African agriculture, especially small farms, have not had it easy over the past few years. Droughts, pests, floods, and local conflict have exacerbated challenges for many food producers. This is why insurtech startup Pula is working to provide small farmers with insurance to help manage the implications of climate change and other environmental uncertainties.
The startup begins the farming season by sending representatives to farms to gauge the potential yield of the season. Pula then sends this estimate to insurance companies to generate a policy offer. According to Pula, the initiative has been so successful because in every African country they have worked in, there are insurance companies willing to support their initiative.
Since its conception in 2015, the company has worked with 4.3 million farmers across 13 African markets. The average cost of a premium subscription is four dollars, but it’s not paid by the farmer themselves. Pula markets the insurance to the bank which backs the small farm in order to encourage more loans to small farmers. This also reduces direct costs for farmers. Added certainty not only keeps these farmers afloat but also gives them the wiggle room to invest in more sustainable farming technologies like drought-resistant crops and crop diversity.
Insurtech is one of the fastest growing fintech sectors. Pula recently raised $6 million in a Series A fundraising and plans to expand its innovative business model to Asia soon.