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Innovative insurance by mobile

Approximately 1,400 farmers have received payouts so far (© Jeff Haskins/Burness Communications)
Approximately 1,400 farmers have received payouts so far
© Jeff Haskins/Burness Communications

As African countries ponder strategies to reduce the vagaries of weather on agricultural productivity, a pilot insurance programme started in Kenya three years ago is expanding to cover a wider selection of crops, including maize, wheat, beans and sorghum. Dubbed Kilimo Salama Plus, the initiative, which started off as Kilimo Salama*, is helping farmers to cushion their investments from drought, excess rain and other extreme weather events.

A Kiswahili translation of 'safe agriculture', Kilimo Salama has been available in Kenya's bread basket regions of Western, Nyanza, Rift Valley and Mount Kenya to issue an insurance policy and rapidly compensate farmers for investments in seeds, fertilisers, and other inputs that are lost to insufficient or excessive rains. The scheme deploys a low-cost mobile phone payment and data system that is linked to solar-powered weather stations. With Kilimo Salama Plus, farmers will now have the opportunity to insure their harvests as well.

Currently, when a farmer purchases insurance, the agro-dealer uses a camera phone to scan a special bar code that sends the policy details to UAP Insurance over the Safaricom network. The farmer is then registered with a local weather station and receives a text (SMS) message confirming the policy. When data from a particular weather station indicates drought or other extreme conditions, including excessive rains, all farmers registered with that station automatically receive payouts through their mobile phone via Safaricom's M-PESA money transfer service. This eliminates the often lengthy claims process involving an agent visiting the farm to estimate losses.

Kilimo Salama currently boasts a network of 80 agro-dealers, with more being trained every day. It includes a fertiliser company, a seed producer and various stockists in an arrangement where, each time a farmer takes a policy, the companies match the premium contribution. The project has also upgraded 30 weather stations, each monitoring the micro-climate in a 15-20 km radius, which guarantee the insurer dependable data in real time.

Building trust

Upgraded weather stations guarantee the insurer dependable data in real time (© Jeff Haskins/Burness Communications)
Upgraded weather stations guarantee the insurer dependable data in real time
© Jeff Haskins/Burness Communications

Simon Macharia is one farmer who decided to try Kilimo Salama because of the droughts he was experiencing and is happy the scheme has lived up to its promises. "We have seen a lot of projects being promoted so I did not give it too much thought," he admits. "But the compensation made me happy. This is a good company." Macharia is among approximately 1,400 farmers who have received payouts so far.

"We have seen 21,000 farmers in Kenya take advantage of the original Kilimo Salama and we should be able to reach 50,000 farmers with Kilimo Salama Plus this year, providing far more insurance options," says Marco Ferroni, executive director of the Syngenta Foundation. "We have quickly seen this initiative grow from a small pilot programme in 2009 to become the largest agricultural insurance programme in Africa and the first to use mobile phone technology to speed access and payouts to rural farmers," he adds.

Kilimo Salama also has a helpline that is staffed by agriculture experts to provide callers with free advice on improving agricultural production and protecting their investments and it is estimated that 16,000 farmers have already used the helpline. "Some farmers have reported that their maize performed better as they had more knowledge of agricultural practices," says Rose Goslinga from the Syngenta Foundation. "We expect that this will stimulate renewal rates in years where the rains appear to be good."

According to UAP Insurance managing director James Wambugu, Kilimo Salama has also helped to re-build farmers' trust in the insurance sector, which is now under pressure to offer more products, such as livestock insurance. "It follows our drive to simplify insurance and, in the process, expand access to more farmers," Wambugu says. While Safaricom CEO Bob Collymore comments with some satisfaction, "It's exciting to see how the rapid uptake of mobile phone technology in Kenya is being used to deal with the weather uncertainties that are a major cause of food insecurity among some Kenyan families."

Future outlook

Kilimo Salama has also helped to re-build farmers' trust in the insurance sector (© Jeff Haskins/Burness Communications)
Kilimo Salama has also helped to re-build farmers' trust in the insurance sector
© Jeff Haskins/Burness Communications

At the launch of Kilimo Salama Plus in Kitale, Dr. Wilson Songa, Kenya's Agriculture Secretary welcomed the initiative and pledged more government support towards expanding the project to other regions. "Agricultural insurance is particularly important in Kenya and elsewhere in Africa today as the extreme weather patterns generated by climate change are introducing greater volatility to food production and food prices," he said.

By registering farmers, the project is also creating a farmers' mobile phone database, which will be critical in the future for sharing timely extension messages throughout a season, resulting in improved crop husbandry. "The idea is that farmers need more than insurance," Goslinga explains. "They need access to the right information. Once they have this, there will be less of a need to depend on insurance." Kilimo Salama also has plans to expand their scheme, offering insurance to other countries in East Africa.

* Kilimo Salama is a partnership between the Syngenta Foundation for Sustainable Agriculture, UAP Insurance, and Safaricom. The scheme is supported by the International Finance Corporation (IFC), Global Index Insurance Facility which is supported by the European Commission, and Syngenta Foundation for Sustainable Agriculture.

Written by: Zablon Odhiambo

Date published: April 2011

 

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