Smallholder farmers across Africa are increasingly vulnerable to the impacts of climate change, such as unpredictable weather patterns, droughts and floods that threaten their livelihoods and food security. Weather insurance solutions provide a potential solution to mitigate these risks. However, delivering insurance at scale to smallholders remains a challenge due to low awareness, affordability, lack of trust, literacy barriers, and high customer acquisition costs.
OKO Finance (‘OKO’), as part of the GSMA Agritech Accelerator cohort, is seeking to address these challenges by offering weather index insurance services in Mali, one of the top ten countries vulnerable to climate change, and other African markets, leveraging satellite data and digital platforms to make climate insurance more accessible, affordable and transparent for smallholder farmers. By automating payouts based on objective weather indices, OKO reduces the need for costly claims assessments and builds trust through timely compensation, enabling the company to offer insurance that is both scalable and sustainable.
This blog explores how OKO is navigating the delivery of climate insurance to smallholders, the challenges it continues to face, and the critical partnerships and funding strategies needed to scale its solution.
Growing smallholders’ climate resilience: OKO’s product offering
OKO provides weather index insurance products to smallholder farmers across a variety of agricultural value chains, offering protection against climate-related risks such as droughts and floods. Leveraging satellite data and weather forecasts , OKO automates risk assessment, premium calculations, and claims management. This parametric approach ensures that compensation is triggered automatically when weather data indicates that an insured weather event has occurred, removing the need for manual claims verification and making the process both efficient and transparent.
Farmers can self-subscribe to OKO’s insurance and make premium payments using their Orange Money accounts, and payouts are also disbursed into the same account. Farmers are also offered an opportunity to pay for the premium in instalments, making the offering more affordable. OKO field agents and B2B partner organisations also provide a channel for sales and premium payments, and a call centre is available for customer support and quality assurance.
Challenges to scale or service iteration
As the largest provider of crop insurance in Mali, OKO continues to positively impact the lives of Malian farmers. In a recent Rapid Feedback Survey conducted by the GSMA Agritech Accelerator, 78% of farmers reported understanding the terms of OKO insurance and 95% of those who received a payout reported that it was helpful in overcoming the climate risks they faced. Overall, 87% of users mentioned that they were satisfied with the OKO service offering.
However, OKO continues to face significant challenges to scale its services, most notably the limited digital and financial literacy of users. Our surveys indicate that though an increasing number of users (46%) are now using their own mobile money accounts to make premium payments, the remaining 54% still need assistance in making the payments, either through OKO or mobile money agents. 73% still prefer to register for the insurance service with the help of an agent, despite the majority of them being repeat subscribers to the service. As agent networks are costly, this represents a significant barrier to scale for OKO.
To overcome these barriers, with support from the GSMA AgriTech Accelerator, OKO has experimented with new and innovative distribution models that support its growth in a cost-effective manner. These include enabling mobile money agents to sell insurance and receive payments, introducing a new performance-based incentive structure for OKO agents, and pursuing more structured B2B partnerships to reach farmers more efficiently. OKO has also launched a project allowing Malian diaspora in the EU being facilitated to directly pay premiums for insurance policies of relatives back home.
Several of these innovative projects were selected to receive financial and technical assistance last year. However, the recent changes in the development sector funding environment have significantly disrupted new sales efforts and the delayed the iteration and scaling of new distribution models. Despite this setback, OKO’s leadership remains confident of continuing its growth journey with new impact-oriented partners, emphasising that the groundwork for these projects is already laid, and they could be quickly reactivated with new funding.
Copyright: OKO
Boosting financial inclusion for women- and youth-led MSMEs
One such promising initiative is a proposed 18-month collaboration between OKO and Viamo aimed at educating 30,000 climate-vulnerable farmers in Mali on crop insurance and other financial tools. The initiative will leverage Viamo’s multi-lingual voice server to deliver tailored financial literacy modules for rural users. In addition, the project aims to train women and youth to become OKO distribution agents and extend weather index insurance to an additional 10,000 farmers. This will be achieved by tapping into Viamo’s existing user base and establishing new partnerships with microfinance institutions and local NGOs, while also tapping into the power of the Malian diaspora in Europe to share the financial burden of insuring their relatives back home through real time payments integrations.
Call to Action:
OKO has multiple other ready-to-launch projects, such as the one highlighted above, that have already undergone stringent scrutiny and received approvals for development sector funding, validating their potential for improving the livelihoods, financial inclusion and climate resilience of smallholder farmers in Mali. However, with recent cuts to this funding, the company is now actively engaging with alternative international development partners to step in and support the scaling of these services.
“While the abrupt termination of these projects is a setback for us, it is a great opportunity for development partners to save time and pick up projects that are structured, have been reviewed and validated, and are ready to be implemented. We call for all development partners focusing on climate resilience, financial inclusion and job creation to reach out to us to make materialise those impactful projects”
The GSMA AgriTech Accelerator is funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) and supported by the GSMA and its members.
