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In Kenya, 1984 is known

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as the year of the cup,

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or the goro goro.

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The goro goro is a cup used to measure

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two kilograms of maize flower on the market,

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and the maize flower is used to make ugali,

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a polenta-like cake that is eaten
together with vegetables.

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Both the maize and the vegetables are grown

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on most Kenyan farms,

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which means that most families can feed themselves

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from their own farm.

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One goro goro can feed three meals

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for an average family,

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and in 1984, the whole harvest

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could fit in one goro goro.

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It was and still is one of the worst droughts

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in living memory.

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Now today, I insure farmers against droughts

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like those in the year of the cup,

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or to be more specific, I insure the rains.

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I come from a family of missionaries

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who built hospitals in Indonesia,

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and my father built a psychiatric hospital

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in Tanzania.

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This is me, age five, in front of that hospital.

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I don't think they thought I'd grow up

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to sell insurance. (Laughter)

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So let me tell you how that happened.

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In 2008, I was working

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for the Ministry of Agriculture of Rwanda,

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and my boss had just been promoted

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to become the minister.

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She launched an ambitious plan

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to start a green revolution in her country,

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and before we knew it, we were importing

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tons of fertilizer and seed

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and telling farmers how to apply that fertilizer

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and plant.

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A couple of weeks later,

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the International Monetary Fund visited us,

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and asked my minister,

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"Minister, it's great that you want to help farmers

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reach food security, but what if it doesn't rain?"

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My minister answered proudly

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and somewhat defiantly,

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"I am going to pray for rain."

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That ended the discussion.

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On the way back to the ministry in the car,

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she turned around to me and said,

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"Rose, you've always been interested in finance.

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Go find us some insurance."

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It's been six years since,

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and last year I was fortunate enough

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to be part of a team that insured

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over 185,000 farmers in Kenya and Rwanda

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against drought.

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They owned an average of half an acre

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and paid on average two Euros in premium.

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It's microinsurance.

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Now, traditional insurance doesn't work

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with two to three Euros of premium,

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because traditional insurance relies on farm visits.

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A farmer here in Germany would be visited

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for the start of the season, halfway through,

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and at the end, and again if there was a loss,

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to estimate the damages.

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For a small-scale farmer in the middle of Africa,

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the maths of doing those visits

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simply don't add up.

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So instead, we rely on technology and data.

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This satellite measures

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whether there were clouds or not,

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because think about it:

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If there are clouds, then you might have some rain,

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but if there are no clouds,

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then it's actually impossible for it to rain.

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These images show the onset of the rains

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this season in Kenya.

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You see that around March 6,

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the clouds move in and then disappear,

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and then around the March 11,

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the clouds really move in.

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That, and those clouds,

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were the onset of the rains this year.

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This satellite covers the whole of Africa

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and goes back as far as 1984,

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and that's important, because if you know

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how many times a place has had a drought

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in the last 30 years,

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you can make a pretty good estimate

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what the chances are of drought in the future,

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and that means that you can put a price tag

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on the risk of drought.

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The data alone isn't enough.

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We devise agronomic algorithms

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which tell us how much rainfall
a crop needs and when.

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For example, for maize at planting,

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you need to have two days of rain

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for farmers to plant,

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and then it needs to rain once every two weeks

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for the crop to properly germinate.

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After that, you need rain every three weeks

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for the crop to form its leaves,

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whereas at flowering, you
need it to rain more frequently,

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about once every 10 days
for the crop to form its cob.

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At the end of the season,

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you actually don't want it to rain,

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because rains then can damage the crop.

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Devising such a cover is difficult,

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but it turned out the real challenge

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was selling insurance.

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We set ourselves a modest target

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of 500 farmers insured after our first season.

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After a couple of months' intense marketing,

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we had signed up the grand total

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of 185 farmers.

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I was disappointed and confounded.

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Everybody kept telling me that farmers

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wanted insurance,

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but our prime customers simply weren't buying.

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They were waiting to see what would happen,

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didn't trust insurance companies,

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or thought, "I've managed for so many years.

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Why would I buy insurance now?"

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Now many of you know microcredit,

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the method of providing small loans to poor people

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pioneered by Muhammad Yunus,

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who won the Nobel Peace Prize

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for his work with the Grameen Bank.

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Turns out, selling microcredit

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isn't the same as selling insurance.

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For credit, a farmer needs
to earn the trust of a bank,

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and if it succeeds, the bank will advance him money.

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That's an attractive proposition.

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For insurance, the farmer needs to trust

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the insurance company, and needs

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to advance the insurance company money.

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It's a very different value proposition.

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And so the uptick of insurance has been slow,

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with so far only 4.4 percent of Africans

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taking up insurance in 2012,

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and half of that number is in one country,

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South Africa.

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We tried for some years

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selling insurance directly to farmers,

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with very high marketing cost

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and very limited success.

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Then we realized that there were many organizations

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working with farmers:

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seed companies, microfinance institutions,

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mobile phone companies,

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government agencies.

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They were all providing loans to farmers,

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and often, just before they'd finalize the loan,

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the farmer would say,

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"But what if it doesn't rain?

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How do you expect me to repay my loan?"

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Many of these organizations

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were taking on the risk themselves,

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simply hoping that that year,

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the worst wouldn't happen.

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Most of the organizations, however,

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were limiting their growth in agriculture.

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They couldn't take on this kind of risk.

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These organizations became our customers,

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and when combining credit and insurance,

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interesting things can happen.

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Let me tell you one more story.

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At the start of February 2012 in western Kenya,

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the rains started, and they started early,

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and when rains start early, farmers are encouraged,

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because it usually means that
the season is going to be good.

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So they took out loans and planted.

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For the next three weeks,

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there wasn't a single drop of rain,

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and the crops that had germinated so well

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shriveled and died.

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We'd insured the loans of a microfinance institution

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that had provided those loans

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to about 6,000 farmers in that area,

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and we called them up and said,

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"Look, we know about the drought.

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We've got you.

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We'll give you 200,000 Euros
at the end of the season."

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They said, "Wow, that's great,

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but that'll be late.

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Could you give us the money now?

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Then these farmers can still replant

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and can get a harvest this season."

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So we convinced our insurance partners,

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and later that April, these farmers replanted.

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We took the idea of replanting to a seed company

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and convinced them to price the cost of insurance

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into every bag of seed,

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and in every bag, we packed a card

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that had a number on it,

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and when the farmers would open the card,

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they'd text in that number,

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and that number would actually help us

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to locate the farmer

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and allocate them to a satellite pixel.

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A satellite would then measure the rainfall

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for the next three weeks,

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and if it didn't rain,

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we'd replace their seed.

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One of the first —

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(Applause) — Hold on, I'm not there!

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One of the first beneficiaries
of this replanting guarantee

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was Bosco Mwinyi.

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We visited his farm later that August,

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and I wish I could show you the smile on his face

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when he showed us his harvest,

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because it warmed my heart

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and it made me realize why selling insurance

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can be a good thing.

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But you know, he insisted

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that we get his whole harvest in the picture,

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so we had to zoom out a lot.

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Insurance secured his harvest that season,

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and I believe that today,

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we have all the tools to enable African farmers

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to take control of their own destiny.

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No more years of the cup.

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Instead, I am looking forward to, at least somehow,

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the year of the insurance,

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or the year of the great harvest.

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Thank you.

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(Applause)