Latest / Crypto Altruists: Real-World Stories of Social & Environmental Impact with Web3 / Episode 267 - When the Rains Come: How Blockchain Is Building Climate and Financial Resilience for Kenya's Informal Traders, with BlockBima, Fortune Credit, Shamba Network, and RiskShield

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Episode 267 - When the Rains Come: How Blockchain Is Building Climate and Financial Resilience for Kenya's Informal Traders, with BlockBima, Fortune Credit, Shamba Network, and RiskShield · Crypto Altruists: Real-World Stories of Social & Environmental Impact with Web3

• 0:00
  SPEAKER_00: Today, you'll discover how blockchain is helping last-mile communities build financial and climate resilience, reaching people the traditional system has left behind.
• 0:07
  SPEAKER_00: How embedded parametric insurance delivers automatic payouts in a single day with no claims processed, no paperwork, and no waiting.
• 0:14
  SPEAKER_00: How blockchain-powered smart contracts and oracles are being used to transform traditional insurance into something that is cheaper, faster, and more people-friendly, and why keeping the technology invisible was the key to reaching people and what that teaches all of us building for real-world impact.
• 0:30
  SPEAKER_00: Welcome to CryptoAltruist, where we explore the intersections of Web3 and Social Good through the stories of impact-driven builders and offer actual insights to empower your journey into a world of blockchain for good.
• 0:39
  SPEAKER_00: I'm your host, Drew Simon.
• 0:41
  SPEAKER_00: Now before we dive in, please remember that this is not financial or legal advice, and always do your own research on any of the projects or investment opportunities that we discussed.
• 0:54
  SPEAKER_00: I'm joined by four guests, each representing a different piece of a genuinely groundbreaking pilot project.
• 0:59
  SPEAKER_00: And together they tell a story I think is an incredible example of how blockchain is changing lives and building more resilient communities.
• 1:05
  SPEAKER_00: Let's lay the groundwork for the conversation.
• 1:08
  SPEAKER_00: Across Kenya and much of sub-Saharan Africa, informal market traders live with a brutal kind of vulnerability.
• 1:13
  SPEAKER_00: Picture a woman running a produce stall in an open air market in Nairobi.
• 1:16
  SPEAKER_00: When the heavy rains come, and they're coming harder more often, her stall floods, her customers vanish, and her income stops.
• 1:23
  SPEAKER_00: But even though her business has ground to a halt, payments are still due on the loan that she took out to stock her business.
• 1:29
  SPEAKER_00: As she put it in the report, we'll discuss today.
• 1:40
  SPEAKER_00: Traditional insurance was supposed to help with this kind of risk, but for informal traders, it simply doesn't work.
• 1:46
  SPEAKER_00: Filing claims, submitting documentation, waiting weeks for a payout that arrives long after the crisis has passed, it's simply inaccessible and it's too expensive to deliver at scale.
• 1:55
  SPEAKER_00: So a group of organizations came together to test how this could be done differently.
• 1:58
  SPEAKER_00: It's a pilot supported by MercyCore Ventures, incredible organization, so shout out to them, and it embeds parametric climate insurance directly into microloans.
• 2:06
  SPEAKER_00: When satellite data confirms its rain too much, a smart contract automatically reduces the borrower's loan balance.
• 2:12
  SPEAKER_00: There's no claim to file, no forms, no waiting, and the results were really remarkable.
• 2:16
  SPEAKER_00: To unpack it all, I'm joined by the people who built it.
• 2:18
  SPEAKER_00: Kennedy Nagania of BlockBeamer, the Web3 infrastructure that makes the automated insurance possible, Benson Jigunya of Fortune Credit, the Kenyan lender who has the experience to reach these borrowers, Mohamed Moija of Shamba Network, the climate data oracle that helps the system when it's rained, and Agritash Mukherjee of Risk Shield, the actuarial expert who helped ensure the system can scale.
• 2:38
  SPEAKER_00: It's a really rich conversation about financial inclusion, climate resilience, and what it really looks like when blockchain gets out of the way and just works.
• 2:45
  SPEAKER_00: So let's dive in.
• 2:47
  SPEAKER_00: So today we have a full house of incredible individuals, uh, two of which we've had on the podcast before with Benson and Kennedy.
• 2:54
  SPEAKER_00: And we're also welcoming two new folks with Mohammed and Agartosh.
• 2:57
  SPEAKER_00: And we're gonna be discussing a really cool project uh today uh that took place in Kenya uh around uh insurance, uh parametric insurance, uh embedded loans.
• 3:08
  SPEAKER_00: Really interesting uh concept, and I'm excited to dive in.
• 3:11
  SPEAKER_00: So thank you all for being here.
• 3:13
  SPEAKER_02: Glad to be here.
• 3:14
  SPEAKER_00: Glad to be here.
• 3:16
  SPEAKER_04: Yep, thank you.
• 3:17
  SPEAKER_00: Yeah, yeah, for sure.
• 3:18
  SPEAKER_00: Um really excited, guys.
• 3:20
  SPEAKER_00: This is gonna be great.
• 3:21
  SPEAKER_00: Um, and so maybe just to kick things off, since there's so many folks in the room, we'll do a quick round.
• 3:25
  SPEAKER_00: If you could just introduce who you are and uh the organization that you're working with, and uh yeah, and then we'll go from there.
• 3:34
  SPEAKER_03: Thank you for having us, Drew.
• 3:36
  SPEAKER_03: It's uh it's a pleasure to be here on your podcast again.
• 3:39
  SPEAKER_03: Um so my name is Kennedy Nanger.
• 3:42
  SPEAKER_03: I'm the CEO at uh Block Beamer.
• 3:44
  SPEAKER_03: Uh and uh it's a pleasure to be here and looking forward to having a discussion uh on our pilot.
• 3:50
  SPEAKER_03: Thank you.
• 3:51
  SPEAKER_00: Awesome.
• 3:52
  SPEAKER_00: Thanks for being here.
• 3:53
  SPEAKER_00: Great.
• 3:53
  SPEAKER_00: Uh Vincent, do you want to go next?
• 3:55
  SPEAKER_02: Great, thank you.
• 3:56
  SPEAKER_02: My name is Benson Jugona.
• 3:59
  SPEAKER_02: I am an um Ethereum Foundation Fellow and a technology entrepreneur in the financial inclusion space.
• 4:07
  SPEAKER_02: Um I'm glad to be here.
• 4:09
  SPEAKER_02: I'm here to represent Fortune Credit, a digital credit provider founded in 2014 by Janet Kuteli, one of my very good friends, uh, with a vision of offering access to credit to people where traditional banking has considered risky and not landed or given this access to before.
• 4:29
  SPEAKER_02: These are people like farmers, small traders, motorbike taxis, which we call Bodai, Boda Boda here in Kenya, and the like.
• 4:37
  SPEAKER_02: So glad to be here.
• 4:39
  SPEAKER_00: Yeah, awesome.
• 4:40
  SPEAKER_00: Thanks, Pensin.
• 4:41
  SPEAKER_00: Uh, Mohammed, do you want to go next?
• 4:43
  SPEAKER_04: Yeah, yeah, sure thing.
• 4:44
  SPEAKER_04: So uh my name is Mohamed Muja.
• 4:46
  SPEAKER_04: Uh, I am the head of engineering at uh Shamba Network.
• 4:48
  SPEAKER_04: Uh, Shamba Network is a decentralized data oracle that provides geospatial data and analysis for on-chain applications.
• 4:56
  SPEAKER_04: Uh, basically, we offer data solutions.
• 4:59
  SPEAKER_04: Uh, I'm really happy to be here.
• 5:01
  SPEAKER_04: It's my first time here, so really looking forward to this.
• 5:04
  SPEAKER_04: Uh, and thank you for giving Shamba Network the opportunity to spread the gospel out here.
• 5:09
  SPEAKER_04: Thank you.
• 5:09
  SPEAKER_00: Uh yeah, of course.
• 5:10
  SPEAKER_00: I love Shamba Network.
• 5:12
  SPEAKER_00: I've been a big fan for quite a while now uh from the early days of the project.
• 5:15
  SPEAKER_00: So uh great to have you here.
• 5:16
  SPEAKER_00: Uh Agritosh, let's finish it off.
• 5:18
  SPEAKER_00: If you could introduce yourself and who you're with today.
• 5:21
  SPEAKER_01: Thanks.
• 5:21
  SPEAKER_01: It's great to be here in this conversation.
• 5:23
  SPEAKER_01: Uh, my name is Agrithosh Mukiji.
• 5:26
  SPEAKER_01: I'm the managing director and um chief actuary with Risk Shield Consultants.
• 5:31
  SPEAKER_01: So, Risk Shield Consultants is a technical service provider and inshore tech operating in multiple countries in Africa and Asia for the last 11 years.
• 5:40
  SPEAKER_00: That's awesome.
• 5:41
  SPEAKER_00: Really cool.
• 5:42
  SPEAKER_00: So, so really great, kind of diverse perspectives that are going to be here today.
• 5:45
  SPEAKER_00: Um, really excited to have you all here.
• 5:47
  SPEAKER_00: Thanks for taking the time to introduce yourself.
• 5:49
  SPEAKER_00: Uh, really kind of complex uh project that we're gonna be discussing today.
• 5:53
  SPEAKER_00: So, obviously, we're not gonna be able to discuss everything and all the different unique components that go into it, um, but maybe just to kind of lay the groundwork to get things started.
• 6:01
  SPEAKER_00: Um, I'd love to kind of set the stage for listeners.
• 6:03
  SPEAKER_00: And if you could paint a picture of the core problem that you were looking to address for the pilot, um that would be super helpful.
• 6:11
  SPEAKER_02: Maybe you can start.
• 6:12
  SPEAKER_02: Let me take it a go to to begin with uh on the lender's perspective.
• 6:18
  SPEAKER_02: Um as a lender, over the over the years we've noticed a correlation between where a series of certain events take place and uh then a series of poor repayment behavior that's also exhibited.
• 6:34
  SPEAKER_02: So such correlation uh where such one event has been weather events.
• 6:40
  SPEAKER_02: So, for example, we've seen during seasons where there is a lot of heavy rains, or during seasons where there is a lot of drought extended, then the pay repayment behavior is quite poor.
• 6:52
  SPEAKER_02: And because of that, we've been thinking of what how can this be solved?
• 6:57
  SPEAKER_02: Because at the end of the day, it we see it has impacted the beneficiary, and it also impacts us as a lender.
• 7:03
  SPEAKER_02: So for sustainability is then that's when we we started thinking about such solutions.
• 7:12
  SPEAKER_00: Yeah, absolutely.
• 7:13
  SPEAKER_00: Thank you.
• 7:13
  SPEAKER_00: Uh, anyone want to add to that, Kennedy?
• 7:16
  SPEAKER_03: Yes, yes.
• 7:17
  SPEAKER_03: Um, just as Benson has uh said, uh from the lender's perspective, the issue is sustainability, right?
• 7:24
  SPEAKER_03: If uh the lender is deploying capital somewhere and the people who are receiving the capital end up being unable to service it or to repay it because of climate events, then sustainability becomes a problem.
• 7:37
  SPEAKER_03: And of course, this has other things that attach to it, one of them being financial inclusion.
• 7:42
  SPEAKER_03: If a lender feels that their capital is likely to get lost, then they are less likely to lend to that demographic that is very vulnerable to these risks.
• 7:52
  SPEAKER_03: So the question actually brings together two things.
• 7:55
  SPEAKER_03: You're talking about the issue of resilience, you're talking about the issue of sustainability, but then there's also the issue of financial inclusion.
• 8:03
  SPEAKER_03: So uh I think we realize that there's a problem uh that intersects between climate and credit.
• 8:08
  SPEAKER_03: And so this is this was the genesis of us coming together and uh figuring out a solution.
• 8:14
  SPEAKER_00: Uh thank you.
• 8:15
  SPEAKER_00: That is kind of great uh uh context as we go into this conversation.
• 8:19
  SPEAKER_00: Now let's kind of talk about um a little bit about what exactly the pilot was and how it all worked.
• 8:23
  SPEAKER_00: And so um I think it's helpful to kind of frame it by looking at how traditional insurance you know would work versus what you're doing.
• 8:30
  SPEAKER_00: Uh and traditionally insurance, you know, means someone filing a claim, uh submitting documentation.
• 8:35
  SPEAKER_00: Sometimes they're, you know, have to dispute or prove things.
• 8:38
  SPEAKER_00: Uh sometimes it takes weeks for a payout to come through or longer, uh, and often long after the crisis has passed, right?
• 8:45
  SPEAKER_00: Um, and so can you walk us through how you know what you are doing is different and how embedded uh parametric insurance works and why bundling it with a loan is a better approach as well?
• 8:55
  SPEAKER_01: So, yeah, with parametric insurance, um it's um you know it's an innovative approach whereby uh the insurance is um basically done on the basis of um defined parameters and a defined index.
• 9:11
  SPEAKER_01: Uh so that you know, as soon as that index has triggered, um, you know, it would um automatically trigger a payout.
• 9:20
  SPEAKER_01: So the key advantage there is then the end customers they don't need to go through the hassle of reporting a claim, which can often be very tedious and complicated.
• 9:30
  SPEAKER_01: Um and then um also for the insurance company, it's quite complicated and time consuming and expensive for them to go and verify losses on the ground.
• 9:40
  SPEAKER_01: So all of that is taken out of the picture by focusing on an index.
• 9:44
  SPEAKER_01: And as long as that index can be measured and um you know monitored reliably and quickly, um, the payouts can also be done uh within days rather than waiting for weeks or months, which is uh often what happens with the traditional uh insurance products.
• 10:00
  SPEAKER_01: So I would say that's one of the key advantages of parametric.
• 10:03
  SPEAKER_01: Yeah.
• 10:04
  SPEAKER_03: Yes, I might add something also on speed.
• 10:06
  SPEAKER_03: Uh, speed is also another uh differentiator between traditional insurance and parametric insurance.
• 10:13
  SPEAKER_03: Uh, because with parametric models, you tend to have faster payouts.
• 10:17
  SPEAKER_03: And especially when it's implemented on some of these fast efficient trails like Web3, it can be uh near real time, near uh, you know, something that happens within a matter of hours rather than days or weeks.
• 10:30
  SPEAKER_03: So that's a big difference.
• 10:32
  SPEAKER_03: Yeah.
• 10:33
  SPEAKER_02: Yeah.
• 10:33
  SPEAKER_02: For me, I'll just add the embedded uh bit.
• 10:36
  SPEAKER_02: Uh what we've uh why why why what is this embedded?
• 10:40
  SPEAKER_02: Embedded just means you're you're selling a key product like a loan, and now accompanying this loan, now that's why we put in this cover, this risk cover.
• 10:51
  SPEAKER_02: And this has been so because we've seen um the the the appetite for for uh risk covers in sub-Saharan Africa has been quite low, with a penetration of less than 3%.
• 11:05
  SPEAKER_02: So people will not go by themselves and just say, give me this cover.
• 11:09
  SPEAKER_02: Yet they're the people who need it the most, because if such a risk occurs, then they they'll be highly affected.
• 11:14
  SPEAKER_02: So, but so that you're able to reach them, uh, rather than selling it as a separate product, that's why you embed it with a product where they already have appetite.
• 11:22
  SPEAKER_02: Because for their credit, the appetite is high.
• 11:25
  SPEAKER_02: So this is why embedding is also part of the package in this product.
• 11:29
  SPEAKER_02: Yeah, back to you, Drew.
• 11:31
  SPEAKER_00: Yeah, I know that's that's that's a really helpful way of looking at it.
• 11:33
  SPEAKER_00: Thank you.
• 11:34
  SPEAKER_00: And we're gonna talk about some of the stats that came from this as well around you know the reduction in time and costs and all that, too, and kind of how that plays into this.
• 11:41
  SPEAKER_00: Um, but first I wanted to talk about, you know, a really interesting insight I saw from the report, uh, which great report, by the way.
• 11:47
  SPEAKER_00: Uh looks like the project was extremely impactful, and we'll talk about the outcomes a bit later.
• 11:52
  SPEAKER_00: Um, but one of the insights is that for you know these traders, a rainfall shock can quickly become a credit shock.
• 11:58
  SPEAKER_00: Um, you know, we'll see stalls close, uh, income stops coming in, um, but the loan repayment is still due, right?
• 12:04
  SPEAKER_00: And so despite it having an impact on one's economics and livelihood, um, they still have to make that payment.
• 12:10
  SPEAKER_00: So, can you talk about how this uh model helps break that cycle?
• 12:15
  SPEAKER_02: Oh, great.
• 12:16
  SPEAKER_00: Sure, sure.
• 12:17
  SPEAKER_02: So um it it's there are two things that I'll talk about that this model helps to break the cycle.
• 12:24
  SPEAKER_02: So the first one is um person who has been hit by a climate shock, and for example, they had their shop, they were selling their green groceries, that is the tomatoes, and now they're not in business uh because maybe the water carried it or the water made this uh uh goods go bad because of uh many other things, wetness.
• 12:47
  SPEAKER_02: Now, but they had a credit facility from a lender.
• 12:52
  SPEAKER_02: So, and the lender, you have agreed in advance, it's a contract.
• 12:55
  SPEAKER_02: On this particular day, maybe weekly, please send this amount of money, maybe daily, send this amount of money.
• 13:02
  SPEAKER_02: Now, where will they get this money if a climate event like this took place?
• 13:06
  SPEAKER_02: It means that um without such a cover, then then the lender will not receive their payment.
• 13:17
  SPEAKER_02: It's so obvious because now they the once you try to collect as a lender, they'll tell you no, I lost.
• 13:24
  SPEAKER_02: And also um which which makes this person get into arrayors in the books.
• 13:30
  SPEAKER_02: And when you you've be you're in the arrayors basket, it's like a blacklist for the lenders.
• 13:36
  SPEAKER_02: Then your credit score is reduced.
• 13:40
  SPEAKER_02: So this means any future loans by this lender to you will be significantly impacted because then they will check their records, their credit score will tell them this one does not pay.
• 13:51
  SPEAKER_02: The credit score does not know about whether it just knows you didn't pay based on the contract.
• 13:57
  SPEAKER_02: So, with such a solution, they will not necessarily now face because the the payout pays for the loan, so they don't fall into arrears, and this consequently does not make them fall into the black book, and this uh consequently does not allow them to access loans in future, which then kills the cycle that would have started if such a product was not existing.
• 14:20
  SPEAKER_02: And then the second item is how can you go and start collecting from a person who has just suffered a catastrophe?
• 14:28
  SPEAKER_02: You must you must be very inhumane and bad.
• 14:32
  SPEAKER_02: That's how they feel.
• 14:33
  SPEAKER_02: Why are you asking me and you know I have nothing?
• 14:36
  SPEAKER_02: So, with this type of support, um, there's no because it's more reputational risk why collecting for people who it's like beating down somebody's already down.
• 14:45
  SPEAKER_02: So, what this solution has actually enabled us is to um give uh a solution to people who need it and uh supporting us to maintain as a as a lender a reputation of not beating down when they're down.
• 15:00
  SPEAKER_02: So I could say then that's how we've managed to to alleviate a cycle of going back to poverty, yeah.
• 15:09
  SPEAKER_00: Yeah, yeah.
• 15:10
  SPEAKER_00: And one thing that's really interesting from this too, and we talk a lot about like, you know, unbankability and imbankable and those sorts of things in the crypto space.
• 15:18
  SPEAKER_00: And, you know, I know that uh 100% of the borrowers in this pilot were new customers, 76% were women, and 54% had previously been denied a loan.
• 15:27
  SPEAKER_00: Um, so how does kind of embedding insurance change the math on who is considered bankable and kind of open up access to folks that traditionally uh wouldn't have access?
• 15:40
  SPEAKER_02: Thank you.
• 15:41
  SPEAKER_02: Uh first of all, I um we we don't call it insurance because uh we call it a warranty.
• 15:47
  SPEAKER_02: It was more of an internal arrangement where you're you're putting your funds so that you overrisk cover.
• 15:53
  SPEAKER_02: Yes, but the mechanics are insurance at the end of the day.
• 15:57
  SPEAKER_02: So one of the things that um that that really um uh embedding insurance has changed the map is is the change in the credit scoring.
• 16:10
  SPEAKER_02: So because of this cover, the the the credit score usually is given some weights, and it calculates how much a person is able to qualify for.
• 16:20
  SPEAKER_02: So one of the data points that you normally ask is, are you uh where are you selling from?
• 16:27
  SPEAKER_02: So you get the location, uh, they get the um how much income you make per period of time, and are you uh a flight risk?
• 16:37
  SPEAKER_02: Are you in a position that where you're seated as a trader, tomorrow you might pack up and go and you're not found?
• 16:44
  SPEAKER_02: So that was one of the parameters that was quite weighted very heavily.
• 16:49
  SPEAKER_02: That any person who is considered a flight risk, meaning they don't have a permanent place, they're sitting, uh then we the the credit uh score, once it runs its numbers, they would not get any uh credit limit.
• 17:04
  SPEAKER_02: So, but with this uh solution, we uh we were able to now be able to overlook that that that that parameter was no longer now very heavy because this product was specifically targeting the um the small traders who are normally a majority of them do not have permanent shelter.
• 17:28
  SPEAKER_02: They most of them are found beside the road towards the market, not inside the market.
• 17:32
  SPEAKER_02: So they don't necessarily have this cover, but they are actually in business, able to generate income and pay.
• 17:38
  SPEAKER_02: And most of them actually are women.
• 17:40
  SPEAKER_02: So with that, you find most of them were excluded from the traditional models.
• 17:45
  SPEAKER_02: But now with what we with this solution where now we know the risks that are major for them, which is when it rains, because when it rains, they are not able to sell because they cover up.
• 17:57
  SPEAKER_02: When it rains, people don't go to them because they are not sheltered.
• 18:00
  SPEAKER_02: So customers would avoid them.
• 18:01
  SPEAKER_02: And usually it's chaos.
• 18:03
  SPEAKER_02: Even they it gets to an extent where their produce are stepped on because people are running looking for shelter.
• 18:09
  SPEAKER_02: So in the midst of that chaos, they normally lose.
• 18:11
  SPEAKER_02: So even for us who are the lenders would avoid such clients, but with such a cover, then uh introducing insurance uh into the model helps now make such people get a limit and actually borrow.
• 18:27
  SPEAKER_02: So we can call it it's it's a sort of collateral that has been introduced that gives the lender comfort and they're able to lend more to such a group.
• 18:36
  SPEAKER_00: Yeah, no, that's really interesting.
• 18:38
  SPEAKER_00: Thank you, uh Benson.
• 18:39
  SPEAKER_00: That's a really neat perspective.
• 18:40
  SPEAKER_00: Uh Kennedy, did you was there something you wanted to add?
• 18:42
  SPEAKER_00: I saw you took your mic, uh, put your mic on there.
• 18:45
  SPEAKER_03: Yes, yes.
• 18:46
  SPEAKER_03: I think I just wanted to add on to what uh Benson said.
• 18:49
  SPEAKER_03: So the issue of bankability is always about how the lender is perceiving the risk of the borrower.
• 18:55
  SPEAKER_03: And so, you know, Benson has been able to break down the criteria that lenders use, and it's not unique to fortune.
• 19:02
  SPEAKER_03: A lot of them have these concerns about lending to people with no fixed premises.
• 19:07
  SPEAKER_03: Uh they are both a flight risk as well as they are very exposed, very vulnerable, a small change, uh, you know, any any extreme weather event can easily uh curtail their business and their ability to repay the loan.
• 19:20
  SPEAKER_03: So the question becomes what are lenders reacting to when they when they perceive a particular risk?
• 19:26
  SPEAKER_03: And how can we be able to use certain mechanisms to de-risk the borrower uh based on this particular criteria?
• 19:33
  SPEAKER_03: So I think that is the one thing that uh I have seen this change.
• 19:38
  SPEAKER_03: The bankability of an individual does not need to be tied uh maybe to a particular uh lack of something like premises.
• 19:46
  SPEAKER_03: You can actually figure out which are the risks that are associated with this and how can we de-risk them uh using this kind of uh embedded protection.
• 19:54
  SPEAKER_03: Yeah.
• 19:55
  SPEAKER_00: Yeah, that's awesome.
• 19:57
  SPEAKER_00: Really cool.
• 19:57
  SPEAKER_00: Uh well thanks, thanks for sharing that.
• 19:59
  SPEAKER_00: And you know, I'd love to now kind of talk about the specifics of how this all kind of happens, the plumbing behind the scenes, if you will.
• 20:06
  SPEAKER_00: Um, and and Mohammed and Agirtash would love to kind of hear your thoughts on this from both the uh Oracle and then the insurance and the pay payout side of things.
• 20:14
  SPEAKER_00: Um, because the whole system really depends on knowing objectively, you know, when it rained too much, right?
• 20:20
  SPEAKER_00: Um, and so can you explain the role of like, you know, the satellite data, the oracle, how that all comes together, and how smart contracts turn that into an automatic payout with no humans in the loop?
• 20:29
  SPEAKER_01: Yeah, maybe I can start talking in uh relation to the satellite data and how how that works.
• 20:36
  SPEAKER_01: So essentially what we did um in the implementation was um, you know, we used the location of um uh different markets um uh to um uh extract the relevant um satellite data sets.
• 20:53
  SPEAKER_01: So we were working with open source um satellite data sets um and uh with specific data sets which uh showed good skill when it came to picking up um to detecting excess rain rainfall events.
• 21:07
  SPEAKER_01: Um and then we used the exact location of the markets based on um the GPS coordinates of um reference points to extract the historical satellite data going back about um 30 years approximately.
• 21:23
  SPEAKER_01: Um, and this was daily satellite data um uh which is also recorded on a on on a live basis uh going forward, which was um a key criteria as well.
• 21:37
  SPEAKER_01: So then the product design and uh the actuarial pricing, all of that is done based on the same historical satellite data and uh to be consistent with the basis that's used for the product design.
• 21:52
  SPEAKER_01: Um, the claim settlement is also done using the same satellite source.
• 21:56
  SPEAKER_01: So we're using, you know, we're maintaining the consistency of users.
• 22:00
  SPEAKER_01: Using the same satellite source, both for the pricing and design as well as for the claim settlement, which is a key requirement from the insurance companies and the reinsurance companies as well.
• 22:11
  SPEAKER_01: So essentially that that's how it worked from the satellite data perspective.
• 22:16
  SPEAKER_01: So it enabled um very regular monitoring of the rainfall conditions so that we know um uh you know very quickly what the rainfall conditions were and whether that implies that a um uh business interruption event has occurred or not, which would trigger payouts.
• 22:35
  SPEAKER_00: That's really interesting, yeah.
• 22:36
  SPEAKER_00: Um thank you.
• 22:37
  SPEAKER_00: And Mohammed, you um love to hear now from the kind of blockchain side of it and the Oracle.
• 22:42
  SPEAKER_00: Um love to hear your thoughts on this and anything you have to add?
• 22:47
  SPEAKER_04: Yeah, so um uh well with the product design uh basically relied a lot on uh historical data like uh past data to come up with trends, uh, look at the values, uh figure out what the thresholds are, uh, and basically what can be considered an excess rainfall event and what cannot be considered.
• 23:06
  SPEAKER_04: Um for us, it it was also about uh accurate reporting uh for the period when these loans were actually issued.
• 23:15
  SPEAKER_04: So after the thresholds have been figured out, after we've been given the thresholds, uh then what we do is uh through our internal pipelines, we we we we basically avail uh the analysis uh through our APIs and our Oracle.
• 23:30
  SPEAKER_04: So uh our integrating partner who is Block Beamer in this uh in this pilot would uh the the smart contracts that they deploy would ask for data, basically, from from our end, and then we would provide the rain uh accurate rainfall measurement that then can actually be used uh to figure out whether the threshold has actually been met.
• 23:52
  SPEAKER_04: So on their end, it was basically just a quick uh tell me how much rainfall fell during this loan period.
• 23:58
  SPEAKER_04: Uh, we will tell them, and then they would figure out uh when uh the thresholds were actually met, and then they can do a payout immediately.
• 24:06
  SPEAKER_04: So for us, uh it wasn't just about the historical data, but it was also about accurate reporting, uh, making sure that we're giving accurate data because it's actually going to affect whether a payout is made or not.
• 24:20
  SPEAKER_00: Yeah, that's really interesting.
• 24:21
  SPEAKER_00: And we'll be right back after this brief announcement.
• 24:24
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• 24:26
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• 24:29
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• 24:31
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• 25:01
  SPEAKER_00: And now back to the episode.
• 25:04
  SPEAKER_00: That's really cool.
• 25:04
  SPEAKER_00: And you know, obviously blockchain's a big part of this too.
• 25:07
  SPEAKER_00: And you know, there was one line in the report I think that really stood out to me in all this, and that's that uh the blockchain adds the most value at the kind of coordination points between actors who don't fully trust each other.
• 25:18
  SPEAKER_00: And so there's so many different actors that are, you know, at play here.
• 25:21
  SPEAKER_00: We have the insurer, the lender, the reinsurer, the oracle, uh, the individual, the trader.
• 25:27
  SPEAKER_00: Um, so how does blockchain kind of help service this coordination point between these diverse actors and help build that trust?
• 25:34
  SPEAKER_03: Uh maybe I could um start on this one.
• 25:37
  SPEAKER_03: So, yeah, it's a great question.
• 25:39
  SPEAKER_03: And I think at the end of the day, the biggest value we are seeing from blockchain here is that coordination.
• 25:44
  SPEAKER_03: The fact that you have actors uh who, in a traditional sense, would be adversarial to each other.
• 25:51
  SPEAKER_03: Uh, we know that part of the reason insurance has such a trust problem in Africa is because insurers are always um, you know, they are always reluctant to make payouts.
• 26:01
  SPEAKER_03: I think that is generally the perception that is out there.
• 26:05
  SPEAKER_03: So then the question becomes how can we be able to eliminate this whole issue of uh requiring a lot of you know trust-based um transaction uh between these parties, and how can we use uh blockchains and cryptographic proof to be able to make the whole thing very objective?
• 26:22
  SPEAKER_03: Uh so when we are using uh blockchains, starting right from the data itself, the fact that the data that is reported for the rainfall is actually anchored on the blockchain uh using a cryptographic hash by an oracle means that you cannot be able to manipulate a number.
• 26:39
  SPEAKER_03: It is something that anybody can be able to go, they can be able to find, they can be able to actually validate and verify.
• 26:45
  SPEAKER_03: And then coming to the to what actually uses that particular number, it is a smart contract.
• 26:51
  SPEAKER_03: And the smart contract executes deterministically.
• 26:54
  SPEAKER_03: If a payout is warranted, it will happen.
• 26:57
  SPEAKER_03: Uh, it reduces the you know the leeway that would have traditionally existed among uh insurers where they can actually delay or even prevent uh uh a payout that is supposed to go out from going out.
• 27:10
  SPEAKER_03: And also when it comes to the insurance side of things, uh when you think about how the insurer communicates with the with the uh with the reinsurer, being able to show them uh the kind of things that have happened in terms of policies that have paid out and whatnot, we believe this kind of mechanism can make coordination across the chain uh to be much more efficient and potentially even the uh the movement of funds, such as the capital, the premiums, and whatnot between the different parties.
• 27:38
  SPEAKER_03: So this coordination mechanism, I think it's very strong uh on the blockchain.
• 27:43
  SPEAKER_03: And uh, it's one of the reasons why you are not likely to see a lot of disputes around payouts uh when it comes to this kind of uh Web3-based uh insurance, parametric insurance.
• 27:54
  SPEAKER_03: Yeah.
• 27:55
  SPEAKER_04: Uh maybe, maybe I can add uh a little bit, uh a little bit of information.
• 27:59
  SPEAKER_04: I I for me I like to call the blockchain as uh the silent hero in this in this uh in this pilot because um you you see the the blockchain is just flying under the radar.
• 28:11
  SPEAKER_04: Um uh you uh you you're not telling people to sign transactions to do anything, but it is the glue that is holding everything together.
• 28:18
  SPEAKER_04: It is the coordination layer, it is what actually makes this possible.
• 28:22
  SPEAKER_04: So uh an incredible technology and um being able to leverage it uh for projects that actually touch people's lives is is actually uh a very satisfying uh thing to do.
• 28:34
  SPEAKER_00: Yeah, that's a great, great point.
• 28:36
  SPEAKER_00: It is, yeah, the glue that holds everything together.
• 28:38
  SPEAKER_00: I love that that perspective.
• 28:39
  SPEAKER_00: You know, I'd love to now kind of talk about the actual impact, right?
• 28:42
  SPEAKER_00: Because you had said, uh Muhammad, using this technology to have a real impact.
• 28:46
  SPEAKER_00: And I love what was also said there about it kind of being behind the scenes, right?
• 28:49
  SPEAKER_00: And not telling people that, oh, here's blockchain crypto, all these sorts of things.
• 28:53
  SPEAKER_00: It just kind of works in the background.
• 28:54
  SPEAKER_00: They don't necessarily have to know about it, which is good, makes it a lot easier, lower barrier to entry.
• 28:59
  SPEAKER_00: Um, and you know, the numbers have been incredible.
• 29:02
  SPEAKER_00: Uh 97% reduction in settlement time from 30 days down to one, and a 3,000 times reduction in settlement costs, uh, from about$21.70 to less than a cent.
• 29:12
  SPEAKER_00: So obviously, incredible numbers, mind-blowing, completely changes the game.
• 29:16
  SPEAKER_00: Um, so tell me about these numbers and how it kind of like um really does change the game when it comes to serving people who've traditionally been excluded uh from you know these types of products and services.
• 29:28
  SPEAKER_02: Yeah, yeah.
• 29:29
  SPEAKER_02: Let me start.
• 29:30
  SPEAKER_02: I think um with their settlement time, um, it has it's it's it becomes a marketing, a very powerful marketing tool.
• 29:42
  SPEAKER_02: It's it's a single most powerful marketing tool any insurance company can possess to drive future renewals and coverage.
• 29:49
  SPEAKER_02: So if then you're you're not only talking about it, whatever you promise, you're able to do it and do it fast, then it makes the marketing and future uptake very easy.
• 30:02
  SPEAKER_02: People understand because they saw the impact.
• 30:05
  SPEAKER_02: Then another thing that usually when it comes to cost reduction, for for this type of solution where you involve uh a lender who is embedding it into the existing product, majorly the loans, it means for every embedding there is increased cost to the loan eventually.
• 30:26
  SPEAKER_02: So most you'll find most lenders don't actually do what we're doing uh because of the cost.
• 30:32
  SPEAKER_02: So, and if they do it, the transfer of the costs goes to the consumer, and it's a whole thing that usually it's a balance where is a sweet spot that you don't overburden them again with additional cost of the of the premium.
• 30:46
  SPEAKER_02: So, but with the with this technology and the model that we used, uh reduction in cost actually means it transfers a reduced cost to the final consumer, a reduced cost to the microfinance or lender who might be involved.
• 31:03
  SPEAKER_02: So, for example, if for every 10 uh news Kenya shillings, so for every 10 shillings, uh you might have received a cover worth 100.
• 31:14
  SPEAKER_02: That means in the event of any problem.
• 31:16
  SPEAKER_02: Now, with this, what we are saying, instead of for every 10 shillings, you're getting 100, now you could pay as little as for every three shillings, you get a cover worth 100.
• 31:26
  SPEAKER_02: So it means you spend more but get a high impact.
• 31:29
  SPEAKER_02: So a better cost benefit uh for the consumer and as well as the lender who is supporting such uh as who has such a solution.
• 31:37
  SPEAKER_02: Yeah.
• 31:38
  SPEAKER_03: Yeah, yeah.
• 31:39
  SPEAKER_03: Just to add uh add on uh the great points Benson has shared, I think uh the the the issue of cost reduction from the execution layer is also quite pertinent uh because you are talking about transactions that on typical banking or you know mobile money rails would cost X amount, but when implemented through the blockchain, they cost Y amount.
• 32:00
  SPEAKER_03: And the difference is is orders of magnitude.
• 32:03
  SPEAKER_03: I mean a 3000 uh X reduction in cost through the use of this blockchain technology, stable coins uh moving fluidly on the chain, uh, you know, transactions happening at all times of day or night.
• 32:17
  SPEAKER_03: Uh, there's nothing that impedes it, nothing that needs you to go to the branch the following day or wait for working hours to place a call and everything happening at a fraction of the value.
• 32:28
  SPEAKER_03: So, what does this unlock?
• 32:29
  SPEAKER_03: This unlocks the opportunity for you know micro insurance, uh backing microfinance.
• 32:35
  SPEAKER_03: And so it comes in together very well.
• 32:37
  SPEAKER_03: It makes the whole uh system of providing uh very low cost protection sustainable, and so it becomes a good foundation to then uh scale resilience, especially among grassroots uh and low-income manas.
• 32:51
  SPEAKER_00: Yeah, that's a great point.
• 32:52
  SPEAKER_00: Um, for sure.
• 32:53
  SPEAKER_00: And that's what I think like this, you know, the the headline for this project really is resilience.
• 32:58
  SPEAKER_00: I think um, so I think you hit the nail on the head there.
• 33:01
  SPEAKER_00: Um so you know, obviously those are the the high points, uh, but also no pilot is ever perfect.
• 33:08
  SPEAKER_00: And an important part of any pilot project is learning of you know what could be done better or things that you didn't expect and how you know we can account for those.
• 33:15
  SPEAKER_00: So um, what were some of the unexpected findings or lessons that you took away from this pilot?
• 33:20
  SPEAKER_02: So I uh for for myself, I I um part of the statistics that we've been seeing in the world uh has been focused on consumers not willing to buy insurance, the sub-Saharan penetration less than 3% narrative, where we we can see we have the data.
• 33:42
  SPEAKER_02: Uh in terms of uh microfinance institutions and lenders willing to buy is a cover specifically that is related to climate, has it's something then that is also a lesson that I've seen that if the premium goes very high, this is one of the push and pulls we really had between ourselves, other RICS RISC Shield, uh, asking them, can it go lower?
• 34:09
  SPEAKER_02: Can the premium go lower?
• 34:10
  SPEAKER_02: Can it go lower?
• 34:11
  SPEAKER_02: Uh, because at the end of the day, they it has to be an enticing product that the lender is willing to accommodate to increasing their cost of credit.
• 34:22
  SPEAKER_02: So, one lesson now learned is that actually even lenders and um uh have uh have um have some some reservations to quickly uptake.
• 34:34
  SPEAKER_02: So if you see low uptake, lenders don't have a problem.
• 34:37
  SPEAKER_02: We have other products like we call credit life.
• 34:39
  SPEAKER_02: You could see you'll see most high percentage, but now it's high time we we do some research on the lenders who actually take up agriculture insurance, what's their percentage, what's their penetration, because even that from what I've seen is quite low.
• 34:53
  SPEAKER_02: Uh being internal and being trying to to lobby to discuss, it's quite a struggle if the percentage goes up a bit high.
• 35:01
  SPEAKER_02: So, and considering our pilot was quite low, we were at around 1.5%, yet the market rate is six to eight percent.
• 35:10
  SPEAKER_02: So you can actually see that's a huge difference.
• 35:14
  SPEAKER_02: And uh for for for for for other lenders uh out there to to to like and use it for their portfolio, then uh I see we we will get there are more lessons to be learned around that space here.
• 35:29
  SPEAKER_00: Absolutely.
• 35:30
  SPEAKER_00: Uh anyone else want to add any uh thoughts on uh unexpected lessons or or things that came from the pilot?
• 35:37
  SPEAKER_03: Yeah, so the duration of cover is one of the issues that we realized uh uh we got feedback from the customers uh from.
• 35:46
  SPEAKER_03: So it sounded like a lot of borrowers uh felt that you know getting a short-term cover uh and then maybe something doesn't happen during that cover period, but something does happen once the cover lapses, they felt like this was uh reducing uh the value that they were getting from that whole insurance.
• 36:03
  SPEAKER_03: So we are now looking at uh extending the duration of cover in future products and uh potentially being able to provide people an umbrella uh that covers a longer period of the season uh so that they are at least covered no matter what happens, whether or not maybe they they do have an existing uh or active loan.
• 36:21
  SPEAKER_03: So that is also one of the things, one of the lessons that came up, and we shall be factoring it in uh as we continue moving forward.
• 36:30
  SPEAKER_00: Yeah.
• 36:30
  SPEAKER_00: Uh yeah, no, this is really interesting.
• 36:32
  SPEAKER_00: And I appreciate like it seems like the pilot was a success in that it uh had really extraordinary outcomes, you know, proved that this technology can really reduce costs and time.
• 36:42
  SPEAKER_00: Um, and you know, one thing too, from all this, bringing it back to the blockchain and crypto side of things, because you know, this is the Crypto Ultras podcast.
• 36:48
  SPEAKER_00: Uh, we, you know, I think there's a really important lesson here for the whole space, and that's that uh it goes back to what you said earlier, Mohammed, around blockchain kind of being essentially invisible to the people that are using the service.
• 37:00
  SPEAKER_00: Uh so boroughs just experience it as a better loan process.
• 37:03
  SPEAKER_00: Loan officers just use their normal workflow.
• 37:06
  SPEAKER_00: Um, you know, for users, they didn't necessarily need to know that they were interacting with the blockchain in any way.
• 37:11
  SPEAKER_00: So talk to me about why it's important to keep the technology in the background as opposed to you know really trying to like make it more front and center.
• 37:20
  SPEAKER_00: And and what can other like builders, you know, learn from this about the importance of kind of abstracting away that complexity for users?
• 37:27
  SPEAKER_02: Yeah, um in Kenya, uh unfortunately not many African countries, the word blockchain is associated with crypto.
• 37:38
  SPEAKER_02: So, and we've seen unfortunately a lot of crypto-related scams.
• 37:43
  SPEAKER_02: So, people, some uh decision makers associate the word crypto with scams or something not clear or new type of money that might be a threat to the locoman, all that.
• 37:55
  SPEAKER_02: So, if you're able to communicate the concept without mentioning blockchain, then some microfinances by the mention of blockchain, they might say, no, no, no, we don't want to deal with crypto.
• 38:08
  SPEAKER_02: Yeah, you're telling no, no, it's not crypto, it's blockchain.
• 38:10
  SPEAKER_02: No, no, no.
• 38:11
  SPEAKER_02: So you you have to talk about the technology more.
• 38:14
  SPEAKER_02: It's a technology solution, and just crypto is a use case, not and it has many use cases.
• 38:20
  SPEAKER_02: So you have to at least be able to bring out that element clearly.
• 38:24
  SPEAKER_02: So talk about the outcome, uh obsess about the outcome the client is going to get rather than the product features and that, because if you speak to that, then it becomes a very easy conversation with the different decision makers, uh, different levels.
• 38:41
  SPEAKER_02: So, yeah, that's what I would say.
• 38:44
  SPEAKER_03: Yes, yes.
• 38:45
  SPEAKER_03: I think I would add a quick point on the blockchain um being something that is in the background, really uh changing the dynamics of the user experience.
• 38:54
  SPEAKER_03: Uh, when we look at Africa, of course, there are certain technical barriers with regards to you know the accessibility of uh maybe technology, internet.
• 39:03
  SPEAKER_03: Uh, even um, you know, people talk about a lot of smartphone penetration, but in the rural areas, these more feature phones.
• 39:11
  SPEAKER_03: Uh, and of course, you uh the the Web3, the native Web3 user experience or crypto experience uh requires uh, I would say a certain level of um information for you to be able to navigate the interfaces, sign transactions, and do all of that.
• 39:26
  SPEAKER_03: So when I think about what will really uh make blockchain and crypto technology scale in Africa, it's makes it making the user experience um easier and making it better uh for people who are not uh very don't have a lot of technical capacity, uh so to say.
• 39:44
  SPEAKER_03: So when we're thinking of how it will work with farmers, how it will work with uh market traders, with uh, you know, motorcycle riders who do this motorcycle taxis, I think we need to start thinking of blockchain as infrastructure uh that has certain things that it does very well and be able to leverage it for that without necessarily subjecting the end recipient or the beneficiary or the buyer to the pain of having to build this uh knowledge or maybe to go through a learning curve.
• 40:14
  SPEAKER_03: So that uh that improvement in user experience that is what will make this technology scale and uh unlock a lot of opportunities uh along the way.
• 40:23
  SPEAKER_00: Yeah.
• 40:24
  SPEAKER_00: Yeah, I love that the way you frame that there.
• 40:26
  SPEAKER_00: And uh, Agratos, did you have something you wanted to add to this?
• 40:29
  SPEAKER_01: Yeah, just to add, I think um one of the many challenges that you know is experienced in the insurance and reinsurance markets in Africa um is that um, you know, for the risk um like related to these types of climate events we're talking about, which can often be extremely extreme, and we're just walking into a very severe El Nineo coming up as well.
• 40:53
  SPEAKER_01: Uh the point is as a uh to have an efficient risk transfer, it's quite important to uh bring on board international uh reinsurance companies, including in, you know, maybe based in uh the US and um uh Europe and so on.
• 41:08
  SPEAKER_01: But then one of the challenges becomes um, you know, the payment of the reinsurance premiums, which is often required in um currencies like US dollars or euros and so on, whereby there might be um you know regulatory barriers and challenges in actually um paying them in um in those uh foreign uh currencies.
• 41:32
  SPEAKER_01: So I think this is where uh this can also be a very um you know interesting application of block blockchain where you uh you you don't have to um you know essentially wait for the availability of dollars before paying the reinsurers if it's being done uh using crypto, for example.
• 41:50
  SPEAKER_00: Yeah, yeah, absolutely.
• 41:51
  SPEAKER_00: I mean, yeah, no, that's really interesting.
• 41:53
  SPEAKER_00: Uh great perspectives all around.
• 41:55
  SPEAKER_00: To really wrap this up, um, I'd like to look ahead because I think that, you know, obviously the pilot was incredible.
• 42:01
  SPEAKER_00: Uh, the outcomes great, so many great lessons to take away from that, not only for like insurers and those working in these settings, but also for the blockchain kind of space more broadly.
• 42:10
  SPEAKER_00: Um, you know, but obviously it was just the beginning.
• 42:12
  SPEAKER_00: And hopefully uh there's so much more uh that can happen from this.
• 42:16
  SPEAKER_00: Um, you know, it started with uh rainfall insurance, obviously, for Nairobi market traders, but the potential is there for so many other use cases.
• 42:24
  SPEAKER_00: I think about droughts, I think about smallholder farmers, um, you know, so and I think about just expanding this, you know, beyond uh East Africa to all over the world as well, it could be a really powerful model.
• 42:34
  SPEAKER_00: And so when you imagine this model at full scale, what does it unlock?
• 42:39
  SPEAKER_00: Like, how do you see this scaling and growing from here?
• 42:42
  SPEAKER_01: Um, I think uh key takeaway for me is also that I mean, um, this, I mean, especially as we look at um, you know, the uh onset of the El El Nino, which is of course it's a regular phenomenon along with other phases of the ENSO cycle.
• 42:59
  SPEAKER_01: So, but that just um, you know, um sort of uh shows us how important it is to have these types of um insurance solutions.
• 43:08
  SPEAKER_01: Of course, it's in insurance with never a silver bullet for for anything, but it it can be one of many um you know risk management tools and specifically for risk transfer, uh especially for the very extreme events such as what might occur in um the next 12 months.
• 43:25
  SPEAKER_01: Um and so I think this just shows us that the importance of having such products, but also the importance of having them over a longer period of time.
• 43:34
  SPEAKER_01: So, you know, it should not be the case that let's say a lot of um people get insured for this coming season, and then for the next couple of years, no one buys the product because the weather is okay.
• 43:44
  SPEAKER_01: So it's important because then it would be extremely loss making for them, the insurance company's perspective, and they would not want to do that uh anymore.
• 43:52
  SPEAKER_01: So it has to be something where even pilots should potentially be over multiple years, and then scaling up should also be done in Way that there's some continuity over at least three three to five years to make these products um workable and um you know feasible for the um on the supply side and also on the demand side for them to be good value for money.
• 44:13
  SPEAKER_01: Apart from that, uh I think one very interesting takeaway from this pilot is also being to show that you can have the application of parametric insurance in um other sectors outside of agriculture, because the vast majority of all initiatives in parametric insurance has been focusing on agriculture, whereas this initiative was on the with MSMEs in um urban Kenya.
• 44:34
  SPEAKER_01: And again, that's such a huge sector.
• 44:37
  SPEAKER_01: I was looking at some stats that about 33% of Kenya's GDP constitutes of MSMEs.
• 44:44
  SPEAKER_01: In other countries in Africa, like Ghana, it's 70%.
• 44:47
  SPEAKER_01: So, yet if you look at the MSME sector, there's very I mean, there are some interesting products out there, but not a lot of really innovative products going on, especially in the insurance space.
• 44:58
  SPEAKER_01: So I think this is one of the very first, I would say, you know, very innovative products for the MSME sector.
• 45:04
  SPEAKER_01: Um, and then finally, I would say um, yeah, the product also shows that you can use insurance as a form of business interruption cover, which is different to the traditional insurance model, which is mostly looking at assets, um, not so much at business interruption.
• 45:21
  SPEAKER_01: So I think this is also uh, you know, it shows the application of parametric insurance and blockchain from a business interruption perspective.
• 45:29
  SPEAKER_01: And finally, I would say it also shows that um, you know, uh insurance could help with uh can can help with uh better access to financing and as an alternative to collateral, uh, which is a key barrier, as uh Belson was saying earlier for MSMEs to access finance.
• 45:48
  SPEAKER_01: So hopefully this can help with uh easier access to finance and also potentially help with reducing the interest rates at which um banks and MFIs are financing, which is very high currently, one of the reasons being the high risks.
• 46:04
  SPEAKER_01: So, to the extent that the insurance product uh mitigates some of those risks, um, there is justification in significantly reducing the interest rates as well.
• 46:14
  SPEAKER_00: Yeah, absolutely.
• 46:15
  SPEAKER_04: And and maybe just thinking about uh Shumba Network as a data solutions provider, um looking looking at the vast uh uh plethora of data sets that we've onboarded onto uh our systems, I would say that uh we are in a position to uh support more initiatives uh with regards to this kind of product.
• 46:35
  SPEAKER_04: Because if you look at the the Chiron pile, the current pile of the example was excess rainfall.
• 46:40
  SPEAKER_04: But we cover so many other uh thematic areas, um, looking at things like air quality, uh temperature, soil moisture.
• 46:48
  SPEAKER_04: So there's so many other um uh thematic areas that can also be brought into the fold uh and following a similar a similar implementation and being able to support it uh end-to-end.
• 47:00
  SPEAKER_04: So yeah, I would say the possibilities uh I don't want to say unless I would I I want to say that there are more possibilities because we can always bring in new data sets that can actually uh help with the with this kind of products.
• 47:14
  SPEAKER_00: Yeah, absolutely.
• 47:16
  SPEAKER_00: Great point.
• 47:16
  SPEAKER_00: Um, thank you.
• 47:17
  SPEAKER_00: Any final thoughts, uh Kennedy or Benson, before we wrap things up today?
• 47:21
  SPEAKER_02: Yeah, thank you.
• 47:22
  SPEAKER_02: As for me, I I'm putting myself in the shoes of many other microfinance and lenders in the world and now and Africa specifically as well.
• 47:34
  SPEAKER_02: If we're able to produce a solution that not just works for Fortune Credit, but many other lenders, then that will be a disruption and a life-changing solution serving the entire community.
• 47:48
  SPEAKER_02: So that is the goal.
• 47:49
  SPEAKER_02: Uh, use Fortune Cred to now ensure that this solution can anybody in Uganda, anybody in Rwanda can look at it and say, wow, this is what I've been looking for.
• 47:59
  SPEAKER_02: This is something you can jump into uh and solve that gap where we don't see a lot of lenders uh focused on agricultural-based risks cover.
• 48:09
  SPEAKER_02: So with that, yeah, thank you for this uh time.
• 48:13
  SPEAKER_00: Yeah, absolutely.
• 48:14
  SPEAKER_00: Kennedy, any final thoughts?
• 48:16
  SPEAKER_03: Yes, yes.
• 48:17
  SPEAKER_03: Uh maybe just to end up uh by mentioning uh a line which I had recently and um has made a lot of sense to me, and it is that climate risk is credit risk.
• 48:29
  SPEAKER_03: I think traditionally uh a lot of lenders uh were not thinking of climate risk beyond the traditional domains of uh agriculture.
• 48:37
  SPEAKER_03: But now we see uh climate risk is pervasive across the economy.
• 48:42
  SPEAKER_03: It affects different areas that lenders land into.
• 48:45
  SPEAKER_03: And so it makes sense that uh lenders start adopting this paradigm of climate smart credit, credit that can actually see the weather and can actually provide the relief that is required when uh these extreme events happen.
• 48:58
  SPEAKER_03: So I think this is just the beginning, as has been echoed by others, and I think we will see uh at scale over the next several years this becoming uh a mainstream uh or rather a mainstream approach within how uh letters manage uh credit risk and climate risk in particular.
• 49:15
  SPEAKER_03: Yeah.
• 49:16
  SPEAKER_00: Yeah, for sure.
• 49:17
  SPEAKER_00: Amazing.
• 49:18
  SPEAKER_00: Well, you know, such great perspectives.
• 49:19
  SPEAKER_00: I've really enjoyed this conversation.
• 49:21
  SPEAKER_00: Uh really interesting work that you're doing and really impactful.
• 49:24
  SPEAKER_00: And I hope to see it scale around the world.
• 49:26
  SPEAKER_00: So thank you so much to all of you for taking the time to be here and for sharing your speci perspectives.
• 49:30
  SPEAKER_00: That was really fun.
• 49:31
  SPEAKER_00: So thank you.
• 49:32
  SPEAKER_00: Thank you, Drew.
• 49:33
  SPEAKER_00: Thank you.
• 49:33
  SPEAKER_00: Thank you.
• 49:35
  SPEAKER_00: And that was Kennedy, Benson, Mohammed, and Agritash.
• 49:38
  SPEAKER_00: A huge thank you to all of them for taking the time to share their wisdom.
• 49:42
  SPEAKER_00: Getting to hear from every part of this partnership in one conversation was extremely enlightening, and I really enjoyed it.
• 49:47
  SPEAKER_00: There's so much to take away from this, but let me pull out a few things.
• 49:50
  SPEAKER_00: The first is how this model can break a vicious cycle.
• 49:53
  SPEAKER_00: For these traders, a rainfall shock had always become a credit shock, because the rain closes their stalls, but the loan is still due.
• 49:59
  SPEAKER_00: This pilot flips that.
• 50:00
  SPEAKER_00: When the rain hits, the loan balance automatically drops, at a time when the trader needs relief the most.
• 50:05
  SPEAKER_00: The protection arrives during the shock as opposed to weeks after when their loan might already be overdue.
• 50:10
  SPEAKER_00: It's a more human-centered and dignified way to design a financial product.
• 50:14
  SPEAKER_00: The second is what it means for inclusion.
• 50:16
  SPEAKER_00: It's incredible how 100% of the borrowers were new customers, 76% were women, and more than half had previously been denied a loan.
• 50:23
  SPEAKER_00: A lender who wouldn't touch these traders before could suddenly serve them, because embedding insurance changed the math on who counts as bankable.
• 50:30
  SPEAKER_00: When the cost of delivering a micropolicy approaches zero, the entire economic logic that has excluded informal traders for so long falls apart.
• 50:37
  SPEAKER_00: And the third is a lesson I think matters most for everyone building in this space, and one that we have discussed so much in our podcast, so sorry if I'm being redundant, and that is that the blockchain here was essentially invisible.
• 50:46
  SPEAKER_00: The traders just experienced a better loan, the loan officers just used their normal workflow, nobody had to really learn about smart contracts or oracles or stablecoins except for those that are building it.
• 50:56
  SPEAKER_00: And yet all of that technology was working away in the background, coordinating between parties who don't fully trust each other and making the whole thing possible.
• 51:03
  SPEAKER_00: This started as a pilot with rainfall insurance for market traders in Nairobi, but as we heard, the potential is so much bigger, expanding to droughts, to smallholder farmers, to new partners across East Africa and beyond.
• 51:13
  SPEAKER_00: It's a powerful glimpse at a future where the people who've always been left out of the financial system finally have real protection against a rapidly changing and unpredictable climate.
• 51:21
  SPEAKER_00: So a huge thank you to Kennedy, Benson, Mohammed, and Agratosh, and to the team at MercyCore Ventures and everyone involved in this pilot for the work you're doing and for sharing your wisdom with us today.
• 51:32
  SPEAKER_00: And that wraps up today's episode of Crypto Altruists.
• 51:34
  SPEAKER_00: Thank you so much for tuning in.
• 51:36
  SPEAKER_00: I hope you enjoyed the conversation as much as I did.
• 51:38
  SPEAKER_00: If you're inspired to explore more stories at the intersection of Web3 and Social Impact, be sure to visit us at CryptoUltruist.com for articles, resources, and more.
• 51:45
  SPEAKER_00: And if you love what you've heard, it would mean the world if you could rate with you and subscribe to the podcast.
• 51:49
  SPEAKER_00: Your support is huge in helping us reach more listeners like you and keeping the platform going strong.
• 51:53
  SPEAKER_00: Thanks again for joining us, and I look forward to having you back for the next episode.
• 51:56
  SPEAKER_00: Until then, let's keep showing the world the good of crypto.