35. Investment Capacity Index (ICI)

35. Investment Capacity Index (ICI)

VERSION

V6.0 - 2026.03 — Existing

INDICATOR CODE

35

TECHNICAL OWNER

PRG-R

INDICATOR TYPE

Country Level Outcome Indicator

INDICATOR CLASSIFICATION

Mandatory

INDICATOR SCOPE

Programme specific indicator used to calculate outcome results of MAI, MMI and SLA programmes.

This indicator is also used to calculate the corporate outcome indicator “Number of countries where WFP-assisted communities benefit from enhanced financial capacity”.

APPLICABILITY

The selection of this indicator is mandatory against the following sub-activities in CSPs logframes. Selection of the below sub-activities will trigger in COMET the mandatory selection of this indicator:

1. Macro-insurance (MAI)

2. Micro/Meso-insurance (MMI)

3. Saving and Loans Associations (SLA)

   
   

UNIT OF MEASUREMENT & ANALYSIS

USD

DEFINITION

This indicator measures the average monetary value (USD) available for investment purposes at household’s level supported by WFP in a given reporting year, defined as the sum of savings, loans for productive purposes, and weather/yield index insurance payouts received from insurance schemes.

Below are some key definitions for this indicator:

Total amount of savings: the total sum of money saved during the reporting year by WFP-supported households and entrusted to organizations, such as Village Savings and Loans Associations (VSLAs), microfinance institutions, farmer/producer cooperatives, etc.

Total amount of loans accessed for productive purposes: the total of loans obtained during the reporting year by WFP supported households for agricultural production or income generating activities from supported community-based associations (i.e. VSLAs, farmer/producer cooperatives, microfinance institutions etc.).

Village Savings and Loans Associations (VSLA): A group of people who meet regularly to join their savings for a year in a common fund from which they can take out small loans in case of need. At the end of the year the accumulated savings and loan interests are distributed among the participants. VSLAs thus provide simple savings and loan facility in communities without easy access to formal financial services.

Total of insurance payouts: The annual value of cash payments to insured persons by financial institutions or insurance providers following a climate shock that triggered the compensation as defined in the insurance policy. Only insurance payouts of policies paid by WFP and transferred during the reporting year are considered for this indicator.

Parametric (Weather/Yield) insurance index: With this type of insurance, the total amount of payouts depends on the incidence and severity of shocks specified in the insurance policy. Shocks are measured either by weather (i.e. temperature, rainfall, soil moisture, vegetation) or yield (i.e. agricultural production) indices, depending on country context, type of insurance, and type of risks. The indices determine the extent of compensation from 0 to the total sum insured recorded in the insurance policy.

USD value: As figures collected for the ICI are captured in local currency, which may fluctuate against the USD, once the average is calculated, it needs to be converted to USD before being entered into COMET. To do this, the CO should use the monthly WFP exchange rate in force on the last day of the data collection exercise. The official exchange rate can be consulted here.

RATIONALE

This indicator measures the total value of savings, productive loans, and insurance payouts generated through WFP‑supported programmes. These financial resources strengthen households’ ability to manage climate‑ and weather‑related risks, though they may also be used to address other shocks. Because financial capacity evolves gradually and fluctuates with exposure to different types of shocks, this indicator is most meaningful when tracked across multi‑year interventions and interpreted alongside contextual information on climatic and non‑climatic stressors.

DATA COLLECTION TOOL

This indicator does not require household surveys as the information must be reported directly to WFP by cooperating partners implementing MAI/MMI/SLA sub-activities. This information is therefore recorded in completion reports from supported VSLAs or similar cooperating partners reporting on the USD value of savings and loans achieved every year, and from reports of insurance companies detailing the USD value of payouts provided every year to WFP and/or WFP’s beneficiaries.

SAMPLING REQUIREMENTS

N/A

INDICATOR CALCULATION FOR REPORTING

The ICI is calculated in USD as the sum of total savings, loans and payouts received during the reporting year:

ICI= Total sum of savings (S) + Total sum of loans accessed (L) + Total sum of insurance payouts received by households (P)

Thus ICI = P + S + L where each of its components is calculated as follows:

P = Total sum of insurance payout received by households:

S = Total sum of savings:

L = Total sum of loans accessed =

Being:

i= each insurance partner report

j= each savings promotion partner report (VSLA, microfinance…)

k= each loans promotion partner report (VSLA, microfinance…)

n = total number of applicable partnerships

Important note: Savings, Loans and Payouts values converted into USD prior to COMET entry.

DATA ENTRY AND DISAGGREGATION IN CORPORATE SYSTEMS

Mandatory:

• ICI components (savings, credits for productive purposes, and payouts)

The Table below shows the minimum set of figures that should always be captured in COMET for this indicator:

For insurance payouts, it is required to specify the type of applicable climate-related shock (multiple choice between Floods, Drought, Storm/Cyclone, Heat Wave, Wildfire, other). The total in the last row should be calculated as the sum of the 3 values reported under the same column.

Optional for reporting outside of COMET

• Geographical area

For this indicator, a cohort/target group is defined as the group of beneficiaries that minimally share characteristics such as receiving the same type of WFP assistance/support and start receiving it at the same time. They can also share other characteristics such as geographic area, vulnerability level, transfer modality, residence status, donor or cooperating partner. Thus, a cohort/target group is entered into COMET with a free text statement allowing COs to summarize the most relevant characteristics.

BASELINE

In line with business rules, baseline values should be established within three months before or after the start date of the activity implementation. However, the baseline for this indicator is always zero for new activities or the latest follow-up of the previous reporting year in the case of multiyear activities.

TARGET SETTING

Annual targets:

The annual target should be at least equal and ideally higher than the latest follow-up of the previous year or than the baseline figure if there is no previous follow-up.

End of CSP target:

This is country specific and depends mostly on the baseline, context, CSP duration, and programme objectives or design.

In any case, for multiyear interventions, annual targets are expected to be equal or higher than the value of the indicator in the year before.

FREQUENCY OF DATA COLLECTION

Partnership/detailed distribution reports should be collected monthly (when applicable) and aggregated annually to report on this indicator.

INTERPRETATION

The ICI gives a snapshot of the financial capacity of targeted households in a given year that can contribute to absorbing or mitigating effects of climate variability and extreme weather events.

Where the ICI is greater than zero, households are expected to be in a better position to cope with the negative effects of sudden or slow-onset climate and weather shocks than households without access to these financial resources.

If the ICI value is positive and maintained/increased over time, even while households are exposed to shocks, it can be assumed that the target groups reached a level of adaptive and mitigation capacities that allowed it to recover from the type and magnitude of shocks experienced during the surveyed period. This trend could reflect an improvement in household production, income and access to financial instruments leading to an increased absorptive capacity.

A lower value of the ICI compared to its previous follow-up or baseline suggests that the capacity to cope with further shocks has decreased which, in some cases, could be explained by resources used to absorb or prevent the negative effects of shocks occurred during the last 12 months.

If the ICI value overtime is zero or remains very low compared to previous figures, it can be inferred that targeted households have not built or increased their financial capacity. The use of complementary food security outcome indicators allows us to determine whether this could be a result of a vulnerability to food insecurity or an extreme weather event of a magnitude higher than expected.

When interpreting this indicator, it is key to describe major climate and other shocks that hit during the past 12 months, as they could impact the ICI.

REPORTING EXAMPLE(S)

WFP is implementing a 3-year activity covering 1,000 households, that have been gradually included into the programme by cohorts:

Cohort 1: 300 participants – Started in 2018 and ended in 2020

Cohort 2: 500 participants – Started in 2019

Cohort 3: 200 participants – Started in 2020

The results of the survey for each year and cohort are reflected in the table below. All averages were calculated as explained in the calculation section:

As shown in this table, the first value for each cohort is always reported as baseline and all others as follow-ups. For instance, cohort 1 has values for all three years, while cohort 3 only for the last year.

These results show that cohort 1 performed better in year 2 than in year 3 and cohort 2 performed much better than cohort 1 in year 1. When big differences occur among cohorts, it is important to note internal (related to the implementation of WFP activities) or external (related to context or anything else) factors that could explain these differences and eventually inform or suggest programme adjustments.

The overall values for this indicator are the sum of all applicable value during the same reporting year. If cohorts are not disaggregated, 2018 would be the baseline value with USD 35,000 and the first follow-up value would be 2019 with USD 175,000.

INDICATORS COLLECTED & ANALYSED AT THE SAME TIME

The following indicators may be reported along with this indicator:

• Number of people covered by climate insurance policies (Tier 3)

• Beneficiaries of value voucher transfer for services (Tier 1)

• Beneficiaries of insurance payouts (Tier 1)

• Indirect beneficiaries of insurance payouts (Tier 2)

• T.11 Total USD value of premiums paid and sum insured under risk transfer mechanisms supported by WFP

• Total sum ensured through risk management interventions

COMPLEMENTARY QUALITATIVE RESEARCH

Depending on country specific context conditions and key programmatic assumptions noted in the corresponding TOC exercises, the information of this indicator can be analyzed together with process monitoring data/results that can be collected through qualitative approaches such as direct observation, Key Informant Interviews or Focus Group Discussions. No additional tools, questions or templates are required to do this apart from what is already used for the regular process monitoring.

DECISIONS DATA CAN INFORM

The results of this indicator can inform programmatic decisions aimed at supporting the absorptive capacity of targeted households and related to the effectiveness of insurance payouts and/or to the definition of the value and duration of all applicable transfer modalities.

VISUALIZATION

The following graphs are examples of recommended visualization alternatives:

Evolution of ICI components per cohort

Percentual variation of average ICI

LIMITATIONS

The ICI can indicate whether the total financial investment capacity of a target group is increasing over time, and related capacities of households to absorb or prevent negative effects of shocks. This indicator cannot tell whether the current investment capacity is enough to absorb the damage of climate shocks that are more likely to occur in a specific context.

This indicator does not measure the effective household investment in shock absorption and adaptation practices but is indicative of the potential financial capacity that can act as a buffer in case of shock and to transform or adapt livelihoods to withstand future climate and weather shocks. (See interpretation section above).

FURTHER INFORMATION

Guidance:

Climate insurance planned and actual figures

Microinsurance at WFP in a nutshell

ARC Replica Factsheet