Analysis by Tim Wall
A livestock insurance program made its first payouts to Kenyan herders last week. About 650 pastoralists in northern Kenya's Marsabit District received funds from the Index Based Livestock Insurance program.
The program uses satellite images to observe the degradation of pasture due to drought. Livestock starvation rates are then estimated. Once a herd's losses exceed 15 percent, the insurance holder gets a payout.
Current estimates are for losses of 18 to 33 percent of the cattle, goat, and sheep herds that Kenyans depend on for milk, meat and other products.
The Marsabit District is home to approximately 86,000 cattle and two million goats and sheep. The Nairobi-based International Livestock Research Institute estimates that up to one-third of the area's livestock may have perished during the ongoing drought in the Horn of Africa.
"It's terrible that we are seeing this level of loss, but gratifying that the policies are doing what they are supposed to do, which is to help herders avert disaster when weather conditions dry up pasture lands and animals begin to perish," said Isaac Magina, head of agriculture insurance at UAP Insurance Ltd., in a press release.
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"When you look at a 33 percent loss, that is a significant portion of the asset base of any business and it would be difficult to survive without insurance," said Magina.
UAP Insurance Ltd. along with Equity Bank are in charge of implementing the program, many organizations were involved in the livestock insurance project.
The project was developed by a partnership of the International Livestock Research Institute, Cornell University and the Index Insurance Innovation Initiative program at the University of California at Davis. Commercial partners Equity Bank and UAP Insurance Ltd. implement the program.
The Index Based Livestock Insurance program is funded by USAID, the European Union, the British Government, the World Bank, the Microinsurance Facility, and the Global Index Insurance Facility.
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"This is all still a work in progress," said Jimmy Smith, director general of International Livestock Research Institute, in a press release. "But the fact that our relatively inexpensive approach to estimating livestock deaths seems to be accurate could open the door to making livestock insurance widely available in many parts of Africa."
"This is asset insurance for animals that are the centerpiece of livelihoods, providing a stream of income and nutrition for years and years," said Andrew Mude, the Index Based Livestock Insurance project leader at International Livestock Research Institute, in a press release.
"The investment in insurance based asset safety nets protecting these herds could have a more cost-effective welfare impact over the longer term than other forms of response such a food and cash assistance," Mude added.
Analysis by Tim Wall