corporate responsibility development poverty

After microfinance, micro-insurance for Kenyan farmers

Small farmers in developing countries often operate on a shoestring budget. With so little capital to spare, stumping up the initial outlay to invest in higher quality seed or fertilisers is very risky. If the crop fails, there is no way to recover those funds and you won’t have enough to buy seed for the next season. In the west, insurance could cover those losses and ensure that farmers stay in business. Those structures are just reaching African farmers now, after some intriguing re-imaginings to suit the small-scale, low income demographic.

Kilimo Salama is a micro-insurance company in Kenya. Meaning ‘safe harvest’, it allows farmers to pay an extra 5% on the price of their seeds, in return for compensation if the crop is destroyed by extreme weather. The innovative bit of Kilimo Salama is that it is almost entirely automated, in order to keep administration costs down and keep the cover affordable.

Since mobile phones have boomed in Africa, most of the administration is done through mobile phones at small rural farming supply shops. Customers are registered by text, and receive their policy numbers in a text message, along with notification of any payouts owed to them. Kilimo Salama has set up a network of solar powered weather stations. If those stations record an extreme weather event that is likely to have caused a failure in the harvest, a storm or a dry spell, the company automatically compensates the farmers.

It’s all quite clever, and yet small scale enough to be accessible to poor farmers. Interestingly, it is a joint venture between mobile company Safaricom, Kenya’s UAP insurance company, and Syngenta, the agribusiness giant. Syngenta wants to sell more seed and fertiliser in Kenya, but realises that it needs to change the way it does business in order to reach that smallholder market. I have no love for agribusiness, but any company that is innovating on behalf of the most vulnerable is worth celebrating.

More on Kilimo Salama here on their online press room.


  1. I’m generally skeptical of micro insurance programs but this one is different. The premium seems to be incredibly low and a one-time cash outflow. However, at the same time, it’s important that the farmers are given proper training about caring for their crops so they don’t fail to deliver because of negligence.

  2. Kilimo Salama is not a registered insurance Company kenya, if you check AKI 2010 you will find that no company exist.

    Most people who offer Micro Insurance are not real and do not understand the subject matter,

    Microfinance is another word for extortion with the interest rates they charged.

    The way forward is bring more people into main stream banking where they have the proper system and procedure in place.

    If your readers check very carefully there is an Insurance Company in Kenya that was set up specifically to reach out to those people that are not currently cover by conventional Insurers.

    1. That’s because Kilimo Salama is the name of the brand, not the company. The insurance itself is provided by UAP.

      Some microfinance is exploitative, sure, but it’s not possible to dismiss the entire movement. And of course, it would be great if everyone could be part of mainstream banking – but microfinance was set up precisely because the mainstream will not give small loans, and are not interested in the poor. If you can convince the mainstream to take the poor seriously, then microfinance would not be necessary.

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