A low-cost insurance solution that operates using data from automated weather stations, will offer 20 000 Rwandan farmers cover for the risks posed by increasingly erratic rainfall in the country. The micro-policies will protect agri-loans for high-yielding seeds, fertilizers and other farm inputs.
Called Kilimo Salama, ‘safe farming,’ the project is a collaboration between the Syngenta Foundation for Sustainable Agriculture, the Ministry of Agriculture and Animal Resources, One Acre Fund, SORAS Insurance in Rwanda, and Swiss Re Corporate Solutions.
It was launched in Kenya in 2010 and has insured 73 000 farmers to date. Ten thousand payouts have been made to farmers in Kenya. The programme will offer farmers in the Southern and Western provinces insurance linked with loans provided by One Acre Fund for fertilizer and other inputs. Insurance premiums will be paid as part of loan repayments.
“This product has the potential to make agricultural microinsurance affordable and attractive for smallholder farmers and economically viable for insurance companies in developing countries that had previously ignored most of the agricultural sector,” says Benjamin Mbundi, managing director of SORAS Insurance.
The project covers farmers who plant maize and beans, on as little as a 10th of a hectare. “Extreme or erratic rains and drought trap many Rwandan farmers in poverty. Repeated bad weather can rob them of the means to recover in the following growing seasons,” adds Marco Ferroni, executive director of the Syngenta Foundation.
“By using the weather stations to verify local weather conditions, we are avoiding expensive and lengthy claims procedures,” says Mbundi.
Automated weather stations
Eight fully automated weather stations have initially been installed in the Southern and Western
provinces. These stations, the first of their kind in Rwanda, are fitted with transmission
systems to broadcast regular updates on weather conditions and rainfall recorded. When data from a particular station indicates that extreme weather conditions are likely, it will trigger a payout to One Acre Fund, which will compensate individual farmers or forgive their loans.
“The use of data from automated weather stations to approximate actual farm losses is an innovative and cost effective alternative in situations where the losses cannot be assessed through traditional means of assessing claims for each smallholder,” explains Christina Ulardic, head of market development Africa with the project’s international risk taker Swiss Re Corporate Solutions. “Such procedures can be cost-effective for large farms, but are far too expensive to be practical for most farms in Rwanda, where the vast majority of farming is done on very small plots.”
Early warning system-integrated insurance and funding schemes have been strongly endorsed by the United Nations Development Programme (UNDP), with pilot project and plans in place across the continent. Countries such as Zambia, Burkina Faso, Uganda, Tanzania and Malawi are all identified for similar technology-integrated schemes in the future.