Formative evaluation on increasing the uptake of ACRE Hakika in Kenya

3ie evidence programme:  Agricultural Insurance Evidence Programme
Author(s): Mercy Musya, Mercy Muttai
Institutional affiliation(s): Busara Center for Behavioural Economics
Grant-holding institution: Busara Center for Behavioural Economics
Main implementing agency: Busara Center for Behavioural Economics
Sex disaggregation: Yes
Gender analysis: No
Equity focus: Yes
Study type: Formative evaluation

Context

Kenya’s agricultural sector forms the single largest contributor to the gross domestic product. Yet it is prone to a host of adverse weather related risks.  Lack of rain is, particularly, a serious risk, given that 96 per cent of the land is rain-fed. In spite of these risks, agricultural risk management is a nascent area of exploration.

Existing informal strategies (such as farm and non-farm diversification) are currently the norm through which farmers protect themselves from unpredictable weather patterns. Such strategies, however, do not necessarily form reliable ways of protecting smallholders from destabilising livelihoods and jeopardizing local food security. There have been initiatives to encourage use of index based insurance that theoretically removes some of the high cost and moral hazard involved in traditional and multi-peril crop insurance (FSD Africa 2013).

The study sample was drawn from six regions in Kenya –  Central, Eastern, Nyanza, Western, Rift Valley and Coast. The specific target population was i) smallholder maize farmers, ii) with an average of two acres of land under cultivation iii) an average income of US$2–US$4 per day and iv) which had already been enrolled for the  Replanting Guarantee (RPG) product.

Intervention design

This study seeks to leverage the rising mobile use in Kenya. ACRE Hakika is a private product offering scalable weather-index based agricultural insurance. The first introduction point to ACRE Hakika is Replanting Guarantee (RPG), the product that initially begins as a free insurance product until the end of the germination day, where it transitions into a paid extension product. An inputs-based insurance uses SMS messages for various objectives such as: to introduce the product, confirm consent of take-up, enable updates regarding payment and include bundling ‘educational’ information on insurance and agronomic practices.

Evaluation design and methodology

The study used a mixed-methods approach. Qualitative research methods included eight focus group discussions to assess the behavioural mechanisms that farmers held towards ACRE, 15 in-depth interviews, and phone surveys.

A baseline survey sampled 669 farmers and descriptive analysis were conducted.

Primary evaluation questions

1. What are the behavioural barriers preventing farmers from converting from the free RPG to the paid ACRE Hakika product?
2. What are their perceptions about crop security and control over harvest with the use of this product?

Primary findings

• 84 per cent of the farmers were willing to take up insurance in the next maize season in order to protect themselves from crop failure.
• The qualitative research activities in this study identified low awareness among farmers about ACRE Africa and what products they offer. However, they showed interest in understanding ACRE Hakika product, especially how the compensation process works.
• 71 per cent of those who paid for the product were satisfied with the product because they felt secure within the maize season. Only eight per cent of those who paid for ACRE Hakika were not satisfied with the product.

Implications

• Qualitative findings highlighted the need for a physical touch point that could deal with both the issue of product understanding and trust.
• There exists an intention–action gap with farmers, indicating that there were farmers who were interested in taking up the product but did not pay for it.