In one of my previous posts, I highlighted the impact of mobile technology in the life of a farmer. Farming is a risky profession and for the small farmer, tools to mitigate risks are few and far between. While you may argue that all professions have some element of risk – so what’s so special about farming? They key is in the word “some”. Most of us are used to ‘some’ level of risk and it is typically relative to an asset – like income. We are tolerant of losing some of our assets but definitely not all. And in most cases, we already have that asset before we decide to risk part of it.
For the small farmer, there is CAPEX, followed by OPEX before any revenue is realized. And that revenue has a spread. In a good year, when the gods have been merciful, the harvest could be bountiful. While a bad year could sink the farmer. And then there are those mediocre years. Anyways, this is not the place to expound my philosophies about risk and risk-management. My point here is that most of us are engaged in risk averse professions, but not the humble farmer.
That said, in plumbing the depths of the social impact of mobile technologies, I came across this wonderful intersection of risk management, farming and mobile technology – Insurance! And that too deployed using mobile technology. Or in other words Kilimo Salama!
Kilimo Salama in Swahili means ‘Agricultural Safety’. And in Kenya, Kilimo Salama is a program that helps the small farmer purchase insurance by adding the insurance premium to his/her inputs. Meaning, that the farmer does not need to purchase a policy, do all the paperwork, deal with an agent etc etc. He/she has to merely purchase say a bag of seeds or fertilizer and pay around 7-10% more for the same to cover the cost of the insurance premium. An SMS message from the insurance company formalizes the insurance contract. The more inputs that they pay using Kilimo Salama – the more the farmer pays towards the premium.
Should the gods be miserly that season and not send in good weather and if the farmer does not have a good crop, the insurance company makes a payout to the farmer based on a formula. And get this, the payment is processed automatically – no claims required and better still the payment is made via M-Pesa. The farmer can collect his payout from any M-Pesa agent!
It is a fascinating program and more importantly, it works! Here’s a video about the program..
The program is run in collaboration with Safaricom, UAP Insurance and Syngenta Foundation for Sustainable Agriculture. Since the payments are made automatically, the program makes every effort to accurately collect weather data. And this is done again with the help of a fully automated and self contained weather monitoring system that on average monitors weather around a 10 to 15km radius. Weather information is beamed to a server via a SIM card based GPRS system on the Safaricom network. The unit is powered by solar energy and is virtually maintenance free. Information that is collected is then analyzed in conjunction with crop production to determine any insurance payouts.
Kilimo Salama is a program that allows for the financial inclusion of the poor farmer who prior to this had no way to manage systematic or unsystematic risks. Now, with this the smallest farmer can afford to cover his bases to the extent possible.
I only hope that the success of Kilimo Salama is replicated across other nations and communities. All of this has been possible due to the proliferation of mobile phones and technology.
Interesting – right?