippines, with the industry mainly covered by the public sector.
“Private-sector involvement remains minimal due to a lack of access to government subsidies, data limitations, taxes on private insurance premiums, and perceived riskiness of agricultural insurance. Recent climatic events, like the El Niño-induced drought, underscore the need for new insurance products. With existing insurance lacking in coverage, accessibility, and affordability, many farmers remain vulnerable to financial losses, discouraging investments in productivity-enhancing technologies and practices.” — Aaron Michael C. Sy