The Satellite Technologies, Innovative and Smart Financing for Food Security (SATISFy) project aims to address the challenge presented by uninsured risks, which is a major cause of low agricultural productivity in the Horn of Africa. It proposed a market-based innovative risk management solution in the form of Risk-Contingent Credit (RCC), a linked or bundled financial product that incorporates insurance protection, providing a risk-efficient balance between business and financial risks. When triggered, the insurance offsets payments due to the lender.
RCC seeks to address the challenge that lenders are reluctant to lend to farmers because of the financial risks associated with crop failure or radical decreases in market prices. Because RCC targets downside business risk, it simultaneously reduces financial risk and exposure. This risk balancing effect encouraged increased supply of and access to credit but also encouraged risk-rationed farmers to increase the use of credit.
Along with Cornell University, IFPRI is piloting RCC in Kenya with our private-sector partners Equity Bank, APA Insurance, and Swiss Re. Satellite imagery was used to provide a baseline for the insurance offering.
