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A Kenyan insurtech startup for de-risking farmers is expanding to Asia with new funding

REUTERS/Jackson Njehia
Harvest time in Sigor village of Bomet County, Kenya, May 28, 2020.
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Across Africa, as the impact of climate change is increasingly felt by the small scale farmers who dominate the region’s agriculture sector, governments have been unable to do much to protect them against the ravages of natural disasters like last year’s desert locust infestation in Kenya or the floods across northern Nigeria and droughts in the normally verdant south of the country.

One other troubling offshoot from climate change is increasing conflict, and sometimes outright terrorism, as communities battle over dwindling resources, in particular water, but also over land rights.

All these highlight the precarious nature of small scale farming and the need for better protections and safety nets to help mitigate the risk of trying to earn a livelihood.

Pula, a five-year old insurtech startup, provides small scale farmers with agricultural insurance to help manage the risk of enduring extreme conditions. Insurtech is one of the fast-growing sub-sectors of the fintech, which has booming with investors in African startups.

The startup works by sending teams to farms to get a representative sample in an area during the beginning of the farming season and harvest period to help gauging the potential of the season’s harvest. For example, if a farm that usually produces 30 bags of maize per hectare, produces five bags due to flooding, the farmer will receive a payout equivalent of 20 bags. This calculated risk is what Pula sends to insurance companies, explains co-founder Rose Goslinga.

REUTERS/Baz Ratner
A man attempts to fend-off a swarm of desert locusts at a ranch near the town of Nanyuki in Laikipia county, Kenya, Feb. 21, 2020.

Since it was founded in 2015, Pula has impacted 4.3 million farmers across 13 African markets. Goslinga says key to Pula’s business model is helps insurance companies better understand the risks of small scale farming.

With an average premium subscription of $4 for small-scale farmers in Africa, Pula actually markets the insurance product to banking partners rather than directly to farmers. The banks make the insurance mandatory before they approve loans to the farmers.

“We are able to work in 13 countries not because we have insurance licenses in all these countries but because in every one of those countries there are insurance companies that are willing if enabled by a company like ours,” she tells Quartz Africa.

To this end Pula raised $6 million in a Series A fundraising this week led by the fund TLcom Capital with participation from Women’s World Banking, which champions women’s financial inclusion. Pula is signing up clients including the Central Bank of Nigeria, the World Food Program, and the Kenyan government.

Pula will also be expanding to Asia, targeting smallholder farmers as it has in Africa, with a focus on Philippines, Thailand, Turkey, and Pakistan. “What we’ve realized is that African solutions are in no way inferior to Asian, European solutions,” says Goslinga.

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