OKO Finance is delivering crop insurance to cushion Mali’s farmers from climate change

Simon Schwall has been monitoring Mali’s weather patterns, and he’s worried about the future.

Not many entrepreneurs take a bet on the poor, landlocked country in West Africa, but Schwall, co-founder and the CEO of OKO Finance felt compelled to act on the early but dire impacts of climate change.

“Droughts and floods are intense, and the situation is bound to get worse,” he tells AFN.

The Sahel nation has in recent years become prone to adverse weather patterns. For Mali’s 20 million people, lurching between drought and flood is becoming the norm.

Schwall is concerned for Malians’ livelihoods and security: nearly three-quarters of the population depend on agriculture to earn a living; two-thirds live below the poverty line. He anticipates that climate change will fuel conflict among Mali’s pastoralist communities—in a country that has experienced two coups in a span of 18 months.

Desertification coupled with severe and unpredictable weather patterns have made it difficult for farmers to plan seasonally, says Schwall. Rates of crop losses are on the rise.

“We believe insurance is important because farmers need to adapt to the new seasons,” he explains. “We have to give them solutions by making sure they have a stable source of income to make the necessary investments and get ready for the changes.”

OKO, founded in 2017 amid a severe drought, offers crop insurance to smallholder farmers to ensure that their incomes are secure in the event of extreme weather events. The company’s mission is to promote farmers’ economic resilience and empowerment—for instance, by ensuring farmers have the financial ability to send their kids to school even when their crops fail.

Embedded tech

OKO depends on satellite imagery and weather forecasting to simplify and automate risk-assessment, premiums and claim management. Such embedded technologies ensure that OKO can offer insurance products that are affordable, inclusive and efficient. Its policies average $20 per crop season. Farmers can access OKO’s products through from simple feature phones and pay in multiple installments through mobile money.

In the past five years, OKO has insured 12,000 smallholder farmers in Mali tilling plots of 1.5 to two hectares to grow crops such as millet, maize, sorghum, cotton, barley and coffee. The company is also present in Uganda where it has enrolled 300 smallholder farmers on its platform.

OKO has also developed an application to manage premium payments in real-time to enable farmers to track the status of their claims.

Last year, OKO paid out $80,000 in claims after farmers suffered losses due to excessive rainfall. This year, it anticipates paying out about $20,000 due to dry weather in some parts of Mali.

Ripple effects

Insurance forms the core of OKO’s services, but the company is noticing tangible ripple effects in advancing sustainable agriculture. Its payment of claims is enabling farmers to prepare for future crop cycles in ways that they have been financially unable to in the past. Farmers are buying more drought resistant seeds, as well as better quality fertilizers and pesticides.

Moreover, gaining access to insurance is opening the doors to financial inclusion for OKO’s farmers. OKO’s insurance acts as a risk-mitigant for micro-credit providers, giving farmers’ access to loans that they otherwise wouldn’t qualify for.

OKO has set a target of reaching one million farmers by the end of 2025. The startup also intends to launch operations in Ghana, Côte d’Ivoire, Cameroon and Nigeria.

Its growth plans are being supported by a $1.2 million seed investment round backed by Newfund, ResiliAnce, Mercy Corps Ventures, Techstars, ImpactAssets and RaSa in April.

“We want to distribute directly to smallholders,” says Schwall.

To do that, OKO has already set up a call center and is investing in a last-mile network of distribution agents to educate Mali’s farmers about crop insurance and get them registered in person.

“It is a costly investment,” he admits. “That’s why we need to raise more funds.”

OKO has been recognized for its social impact and financial inclusion on the Inclusive Fintech 50 list and the Alliance for Financial Inclusion’s FinTech Showcase in 2019. It also won the ITU Virtual Digital World 2020 digital finance award.