Kenyan pastoralists receive insurance payout for livestock deaths
Posted Tuesday, April 29 2014 at 18:29
- About 101 pastoralists from Kenya’s Wajir County were awarded $5800 for losses incurred due to death of their cattle during drought.
Pastoralists in northern Kenya are the first beneficiaries of a sharia-compliant insurance cover that compensates for livestock deaths linked to drought, in a programme that is expected to be expanded throughout East Africa.
About 101 livestock keepers from Kenya’s Wajir County were awarded $5800 for losses incurred due to death of their cattle during drought.
Takaful Insurance CEO Hassan Bashir said the Index-based Livestock Insurance product (IBLI) is aimed at giving pastoralists a fallback plan during natural hazards.
“Our goal is to show pastoralists that they can use a fair and ethical business model to protect their assets from a natural hazard in East Africa,” said Mr Bashir.
The programme is run jointly by Takaful Insurance of Africa (TIA) and the International Livestock Research Institute (Ilri) with financial assistance from the UK and Australian governments.
Through a contract called tabbaru (donation), members of the scheme contribute to a risk fund and are charged a premium of between six and nine per cent.
“In the case of a payout, the fund makes payments commensurate with the contributions received,” said Andrew Mude, Ilri’s programme leader of the project.
IBLI uses satellite imagery —measuring the conditions of grazing lands which is fed into an algorithm that predicts livestock losses. Predictions beyond 15 per cent level trigger indemnity payments.
“This payout is critical for building confidence in the concept of insurance for the pastoral, drought-prone regions of East Africa, where life revolves around livestock and droughts can bring disaster,” Mr Mude said.
The programme is to be made available throughout East Africa where an estimated 70 million people live in dry lands, many of them relying on livestock.
In Kenya alone, the pastoral livestock sector is estimated to be worth at least $5 billion.
So far, about 4,000 pastoralists in northern Kenya have bought IBLI contracts since the project launched in 2010, an indication that there is both interest in and demand for livestock insurance.
Experts at ILRI say that in semi-arid and arid regions, insurance can make keeping livestock a more effective and sustainable livelihood strategy and can act as a cushion to household assets and income in times of distress.
Initial studies from other pastoral regions that have access to the IBLI product showed that droughts were less likely to damage diets in households that had bought insurance.
The insurance also was linked to a 50 per cent drop in distress sales of livestock and a 33 per cent drop in reliance on food aid.