Kenyan startup cushions Africa farmers from risks

A farmer in Nyeri weeds her crops. FILE PHOTO | NMG 

Thomas Njeru experienced firsthand challenges that his peasant father underwent at their home on the slopes of Mount Kenya in Embu County.

The sad reality was that the whole village was constantly staring at droughts, floods, diseases and abject poverty.

“The problem was worsened by the fact that no one had any form of insurance or risk mitigation mechanisms from the vagaries of weather,” Mr Njeru says.

So in 2016, determined to end this set of concerns, Mr Njeru together with Rose Goslinga co-founded Pula, a company that now develop and distribute insurance and farm advisory solutions to more than 1.3 million smallholder farmers across Africa.

"The concept of Pula was born from an attempt to create a solution for these pressing needs,” he says.


He reckons absence of viable risk mitigation techniques is the main cause of poor productivity on Africa’s arable land.

Pula’s system works by embedding insurance products on farm inputs such as seeds, fertiliser, agrovet products as well as credit and government subsidy programmes. "Farmers automatically get insured when they purchase inputs. It is similar to a warranty and for the input companies, insurance becomes a part of the product feature for their marketing programmes,” he says. In the case of seeds, insurance vouchers are stuck on all bags at the point of packaging and the insurance cost included in the cost of the input.

"When the farmer walks to the agro dealers to purchase seed, the shopkeeper scans the bag and enters the farmer details including the GPS location,” he says.

The details, Mr Njeru says, allow them to monitor and assess the performance of the crop through a combination of both satellite-based technology and a ground-based harvest measurements.

“If farmers experience losses, we send them an SMS with the payout voucher with which they can redeem for another bag of seed, or even cash at their nearest agro dealer or any of our distribution outlet,” he states.

The insurer has a team of actuaries who structure and price insurance products.

"We also use technology — such as mobile, satellite, machine learning — to make distribution and execution of these products operationally feasible for small holder farmers, " he adds.

On average, he notes, a farmer can afford to pay only between Sh300 and Sh500 in premiums that include the cost of product development, pricing, underwriting, claim adjustment and the claim costs.

"We’re building an M-Pesa for small holder farmers insurance, states Mr Njeru who was featured as one of the top 12 visionaries of 2019 by New York Times..

The entrepreneur says existing insurance companies’ business models are not set up to serve the unique needs of small-holder farmers.

The firm has expanded across nine countries — Nigeria, Malawi, Zambia, Mali, Senegal, Ethiopia, Tanzania and Uganda. Moreover, it has done a piloting in India and Angola.

The firm serves about 300,000 smallholder farmers in Nigeria, where it has partnered with the government, the Central Bank of Nigeria and the Dangote Group.

In Zambia where it has also partnered with the government, the enterprise serves 150,000 smallholder farmers.

The firm now boasts a network of five seed/fertiliser companies, 5,000 agro-retailers, 26 credit providers, and has partnered with three African governments as well as 20 insurance/reinsurance firms.

The firm has now set its sights on India, targeting the populous nation to drive growth.

“Why India? The size of the population is huge. We are talking about a billion people,” Mr Njeru says.

The firm now commands a seed investment worth Sh300 million ($2.85 million). Some of the notable investors who funded the seed investment is Omidyar Pierre — who was the founder of E-Bay — through his social impact vehicle called Omidyar Networks.

Mr Njeru notes that the company now offers yields index which guarantees farmers of production by comprehensively insuring against many risks including droughts, cyclones, floods, pests and diseases.

"When we started, our initial product was weather index which covers farmers against either insufficient rainfall or excessive rainfall," he says.

The firm also offers digital-based extension services to farmers on mobile phones, USSD as well as WhatsApp.

"We use artificial intelligence, mobile-based registration systems, remote sensing, end-to-end automation tools amongst others to make the numbers work," he says.