In partnership with BIRDC and AIC, ACRE Africa has been awarded a grant to Implement an Innovative Hybrid Index Insurance among Smallholder Banana Farmers in Uganda

We are thrilled to share that in partnership with the Banana Industrial Research Centre (BIRDC) and Agro Consortium Limited (AIC), we have been awarded a grant under the Adaptive Fund – UNDP Innovation Small Grant Aggregator Platform (ISGAP) to implement an innovative hybrid Index Insurance solution among smallholder farmers in Uganda, farming banana. Together, we will support the implementation and scaling of the pilot Innovative hybrid insurance product for smallholder farmers.

A Banana plantation ravaged by heavy rains

Research shows that wind and hailstorms contribute to approximately 60% of losses for banana smallholders across Uganda. Existing Index Insurance products do not cater to these additional perils as they are strictly for drought and excessive rainfall. This seasonal unpredictability of these extreme climate events adversely impacts vulnerable farmer household income. The proposed Picture-Based Monitoring (PBM) product is specifically aimed at ensuring that banana smallholders can quickly and fully recover whenever these extreme climate-related events occur, avoiding catastrophic financial losses which affect livelihoods, and threaten food security. The PBM is bundled with climate-smart practices to support farmers adapt to climate threats.

Figure 1: A Banana plantation in Uganda

The Innovation

Implementation costs for assessing farmer damage are very costly using physical farm visits. However, through the innovative picture-based monitoring (PBM) tool that can reliably and rapidly predict weather-related yield losses at low cost by combining satellite data and cellphone imagery to document crop health, growth stages, and monitor farming practices with an aim to speed up the loss verification process and reduce implementation costs. We have tested and implemented the Picture Based Insurance (PBI)model in Kenya over a period of 3 years working with 40,000 smallholder farmers across 7 Counties.

This innovative product will be bundled with extension services on climate-smart agricultural practices like agro-forestry, water management, access to yield-increasing inputs and markets, and financial services training to access loans and insurance against losses. Improved agroforestry practices will provide windbreaks and reduce surface run-off, nutrient leaching, and soil erosion caused by heavy rains, therefore, protecting the banana plantations against the worst impacts of windstorms and floods driven by climate change. The insurance component will also incentivize access to finance.

Through this project, we look forward to improving perceptions and demand for PBM contracts compared to existing conventional alternatives in Uganda’s insurance markets, paying attention to gender inclusion. We also seek to promote the uptake of implementation findings through the consortium’s operations in Uganda, as well as close engagement with policymakers and other stakeholders in the insurance value chain and to offer training and capacity building related to the Picture Based Monitoring platform. The project shall be implemented in Sheema and Bushenyi Districts in Uganda where there have been incidences of windstorms causing severe production disruption and damage to the plantations resulting in low or no production until the plantations are fully restored after 2-4 seasons.