If you don’t have data on your business, how are you going to run it? Well, more likely than not, you’re going to use HIPPO, says Joel Macharia, founder of Abacus, a provider of data solutions for businesses. HIPPO stands for the “HIghest Paid Person’s Opinion”, and this is not the lead you want to follow.

Joel showed us the power of big data in the running of a business in Kenya, as seen during Afrikoin’s conference today.

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A data-driven safety net for farmers in Kenya

Big Data Case Study: UAP

It is the story of UAP, an insurance company based in Kenya which has partnered with Syngenta (a provider of farm products) and Safaricom, the telco operator of Kenya behind the Mpesa mobile money system.

Insurance is traditionally an ungrateful business. Customers complain about being spammed through their phones and having difficulties claiming their money when they need it. Insurance companies employ large sales teams which are often seen as aggressive. Furthermore, the methods they use to assess a claim is also time-guzzling and costly.

UAP takes advantage of the data to help them understand agriculture and designed a micro-insurance program called Kilimo Salama based on it. Analysing climate and crop trends from the past 30 years, they are able to decide on compensation plans with the data of the present year without having to assess individual cases. If rainfall exceeds a certain average within the data, then the crop will be lost and the compensation can happen immediately.

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Big and easy data

For instance, “a calculated 15 percent decrease in yield, based on the rain shortfalls recorded at the weather stations, triggered a payment of 15 percent of the insured value. The largest payout was for 2500 Kenyan Shillings (Kshs) or about US $30. That is the equivalent of about 12 kilos of high-yielding maize seed, which is enough to plant one acre.” (UAP website)

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No assessment, all data, and an easy way to get compensation

Depending on the price of crops and the situation of the farmer, UAP can provide a more targeted compensation, from revenue compensation to support for buying new seeds. The money is provided through MPesa, Kenya’s pioneering mobile money system.

So far Kilimo Salama has been growing steadily, from a pilot batch of 200 farmers in 2009 to more than 45 000 in 2012. All the details of the program can be found here.

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The check-list for a data-driven business

To conclude, Joel showed us a check-list to make your project/business is data-ready so you have no excuse for spamming your users with the wrong message.