Insuring 37,000 Rwandan Farmers Against Drought
Index insurance can lower the cost of insurance, allowing smallholder farmers to buy insurance that can help them withstand the impacts of bad years and risk making productive investments in good years. A key component of index insurance is historical data – often temperature or rainfall data – to use as a basis for creating an index that determines when insurance payouts occur.
The Kilimo Salama index insurance project is a partnership between the Syngenta Foundation for Sustainable Agriculture, Rwanda’s Ministry of Agriculture, Rwanda’s SORAS Insurance and Swiss Re. Kilimo Salama is funded through the Syngenta Foundation and the Global Index Insurance Facility, an innovative partnership implemented by International Finance Corporation with financial support from the European Union, the Netherlands and Japan. This project faces many unique challenges in Rwanda. Among them, the historic rain gauge data necessary to create index insurance did not exist, due in part to prior civil strife.
Recently, Kilimo Salamo wanted to extend a new product to smallholder farmers in Rwanda that was both understandable and affordable to distribute. In order to accomplish this, the project sought IRI’s help to provide access to the wide array of public satellite products that are accessible through its powerful Data Library, which is funded by the U.S. Agency for International Development. IRI also provided research and training services available through the USAID/NASA SERVIR-Global satellite hub in Kenya. IRI helped Kilimo Salama navigate the challenges of using satellite data for developing index insurance contracts and learn how to write software to query the Data Library in order to scale up index design, building on existing IRI capacity that has been supported by USAID. This support enabled Kilimo Salama to develop and sell an understandable and affordable product that automatically drew on ARC2 satellite rainfall data from the the National Oceanic and Atmospheric Administration to drive their indices.
As a result, more than 37,000 low-income smallholder farmers in Rwanda were able to purchase a satellite-based index insurance product, as part of a larger effort to increase farmers’ ability to make productive investments.
“It was really exciting to see the amazing things Kilimo Salama could do with training on the strengths and weaknesses of remote sensing in index insurance, and how much further they could bring things when they had easy access to satellite products,” says Daniel Osgood, who leads IRI’s work on index insurance.
To learn more about index insurance, visit our Financial Instruments page.