OKO

With OKO, we have chosen to tackle a very difficult challenge: securing the income of smallholder farmers in Africa. There are multiple barriers to overcome: low literacy rate among our customers, limited purchasing power, complicated logistics in rural areas, etc.

While we have achieved notable successes (4,500+ farmers insured in Mali), we are still a year away from profitability at this pace, and we need external funding to reach that milestone. It is still too early for traditional investors to invest in OKO, as they would need to see retention rates over a few seasons to confirm the unit economics.

The Elevate challenge was created to help the ambitious innovators develop new business models that will improve the live of the most vulnerable. So it seems to us like the perfect fit.

We would use the funding to test new distribution methods (selling to the diaspora, referral schemes, partnership with agro-dealers etc.), which will serve two purposes: (1) increase our user base and (2) help us identify the best opportunities for growth.

OKO was created by Shehzad Lokhandwalla and myself (Simon Schwall). While working for 2 different organisations (the One Acre Fund and BIMA respectively) we both identified the same opportunity: mobile technologies can help rural populations access financial tools that they desperately need to unlock growth. After working together on formalising the project, we joined an incubator and piloted an index-based crop insurance solution in Mali. Our solution was awarded the Orange Social Venture Prize and the Alliance for Financial Inclusion's Fintech showcase, which encouraged us to keep developing our solution and making it available more widely.

Our vision is a world where every farmer can earn and save wealth without the fear that their source of income will be threatened.

Our purpose is to provide effective, affordable insurance to farmers in emerging markets and deliver instant claim settlement. By leveraging the increasing influence of mobile technology, we aim to help overcome income distribution insufficiencies for those who feed the world.

Our organisation is a for-profit company with double bottom line: profit and positive social impact.

Our goal is to insure 1 million farmers by 2026 and become the most widely available crop insurance in Africa.

Problem: Out of 500m small farms globally, 80% are un-irrigated and un-banked. In Africa, less than 3% of them have crop insurance (Source: ISF Advisors (2018), Protecting growing prosperity). This means that hundreds of millions of farms are always undermined by a risk of bankruptcy due to adverse weather and don't have a reasonable access to loans.

Contributing factors: Traditional insurance cannot be offered to isolated smallholder farmers due to the high cost associated to reaching them, collecting cash payment and measuring on-site the losses incurred every time a claim is made.

How we address it: OKO creates and distributes crop insurance for African farmers, to secure their income and give them access to financial tools.

Our organisation and our work: OKO is not an insurance company but rather a new kind of insurance broker. We design insurance products using big data, which automatically compensate farmers when some triggers are reached (e.g. low rainfall), and we then partner with a local insurance company who carry the risk. We then use mobile technologies (mobile money, WhatsApp chatbot, mobile apps, ...) to distribute insurance to farmers, collect premiums and pay claims.

We differentiate from traditional insurance companies by using Index insurance (aka parametric insurance). Index insurance pays claims on the basis of data, observed remotely. In our case, we use weather data coming from satellite providers. our cost of claim verification is therefore close to zero, and that we can serve any kind of farm, regardless of its size.

We differentiate in two ways from other index-insurance solutions:

1. Mobile-first solution: Instead of partnering with micro-finance institutions or cooperatives, which all have a limited reach, we partner with mobile operators to have a direct access to customers. We equip our agents with mobile apps and train them on insurance. We also have voicenote-based chatbot, an interactive vocal server and a call center to be available remotely to any farmer, even illiterate.
2. Proprietary data and algorithms: We developed our own algorithms to analyse historical weather and yield data, and correlate weather conditions to agricultural revenues. We can predict with a good level of confidence (max 15% of deviation) the value of the harvest in 79% of cases. To do so, we collect yield data from farmers and use machine-learning to teach our model. This means that our competitive advantage increases season after season.

We have a double impact on our customers:

1. Financial Inclusion: OKO designs affordable insurance products for populations previously unserved. OKO also creates tools and trains a team to make insurance accessible universally. Finally, OKO's insurance also facilitates access to micro-loans as it reduces the risk of non-repayment. To measure this impact we are measuring the percentage of our customers who access insurance or micro-loans for the first time.
2. Climate Resilience: OKO's insurance helps farmers re-start their business after having experienced adverse weather conditions. It stabilises farmers' income in spite of un-predictable weather patterns. To measure our impact, we look at the money we redistribute in claims to farmers. In the longer term, we will also look at the "progress out of poverty" for insured farmers vs. non-insured farmers.

We also have an indirect impact on child labour (as farmers don't need to take their children out of school after a bad season), and reducing the gender gap (as we actively  push our insurance product to female.