2024 Global Economic Prosperity Challenge
Emergency credit collateralised by insurance cover enhancing climate resilience for pastoralists.
What is the name of your solution?
Emergency credit collateralised by insurance cover enhancing climate resilience for pastoralists.
Provide a one-line summary of your solution.
Access to emergency credit collateralised by insurance cover enhancing the climate resilience of pastoralists during drought.
In what city, town, or region is your solution team headquartered?
Nairobi, KenyaIn what country is your solution team headquartered?
What type of organization is your solution team?
For-profit, including B-Corp or similar models
What specific problem are you solving?
The objective of our project is to enhance the financial inclusion of pastoralists in Kenya by providing them with access to financial services and improving their financial literacy. There are over 2.1 million pastoralists who face critical food insecurity and rely predominantly on livestock. Unfortunately, they are negatively impacted by droughts, which not only leads to food shortages but also severe financial instability due to the loss of livestock which is their primary income source.
The existing financial system inadequately addresses the needs of these pastoralists. Insurance processes have bureaucratic delays, and the availability of credit is hindered by stringent collateral requirements that many cannot meet. Consequently, during drought, pastoralists lack the necessary financial support, leaving them to confront significant losses independently.
Moreover, the issue is aggravated by lack of financial literacy within these communities, hindering their ability to leverage financial tools that could mitigate their economic hardships. The global relevance of this challenge is seen in other pastoralist communities across Sub-Saharan Africa and parts of Central Asia, where similar conditions prevail, affecting millions more.
Our solution targets these problems by improving access to specially tailored financial services such as insurance and flexible credit options, and prioritising financial education to enhance understanding and engagement with these services. By developing financial solutions that are attuned to the unique challenges faced by pastoralists and simplifying access to these solutions, we aim to strengthen their resilience against climate-induced disasters and foster a model that can be replicated globally in similar environments.
What is your solution?
Our solution is designed to enhance the resilience of pastoralists against the economic impacts of drought through a comprehensive program integrating insurance, emergency credit, and financial literacy training. The program leverages technology and innovative financial products to ensure that pastoralists can withstand and recover from the effects of drought.
The program will work as follows:
Pastoralists are registered for an insurance product protecting in the event drought occurs. Satellite technology will be used to monitor environmental conditions. This insurance is automatically triggered by specific drought indicators, providing payouts to mitigate the financial hardships caused by reduced livestock productivity.However,insurance payouts have historically delayed by more than 2 months.
Therefore, the same insurance trigger will avail a credit limit equivalent to the potential insurance payout. The registered pastoralists will gain access to the emergency credit via their features phones using USSD technology and mobile money wallets This credit is uniquely designed to be accessible during critical times, with the delayed potential insurance payout acting as a form of collateral. This ensures pastoralists have immediate financial resources to procure necessary supplies or services to sustain their livelihoods during adverse weather conditions.
The backbone of our insurance model is the use of the Normalized Difference Vegetation Index (NDVI), a proven remote sensing measurement that assesses vegetation health since rainfall directly affects the health of pasture. NDVI data helps predict drought conditions well in advance, triggering insurance claims,and emergency credit limits setting to enable credit access before pastoralists are in a crisis situation.
To empower pastoralists to make informed financial decisions, our project includes comprehensive training on financial management, savings, and investment strategies tailored to their needs. This training helps them better manage the financial products provided and apply learned principles to enhance their economic stability, such as strategic livestock trading.
This integrated approach not only provides immediate financial relief during droughts but also builds long-term financial resilience among pastoralists. By combining timely financial support with educational outreach, we equip pastoralists to not only survive but thrive despite environmental challenges.
Who does your solution serve, and in what ways will the solution impact their lives?
Our solution is specifically designed for pastoralists in arid and semi-arid regions, who are negatively affected by the frequent droughts worsened by climate change. These communities rely heavily on livestock for their livelihood, making them particularly vulnerable when drought conditions lead to scarce pastures and water sources, resulting in livestock loss, their primary income source and asset.
The pastoralists we aim to serve are often financially underserved and geographically isolated, residing in areas where traditional banking services are either unavailable or inaccessible. Their nomadic lifestyle and lack of traditional collateral, such as land titles, exclude them from the mainstream financial system. This exclusion not only prevents them from accessing credit but also from utilising financial tools that could help manage and mitigate risks associated with their dependence on climate-sensitive livestock farming.
Our solution addresses these specific needs by:
Providing access to an insurance product to protect them in the event drought occurs. Through satellite-based monitoring using the NDVI metric, payouts will be triggered based on predetermined drought conditions. This financial support prevents the complete economic collapse of pastoral households during critical periods, allowing them to have financial reserves they can use to purchase essential supplies and maintain their herds.
Alongside insurance, we offer emergency credit that does not require traditional collateral. This credit is crucial for immediate needs and can be accessed quickly to buy fodder or water,especially during the delay in insurance payment, thus directly sustaining livestock immediately during drought periods and preventing total loss.
By educating pastoralists on financial management, savings, and investments tailored to their context, our solution empowers them to make informed decisions that enhance their economic resilience. This training helps them utilise financial products effectively and explore additional income-generating activities that diversify their economic base.
Our solution not only safeguards the immediate economic stability of pastoralists during droughts but also strengthens their long-term financial health, enhancing their capacity to thrive in a changing climate. By addressing both the symptoms and the systemic barriers to financial inclusion, we transform how pastoral communities withstand environmental challenges and secure their future.
How are you and your team well-positioned to deliver this solution?
Our team is uniquely positioned to deliver this solution.We have technology experts that developed and manage the digital platform that will serve the community.We also have insurance experts that design, distribute and monitor the insurance products with strong reinsurance backing.
We also have inhouse extensive on-ground experience and established trust with the pastoralist communities. Our leadership and team members include individuals who have worked with these communities we serve, enhancing our understanding and responsiveness to their needs.
We have a longstanding relationship with the pastoralist communities, developed through previous collaborative projects. These initiatives have not only been successful but have also built a mutual desire for continued partnership, as evidenced by the community's direct request for further collaboration. This ongoing engagement is crucial as it ensures our initiatives are community-driven and aligned with the actual needs and aspirations of the pastoralists.
Our ability to mobilize and work effectively is further strengthened by broad partnerships with local stakeholders who are committed to the cause of financial inclusion for pastoralists. These stakeholders provide invaluable insights and resources, facilitating smoother implementation and greater impact of our projects. In addition, we have established partnerships with organisations who can provide crucial technical support to ensure this project is a success.
We have a proven track record of working with underserved communities, particularly in delivering financial solutions that are accessible and beneficial. Our team's expertise in tailoring financial products to fit unique lifestyles and constraints ensures that our interventions are not only practical but also sustainable.
Which dimension of the Challenge does your solution most closely address?
Foster financial and digital inclusion by supporting access to credit, digital identity tools, and insurance while securing privacy and personal data.Which of the UN Sustainable Development Goals does your solution address?
What is your solution’s stage of development?
PilotWhy are you applying to Solve?
We are applying for Solve because we are in need of funds to scale the project from pilot to growth which includes infrastructure upgrades. In addition, we are looking for partners who can assist us in perfecting the business model and facilitate better product and service distribution.
In which of the following areas do you most need partners or support?
Who is the Team Lead for your solution?
Benson Njuguna - Executive Director of Technology and Innovation
What makes your solution innovative?
Our solution introduces several groundbreaking elements that significantly innovate how financial services are provided to marginalized pastoralist communities, particularly in regions severely affected by drought.
Recognizing the unique challenges faced by pastoralists, who often lack traditional assets for collateral, our approach uses livestock and future insurance payouts as alternative collateral. This adaptation allows financially disadvantaged groups better access to credit, thereby enhancing their financial stability and enabling them to invest in their livelihoods sustainably.
Our solution tackles the low penetration of insurance in rural, underserved areas by combining the provision of insurance with targeted financial literacy programs about its benefits. By informing pastoralists about how insurance can safeguard their primary assets—livestock—we significantly increase uptake and provide a buffer against the economic impacts of climate disasters.
We employ blockchain technology to manage the trigger of funds release. This use of smart contracts ensures that transactions are transparent and efficient, reducing the potential for disputes and delays in credit accessibility. Furthermore, the transparency provided by blockchain technology fosters greater trust in the financial system among pastoralists.
These innovations not only address the immediate needs of the pastoralists but also have the potential to catalyze broader positive impacts within the financial inclusion space. By demonstrating successful implementation of alternative collateral and educational outreach in conjunction with technology like blockchain, we could influence other markets serving similar communities worldwide. This approach could change how financial products are tailored and delivered to marginalized groups, potentially transforming the broader landscape of financial services.
Describe in simple terms how and why you expect your solution to have an impact on the problem.
Our solution is designed to impact marginalised pastoral communities through a structured theory of change that logically connects our activities to intended outcomes, reinforced by evidence from prior interventions and ongoing feedback from the communities.
By offering credit that utilises non-traditional collateral such as livestock or insurance claims, we enable pastoralists to maintain and expand their herds, ensuring continuous livelihood even during adverse conditions. We conduct educational workshops to increase understanding and trust in insurance products, subsequently enrolling pastoralists in tailor-made insurance schemes that protect against drought-related losses. Through regular training sessions, pastoralists learn vital financial skills, including savings, investment, and strategic livestock management.
The immediate access to credit and insurance allows pastoralists to better manage financial risks associated with drought and other environmental challenges. As understanding and trust grow, more pastoralists take up insurance, gaining a safety net that secures their primary assets. Financial literacy leads to better financial decision-making, with pastoralists applying new skills to diversify income sources and stabilise their finances.
With enhanced financial resilience, pastoralists can avoid the cycle of poverty , leading to sustainable economic development within their communities. As pastoralists become better at using financial tools to mitigate risks, their vulnerability to catastrophic climate events diminishes. With stable incomes and enhanced financial knowledge, the overall well-being of the community improves, leading to better health, education, and social stability. Our approach is backed by findings from similar interventions where access to emergency funds significantly reduced economic shocks in marginalised communities. Interviews with pastoralists post-implementation show increased confidence in managing financial resources and a decreased reliance on emergency measures during droughts.
What are your impact goals for your solution and how are you measuring your progress towards them?
Our solution aims to create transformational impacts on the lives of pastoralists through four primary goals, each measured by specific, actionable indicators:
Enhance Financial Inclusion: The quantitative indicator of this will be the number of pastoralists enrolled in insurance and credit schemes. The qualitative indicator will be the changes in financial behaviour and access, assessed through baseline and endline surveys analysing participants' ability to access financial services.
Increase Financial Literacy: The quantitative indicator will be the percentage of participants who understand the value of insurance and credit and utilize the funds in investing in increasing their animal count. The qualitative indicator will be the improvements in participants' understanding and utilization of financial principles, gauged through pre- and post-training surveys to show an increase or decrease in animal count.
Reduce Poverty Risk: The quantitative indicator will be the number of pastoralists who expand their livestock holdings as a means of income generation. The qualitative indicator will be the participant testimonials and surveys assessing changes in their livelihood as measured by their access to basic needs like food, clothes and shelter.
Promote Overall Well-being: The quantitative indicator will be metrics such as the frequency of meals, ability to pay for educational expenses, and improved access to essential resources like water. The qualitative indicator will be baseline and endline surveys evaluating enhancements in quality of life and well-being.
Describe the core technology that powers your solution.
Our solution integrates several technologies to enhance financial accessibility and resilience for pastoralists, ensuring rapid, transparent, and efficient delivery of services.
Our solution is built on blockchain technology, which we use to manage and issue smart contracts for triggering credit availability. This application ensures that transactions are secure, transparent, and immutable. By automating credit triggers through smart contracts, we significantly reduce the potential for fraud and delay, ensuring pastoralists receive timely support when triggered by predefined conditions such as drought indicators.
We leverage mobile money technology to facilitate the disbursement of funds and collection of credit repayments. This technology allows pastoralists to access financial services directly from their mobile devices, eliminating the need for physical bank visits, which are impractical in remote areas. Mobile money offers a fast, secure, and user-friendly means of managing finances, which is crucial for communities that are traditionally underserved by conventional banking systems.
To streamline the process of enrolling pastoralists in our programs, we utilize last mile onboarding tools that replace traditional paper-based systems. These digital tools enable faster registration and data collection, improving efficiency and reducing errors. This technology is particularly effective in remote areas, helping to bridge the gap between these communities and the financial services they need.
Together, these technologies form a strong framework that not only addresses the immediate financial needs of pastoralists but also builds a foundation for sustainable economic growth. By combining blockchain, mobile money, and digital onboarding, we are not only solving the problem of financial exclusion among pastoralists but also setting a precedent for how modern technology can be harnessed to benefit remote and marginalised populations globally.
Which of the following categories best describes your solution?
A new business model or process that relies on technology to be successful
Please select the technologies currently used in your solution:
If your solution has a website or an app, provide the links here:
https://www.divadonate.xyz/ , https://www.mercycorps.org/blog/anticipatory-cash-transfers-in-kenya , https://documents1.worldbank.org/curated/en/099715007272233625/pdf/P17651709ab91f0f20af890aa00c4a7147c.pdf
In which countries do you currently operate?
How many people work on your solution team?
Full-time staff - 10
Contractors - 4
Community mobilisers (part time) - 20
How long have you been working on your solution?
About 16 months, since January 2023
Tell us about how you ensure that your team is diverse, minimizes barriers to opportunity for staff, and provides a welcoming and inclusive environment for all team members.
Our commitment to diversity, equity, and inclusion in the workplace is embedded in our organisational culture and operational strategies. Our approach involves several key strategies to ensure our team is not only diverse but also operates in an environment that promotes equity and inclusion.
Our leadership team includes a diverse group of individuals, led by a female CEO who is an advocate for gender equality. This diversity in leadership helps to foster a culture of inclusivity and sets a strong precedent for the rest of the organisation. Currently, nearly 50% of our management roles are filled by women, demonstrating our commitment to empowering women in leadership.
We also hire community mobilizers from the locals, who are known to the community and can speak the local language. We ensure 50:50 male to female ratio in the selection of the village champions to ensure women pastoralists are free to participate since in these communities the women shy away from male mobilizers and in equal measure women mobilizers shy away from male pastoralists.
We ensure that our hiring processes are transparent and equitable by advertising positions widely to attract a diverse applicant pool. Our selection panels are deliberately composed of diverse team members to minimize unconscious bias and to consider a wide spectrum of perspectives. This approach helps us maintain fairness and inclusivity from the initial stages of recruitment.
We prioritise creating a safe and supportive workplace where all employees feel valued and respected. This includes creating channels for feedback on workplace culture, and implementing policies that support work-life balance and professional growth for all staff members.
Through these measures, we strive not only to create a workforce that is representative of diverse backgrounds and experiences but also to cultivate an organisational culture where every member has the opportunity to succeed and contribute to our mission effectively.
What is your business model?
Fortune Credit Limited is a microfinance institution in Kenya, with a focused mission to economically empower the rural population. Our business model is centred around providing integrated financial services tailored to the unique needs of financially disadvantaged communities.
We offer loan products that are embedded with insurance coverage. This dual approach not only provides our clients with the necessary capital to invest in their livelihoods but also protects them against potential losses, particularly those arising from environmental or economic shocks. This combination of credit and insurance is especially valuable to our clients who face increased risks due to their dependence on agricultural and livestock activities.
Our primary mode of transaction is mobile money, which allows clients to receive loans and make repayments conveniently from any location at any time. This method is critical in ensuring accessibility and usability for clients in remote areas where traditional banking infrastructure is limited or nonexistent.
Our key customers are the rural populations that are typically underserved by traditional financial institutions. These institutions often require traditional forms of collateral which our clients do not possess. To address this gap, we utilise non-traditional collateral options, such as livestock or future harvests, making financial services more accessible and inclusive.
The core value we provide to our customers stems from our ability to offer financial products that are both accessible and responsive to their needs. By reducing the barriers to financial services, we help our clients enhance their economic stability and resilience, thereby contributing to broader community development and poverty reduction.
Our revenue is generated primarily through the interest on loans and fees associated with insurance processing. By maintaining affordable rates and focusing on high repayment rates through our supportive services, we ensure a sustainable business model that also prioritizes the welfare of our clients.
Through this business model, Fortune Credit Limited not only facilitates economic empowerment but also champions financial inclusion, creating a scalable impact that aligns with our social mission.
Do you primarily provide products or services directly to individuals, to other organizations, or to the government?
Individual consumers or stakeholders (B2C)What is your plan for becoming financially sustainable, and what evidence can you provide that this plan has been successful so far?
Fortune Credit Limited has established a robust financial sustainability plan characterized by diversified revenue streams, ensuring our long-term operational capacity and ability to serve underserved rural populations in Kenya.
Revenue Streams: Our primary source of revenue comes from the interest earned on our various loan products from which we have profited for years. We shall apply our loan expertise to this new product to ensure sustainable returns and growth. Our past loans have been tailored to meet the needs of rural entrepreneurs, in the agricultural ,livestock and small trading sectors. We also generate additional revenue through fees associated with loan processing and insurance services.
Evidence of Success: Our financial strategy has proven effective, as evidenced by:
Sustained Revenue Growth: The interest from our loan products and the insurance commission income have consistently grown over the past years in other products. We have demonstrated custom product design, distribution, and effective service delivery for our services.
Future Financial Strategy: Looking ahead, we plan to expand our revenue base by:
Scaling Up Loan Disbursement: Increasing the volume of loans, particularly by introducing new products designed for emerging needs in our target communities.
Enhancing Partnerships: Developing more strategic partnerships with third-party providers to increase the range of services offered and the associated commissions and rebates.
These strategies are designed not only to cover our expected expenses but also to reinvest in our mission, ensuring we can continue to enhance the financial resilience and growth of rural communities.
By leveraging a combination of sustained internal revenue generation and external funding support, Fortune Credit Limited is positioning itself for sustainable growth and continued impact in the communities we serve.
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Our Organization
Fortune Credit Limited