The lack of insurance for smallholder farmers is a major challenge in many parts of Africa. As our climate changes and global fish stocks continue to face widespread depletion, the livelihoods of millions of farmers and fishers around the world are increasingly at risk.  One such solution is to invest in new and better crops in Africa but risk management is a serious constraint that inhibits fishers and farmers from taking that leap. Having insurance is extremely important for smallholder farmers and others to increase incomes and reduce their risk to climate and environmental shocks.

Fisherfolk in Accra Ghana
ACCRA, GHANA – Group of fisherfolk working on Cape Coast beach, one of the most prominent fishery villages.

Insurance companies are well versed in this challenge.  They have a strong interest in serving this market and solving the issues that affect smallholder farmers and others, but are often limited due to a wide range of other demands, including access to data and information.

In Kenya, Resonance has been working with diverse stakeholders to develop and deploy a next generation weather-indexed crop insurance product for smallholder farmers.  Building off lessons learned from previous attempts at insurance partnerships, we incorporated decades of historical weather data and worked to improve the service provision of government partners, two critical innovations that create opportunities for shared value in what Francis Ngari, Micro-Insurance Manager at Jubilee Insurance, calls “a big breakthrough in designing crop insurance.”  The partnership involved numerous stakeholders including Jubilee Insurance, Kenya Meteorological Department, Rabobank, FAO, USAID’s PREPARED project and others.  The product is called Kinga Kilimo, and it is being test-marketed in two counties in Kenya this fall with the goal of rolling it out across much of the country for the spring growing season.

Peter Ambenje, Director of the Kenya Meteorological Department confirmed that “The innovative approach to the partnership design of the Weather Index Insurance Kinga Kilimo product has opened our eyes on how we can connect to private companies and generate products that add value as opposed to just sharing climate data. [It] has changed the approach and mindset of our staff as far as service delivery is concerned. We look forward to adopting this model to engage with other partners in the future.”

Building these kinds of shared value partnerships is never easy.  Here are a few insights that we have learned from our work across Africa to improve the livelihoods and resiliency of farmers and fisherfolk:

  • Analyzing the Market Landscape is Key. In both the Kenya and Ghana cases, our team conducted a Rapid Partnership Appraisal (RPA) to better understand the local market and how we could create new market opportunities that would help smallholder farmers and fisherfolk manage risk in a changing climate.  Through targeted interviews and focus groups, our teams were able to uncover significant shared value opportunities in the micro-insurance space.
  • Leverage Local Knowledge Networks to Create New Business Models. With the opportunity identified, we then convened local industry leaders, scientists and government policy-makers to develop new business models that capitalize on the market opportunities.  In Kenya, for example, we held a two-day co-creation session where we used Ostwalder’s Business Model Canvas to generate a new business model for weather-indexed insurance for smallholder farmers.  The workshop enabled participants to build off of previous efforts and better understand how – by working together – they could create a new scalable product that would best serve the needs of farmers.
  • Customers are Integral to Shared Value Solutions. Too often, development organizations and product developers do not involve base of pyramid (BoP) consumers in the development of new products, resulting in product failures that do not create value.  In the case of both Kenya and Ghana, Resonance actively engaged farmers and fisherfolk groups as part of the product development process, ensuring that the resulting insurance products are designed to meet real-world needs.

By focusing on shared value, these partnerships are not creating new markets for insurance companies, mobile operators and others,  they are also addressing the needs of smallholder farmers and fishers.  According to Yolanda Zoluka Cuba, CEO of Vodafone Ghana, “For us, it is an important milestone as this is not only a business transaction, it’s a social impact initiative.”  By combining business with social returns, African insurance companies are not only transforming their industry, they are enabling millions across the continent to meet the challenges of a changing climate.