By Lawrence Paganga
A study which looks at the financial solutions to help farmers in Tanzania, received the prestigious United Kingdom (UK) -based Financial Times Responsible Business Education Award on Monday.
The study ‘How to take the risk out of farming. Bringing finance to Africa’s smallholder farmers;’ was led by Dr Enrico Biffis, an associate professor of Actuarial Finance and Dr Erik Chavez, a research fellow from Imperial College Business School in the UK.
The study addresses several issues bedevelling farmers in Tanzania.
According to the study, most of the farmers lack access to affordable insurance to protect them against the effects of climate change with crops failing due to the changing weather patterns.
Using machine learning to analyse the data such as weather variables, soil characteristics and agricultural practices to determine what ideal crop yields look like, the researchers developed a set of criteria by which a farm’s performance could be judged.
They worked with the World Bank and reinsurance company Munich Re, to create a product that combines loans and insurance to help protect smallholder farmers, many of whom lack access to basic financial services, which makes managing unexpected emergencies difficult.
Reacting to the news of the award, an excited Dr Chavez said: “I am delighted that our research was been recognised by the Financial Times for this prestigious award. Getting your hands dirty with real-world problems allows you to formulate research questions that are not otherwise present in academia.”
Dr Biffis added: “Tackling major social issues requires a broad range of skills and ideas, and we found that by working directly with market participants and other experts, we were able to come up with an effective solution to the problems facing farmers in this region.”
The Financial Times Responsible Business Education Awards recognise academic research from leading business schools that demonstrates positive social impact. In the FT’s criteria, this research should “tackle significant societal problems” and show that “their findings are driving change in policy or practice.”
This is the first time that Imperial College Business School has been recognised by the Financial Times for the social impact of its research.
The farming project in Tanzania was among a number of initiatives that, according to the FT, “combined intellectual originality, a focus on pressing social issues and efforts to engage organisations to bring about change.”
Professor Francisco Veloso, Dean of Imperial College Business School said: “This award reflects their tireless work in producing impactful research that really drives positive societal change.
“This recognition by the Financial Times will help us continue our mission of producing world-class research that tackles the most pressing global challenges.”
Private Agricultural Sector Support (PASS) is a Tanzanian trust that partially guaranteed the loans. Nicomed Bohay, Managing Director of PASS when the project was being undertaken, said the premiums were lower than other products on the market.
“The premium was included in the financing structure of the small holder farmers loans from banks. This arrangement not only made this product competitive, but also affordable as it is built into the financing structure so farmers pay for their loans after the crops are harvested.”
They are plans to expand the model to countries including Ghana, Uganda and Zimbabwe, and many more could soon experience a similar improvement in financial security.
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