Affordable fire alarms and insurance made accessible to people living in informal settlements – keeping our communities safe

Happiness Mthandana and Portia Mjilana Lumkani employees with Francois Petousis CEO of Lumkani

Francois Petousis CEO of Lumkani in Imizamo Yethu in Hout Bay with the fire alarm device

Francois Petousis CEO of Lumkani installing a fire alarm at Madiba Spaza shop in Imizamo Yethu in Hout Bay

At least one person dies in the 15 to 30 potentially devastating fires that break out in informal settlements in South Africa every day, according to research conducted in 2020 by Stellenbosch University.

These high-density areas, populated by 3.1-million South Africans, according to the Department of Human Settlements, face unique challenges in combating fire and the associated loss. Aside from taking some basic precautions, residents have no real means to mitigate this threat. However, innovative technology, inclusive financial service offerings and shared value partnerships can combine to offer hope.

Fires spread rapidly through the flammable dwellings in densely packed informal settlements. Even if residents practise fire safety and take the necessary precautions, they are still at risk of losing their homes and belongings if a blaze tears through the settlement.

Each fire triggers a familiar pattern: loss, displacement and a long wait for external assistance. Many people are left homeless, having lost everything without the financial means to recover, and essentially have to start from scratch. These cycles of poverty created by the realities of housing that is unsafe, trap many of those living in informal settlements.

In wealthier environments, people use insurance to guard against financial shocks. However, due to issues of access and affordability, most residents of informal settlements are not able to protect their hard-earned assets or their basic shelters. A significant “protection gap” exists – thanks to a lack of suitable, affordable products designed for the low-income market.

It was within this context that I co-founded our company, Lumkani, along with a group of similarly committed individuals. We wanted to establish a reality, in which underserved communities (and particularly those living in informal settlements) are safer and more resilient, through access to a combination of risk-reducing technology and affordable financial services.

Traditionally, the response after hardships such as fires involves emergency relief – waiting for assistance from government, NGOs and private entities, which reduces residents to passive beneficiaries of aid and charity. There is a need for such aid efforts, but considering communities only in this light, strips them of agency and overlooks their potential as active participants in risk mitigation.

At Lumkani, we made a conscious choice to engage with our communities as customers rather than only beneficiaries of aid, which fundamentally alters our approach to providing services. It emphasises dignity, agency and mutual respect. This means that the products and services we offer must not only meet the immediate needs of these communities; they have to speak to their wants – if people with limited income are willing to pay, it really has to be for a value-adding service. Basically, we’re looking to enable community members to take sustainable steps towards their own safety and financial resilience.

We decided to focus on fire prevention and designed technology with communities rather than for them. The result is our palm-sized fire detection device, currently installed in over 65 000 high fire-risk informal homes in our country. It triggers an alarm upon sensing a rapid rise in temperature in a confined space (as caused by a fire) rather than on the presence of smoke - smoke detectors are too sensitive to the daily realities of cooking and heating in informal homes and their filters clog in dusty communities. The alarm in turn activates other Lumkani devices in neighbouring homes within 60m, thus creating a community-wide alert system. At the same time, warning-alert text messages are sent to these residents.

This product has proven to help prevent small fires from spreading and destroying hundreds of homes, with an estimated R142 million of informal property saved from fire in the last 5 years. However, due to the configuration of dwellings and the difficulty of access for firefighting, some residents could still be at risk of losing possessions and structures. To address this, we entered into a partnership with Hollard to offer residents low-cost short-term insurance against property loss (structure and contents) due to fire – at R80 per month, the product gives cover of up to R40 000, and is bundled with our fire detection device.

Our device mitigates the risk of fires, which has allowed Hollard to make short-term insurance affordable for people living in informal settlements. We’ve, in turn, made insurance more accessible by removing traditional barriers to entry, based on our community insights. For example, we “formalise” homes for the purpose of insurance through recording and storing GPS coordinates, and we offer flexible premium payment plans given our client’s context. Through this shared-value partnership with Hollard, properties to the value of R440-million in low-income and underserved areas have been insured against loss, while about R19-million in claims have been paid to date.

In recognising community members as empowered consumers rather than just beneficiaries of aid, it's important to develop and nurture genuine relationships with the communities we aspire to serve. This is done in a number of ways. Firstly, we employ 300 local community members, specifically women, in various permanent roles across South Africa, thus creating employment opportunities within communities.

We also put a portion of our revenues back into developing the communities we work with, while building a growing business. We support communities by providing community relief efforts and essential aid after a fire. We work closely with community leaders, collaborate with local fire departments to educate residents on fire safety and prevention, and work with Hollard in building financial literacy in communities, through their Streetwise Finance programme.

By recognising the agency of people living in informal settlements – rather than viewing them simply as beneficiaries of aid – and by creating access to products and services previously unavailable to them - we believe we can equip our communities with the tools they need to navigate hardship and build a more secure future.