"Pay As You Plant" Insurance Helps African Farmers Recover from Climate-Induced Crop Loss

Africa farmer microinsurance photo

Image: Flickr via meaduva

Micro-insurance might be the latest in a string of technology applications that have brought exciting developments to perhaps one of the most surprising regions, rural Africa.

Kilimo Salama, or "safe farming" in Swahili, is a micro-insurance system that allows farmers to be compensated for low crop yield due to poor weather conditions, and can notify customers—by text message—of payments they will receive for their losses. It's a brilliant solution to a problem that has been impossible for African farmers to avoid and is only growing worse with climate change: economic loss due to poor climate and soil conditions.Micro-insurance gets at the heart of one of the problems facing farmers in rural Africa, that if you lose a crop one year, you won't have the cash to buy seeds the following year. One bad rainy season can be felt even years later. But now, efforts to increase access to insurance could help vulnerable farmers recover from losses that are well beyond their control.

SciDev.net explains how the micro-insurance scheme works:

The stockists use a mobile-phone camera to scan a bar code when farmers purchase supplies, which immediately registers the policy with African insurance provider UAP Insurance over Kenyan mobile network operator Safaricom's network. Farmers then receive a confirmation of the insurance policy purchase via a text message.

Participating farmers have to register with one of 30 solar-powered weather stations, readings from which are used to calculate whether there has been too much or too little rain for a healthy crop. If not, the farmers get compensation for their lost crops—and they don't have to spend all their earnings on transportation to the nearest bank, they can just be paid directly through a money-transfer system that operates over cell phone networks.

The cost for farmers is five percent of the value of the seeds, chemicals, and fertilizers sold by MEA Fertilizers and Syngenta East Africa—so it's not an altruistic mission, but these companies are part of the Kilimo Salama partnership, and provide the funds to match the farmers' investment, covering the 10-percent premium required to cover the costs of the program. Kenya-based UAP Insurance is the provider for the partnership, which also involves Safaricom and the Kenya Meteorological Department.

Not perfect
There are some drawbacks, like the potential discrepancy in weather between a farmer's plot and the weather station (each station covers about 15-20 km), which could prevent a farmer from receiving compensation even if he loses a full crop, as well as the up-front cost. That cost is small, but in some cases likely to be prohibitive, another example of how the people who need the most help often have the least access to it. But overall, it's a promising scheme that has reached at least 9,500 farmers aready and that provider UAP hopes will eventually reach 50,000 farmers in Kenya alone.

More on sustainable agriculture in Africa
Financial Engineering Key to Sustainable Development in Africa?
What's Shaking in Africa? 8 Amazing Projects You Want to Know About
UN FAO Says Invest More in Agriculture, Not Food Aid, in Africa
Food Policy Meeting in Africa: We Need Home-Grown Solutions

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