[music playing]
In Kenya, 1984 is known as the year of the cup, or the goro goro.
The goro goro is a cup used to measure
2 kilograms of maize flower on the market,
and the maize flower is used to make ugali,
a polenta-like cake that is eaten together with vegetables.
Both the maize and the vegetables are grown on most Kenyan farms,
which means that most families can feed themselves
from their own farm.
One goro goro can feed 3 meals for an average family,
and in 1984, the whole harvest could fit in one goro goro.
It was and still is one of the worst droughts in living memory.
Now today, I insure farmers against droughts
like those in the year of the cup,
or to be more specific, I insure the rains.
I come from a family of missionaries
who built hospitals in Indonesia,
and my father built a psychiatric hospital in Tanzania.
This is me, age 5, in front of that hospital.
I don't think they thought I'd grow up to sell insurance.
[audience laughing]
So let me tell you how that happened.
In 2008, I was working for the Ministry of Agriculture of Rwanda,
and my boss had just been promoted to become the minister.
She launched an ambitious plan
to start a green revolution in our country,
and before we knew it we were importing tons of fertilizer and seed
and telling farmers how to apply that fertilizer and plant.
A couple of weeks later,
the International Monetary Fund visited us and asked my minister,
"Minister, it's great that you want to help farmers
reach food security, but what if it doesn't rain?"
My minister answered proudly and somewhat defiantly,
"I am going to pray for rain."
That ended the discussion.
On the way back to the ministry in the car,
she turned around to me and said,
"Rose, you've always been interested in finance.
Go find us some insurance."
It's been 6 years since,
and last year I was fortunate enough to be part of a team
that insured over 185,000 farmers
in Kenya and Rwanda against drought.
They owned an average of half an acre
and paid on average €2 in premium.
It's micro insurance.
Now, traditional insurance doesn't work with €2-€3 of premium,
because traditional insurance relies on farm visits.
A farmer here in Germany would be visited at the start of a season,
halfway through, and at the end,
and again if there was a loss, to estimate the damages.
For a small-scale farmer in the middle of Africa,
the maths of doing those visits simply don't add up.
So instead we rely on technology and data.
This satellite measures whether there were clouds or not,
because think about it -
if there are clouds then you might have some rain,
but if there are no clouds
then it's actually impossible for it to rain.
These images show the onset of the rains this season in Kenya.
You see that around the 6th of March the clouds move in
and then disappear,
and then around the 11th of March the clouds really move in.
That, and those clouds, were the onset of the rains this year.
This satellite covers the whole of Africa
and goes back as far as 1984, and that's important,
because if you know how many times
a place has had a drought in the last 30 years
you can make a pretty good estimate
what the chances are of droughts in the future,
and that means that you can put a price tag
on the risk of drought.
The data alone isn't enough.
We devised agronomic algorithms,
which tell us how much rainfall a crop needs and when.
For example, for maize at planting
you need to have 2 days of rain for farmers to plant,
and then it needs to rain once every 2 weeks
for the crop to properly germinate.
After that, you need rain every 3 weeks
for the crop to form its leaves,
whereas at flowering you need it to rain more frequently,
about once every 10 days for the crop to form its cob.
At the end of the season, you actually don't want it to rain,
because rains then can damage the crop.
Devising such a cover is difficult,
but it turned out the real challenge was selling insurance.
We set ourselves a modest target
of 500 farmers insured after our first season.
After a couple of months and intense marketing,
we had signed up the grand total of 185 farmers.
I was disappointed and confounded.
Everybody kept telling me that farmers wanted insurance,
but our prime customers simply weren't buying.
They were waiting to see what would happen,
didn't trust insurance companies, or thought,
"I've managed for so many years. Why would I buy insurance now?"
Now many of you know microcredit,
the method of providing small loans to poor people
pioneered by Muhammad Yunus, who won the Nobel Peace Prize
for his work with the Grameen Bank.
Turns out, selling microcredit isn't the same as selling insurance.
For credit a farmer needs to earn the trust of a bank,
and if he succeeds the bank will advance him money.
That's an attractive proposition.
For insurance the farmer needs to trust the insurance company
and needs to advance the insurance company money.
It's a very different value proposition.
And so the uptake of insurance has been slow,
with so far only 4.4% of Africans taking up insurance in 2012,
and half of that number is in one country, South Africa.
We tried for some years selling insurance directly to farmers,
with very high marketing cost and very limited success.
Then we realized that there were many organizations
working with farmers: seed companies, microfinance institutions,
mobile phone companies, government agencies.
They were all providing loans to farmers,
and often, just before they'd finalize the loan,
the farmer would say,
"But what if it doesn't rain?
How do you expect me to repay my loan?"
Many of these organizations were taking on the risk themselves,
simply hoping that that year, the worst wouldn't happen.
Most of the organizations, however,
were limiting their growth in agriculture.
They couldn't take on this kind of risk.
These organizations became our customers,
and when combining credit and insurance,
interesting things can happen.
Let me tell you one more story.
At the start of February 2012 in western Kenya,
the rains started and they started early,
and when rains start early farmers are encouraged,
because it usually means that the season is going to be good.
So they took out loans and planted.
For the next 3 weeks there wasn't a single drop of rain,
and the crops that had germinated so well shriveled and died.
We'd insured the loans of a microfinance institution
that had provided those loans to about 6,000 farmers in that area,
and we called them up and said,
"Look, we know about the droughts. We've got you.
We'll give you €200,000 at the end of the season."
They said, "Wow, that's great, but that'll be late.
Could you give us the money now?
Then these farmers can still replant
and can get a harvest this season."
So we convinced our insurance partners,
and later that April these farmers replanted.
We took the idea of replanting to a seed company
and convinced them to price the cost of insurance
into every bag of seed.
And in every bag we packed a card that had a number on it,
and when the farmers would open the card
they'd text in that number
and that number would actually help us to locate the farmer
and allocate them to a satellite pixel.
A satellite would then measure the rainfall for the next 3 weeks,
and if it didn't rain, we'd replace their seed.
One of the first...
[applause]
Hold on, I'm not there!
One of the first beneficiaries of this replanting guarantee
was Bosco Mwinyi.
We visited his farm later that August
and I wish I could show you the smile on his face
when he showed us his harvest,
because it warmed my heart
and it made me realize why selling insurance can be a good thing.
But you know, he insisted
that we get his whole harvest on the picture,
so we had to zoom out a lot.
Insurance secured his harvest that season,
and I believe that today we have all the tools
to enable African farmers to take control of their own destiny.
No more years of the cup.
Instead, I am looking forward to, at least somehow,
the year of the insurance,
or the year of the great harvest.
Thank you.
[applause]