Brianna Hacker

Israeli Startup Helps Farmers Cope with Climate Change

January 29, 2020

Rural communities in Africa rely heavily on agriculture. However, the impacts of climate change have severely affected the crop yield in recent years. OKO, an Israeli startup, is working to make sure that these farmers do not suffer economically from crop loss

Farmers in African countries are strongly dependent on the success of their businesses to make ends meet, but the effects of climate change, such as drought and floods, present immense challenges. Countries in Eastern Africa like Mozambique and Zimbabwe were seriously affected by two cyclones in 2019, within just weeks of each other. Cyclones Idai and Kenneth destroyed hundreds of millions of dollars worth in crops and displaced many people from their homes. With agriculture being the primary source of income for so many people in this region, a natural disaster often entails a months-long struggle only to get back on one’s feet.

In Mali, maize and cotton are the main exports, and local farmers depend solely on rainfall for the irrigation of their crops. However, since 2000, rainfall there has been significantly lower than in the early 20th century. With the climate changing around the world, there are many dry months in Mali that are negatively impacting farms. West African countries have lost billions in US dollars due to the decrease in crop yield over recent decades.

What is OKO?

OKO, named after an African god, is an Israeli start-up that helps Malian farmers secure their income despite these climate-related issues. The company is based in Tel Aviv and is part of a hub called MadanesTech Innovation Labs, which is dedicated to insurance technologies. Through the resources and technologies that farmers in Mali can access, OKO compensates them for losses caused by climate change, thus providing them assistance in times of financial hardship.

“We look at startups, like OKO, which provide innovative parametric (index-based) insurance solutions. This is an old concept that gains momentum with the use of deep learning actuarial science for precise risk aggregation calculations, and automated smart contracts to carry out insurance processes (e.g., claims assessment and settlement),” says Shai Levy, CEO of MadanesTech.

Simon Schwall, the founder of OKO, is a Luxembourg native who was educated in Paris and Singapore, and has always been interested in helping communities in need. He helped build huts in Mongolia at age 18 and later worked in Papua New Guinea, Fiji, Egypt, and Senegal with BIMA, a micro-insurance company that uses mobile devices to provide life and health insurance to families in developing countries. Schwall then moved to Israel and decided to take his experiences in helping underprivileged communities and start a company to specifically help struggling farmers. He wanted his work to help people around the world and felt that “crop insurance was an obvious choice, as the vast majority of the population in emerging countries relies on agriculture.”

Through the resources and technologies that farmers in Mali can access, OKO compensates them for losses caused by climate change, thus providing them assistance in times of financial hardship. .Photo by Anaya Katlego on Unsplash

Everything is Done Remotely

OKO provides index-based insurance to Malian farmers by analyzing publicly available data on weather patterns from past decades and in real-time in conjunction with data on crop yields, to predict changes in production. Schwall explains that before the rainy season, OKO determines thresholds of rainfall below which loss in production is inevitable. If these thresholds are not reached, “it automatically triggers the validation of a claim payment. At the end of the season, [OKO looks] at the sum of the amounts ‘unlocked’ and [they] communicate these amounts to the insurance company, which usually pays within 1 week.” Farmers do not need to make a claim or contact anyone to receive the compensation. By automatically providing compensation to these farmers, OKO guarantees that people are not adversely impacted by a situation in which they have no control.

OKO is able to send money to farmers through a system already in place for many African countries. This system provides the means for people to make transactions using their mobile devices. Farmers can simply sign up and pay for OKO’s insurance service by using their cell phones. OKO sends money over when they determine low crop yield. Everything is done remotely and through a mobile device. Similar to some applications that connect to a bank account and allow people to transfer money to others’ accounts electronically, their devices have money attached to them with no need for internet access or a bank account.

Index insurance is a very efficient way of insuring farmers without having to address the problems in person. Personal assistance is only needed in the beginning, when a farmer signs up for the insurance. Because OKO uses publicly available data to track rainfall and crop yield, they do not need to send people to Mali to evaluate farms every year. The use of public data also helps prevent the risk of insurance fraud. Since farmers are not making claims regarding their crops and OKO is simply using facts, they are able to trust that their information is completely accurate.

Plans to Expand in Africa

While OKO currently only provides crop insurance to farmers in Mali, they “plan to launch in two new markets in 2020, and be active in seven countries within five years,” according to Schwall. “The challenge is to find the funding to fuel this growth, as the revenues only come once [they] have a large enough customer base.” To achieve this growth, OKO sends representatives to help farmers sign up to receive insurance, which fortunately is a very easy and user-friendly service.

OKO does not combat climate change or give farmers more crops, but is a system that is very much needed, nonetheless. Low crop yields caused by changing rainfall patterns is a pressing issue that must be addressed since climate change will continue to exacerbate this problem, and underprivileged and poor communities are the first to suffer the consequences.

This ZAVIT article was also published in The Jewish Journal on 01/21/2012.