By Fabian Mangera WAJIR (Xinhua) --
Some 101 Muslim pastoralists on Tuesday received 5,800 U.S.
dollar compensation for drought- induced losses suffered in
Wajir County of northern Kenya.
The pastoralists’ herds of
sheep, goat, cattle and camels were insured in August 2013 by
Takaful Insurance of Africa (TIA) with an Index-Based Livestock
Insurance (IBLI) product, branded as Index-Based Livestock
According to Andrew Mude
who leads the IBLI program of the Nairobi-based International
Livestock Research Institute (ILRI), the dry spell conditions in
much of Wajir County have surpassed the index trigger and active
contract holders in these areas will be compensated.
“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,” Mude said on Tuesday.
Mude said its particularly
imperative to make livestock policies work for places like Wajir
where many thought the combination of isolation from economic
activity and the vast, remote areas covered by pastoralist
herders made protecting livestock assets with market-mediated
insurance products impossible.
This is the first time in
Africa that an insurance policy that combines an
Islamic-compliant financial instrument with innovative use of
satellite imagery is compensating Muslim pastoralists for
drought-induced losses suffered in Kenya.
Among the beneficiaries of
the pilot livestock insurance program will be 30 women and 71
men who incurred losses during long dry season that typically
ends in March in arid and semi-arid Wajir.
Mude said the
beneficiaries conform to the Islamic concept of takaful, in
which risks are shared among a group of participants.
Through a contract called
tabbaru (donation), participants make contributions to a risk
fund. In the case of a payout, the fund makes payments
commensurate with the contributions received.
IBLI uses satellite
imagery - measuring the conditions of grazing lands - that is
fed into an algorithm that predicts livestock loses. Predictions
beyond the 15 percent level trigger indemnity payments.
“Our goal is to show
pastoralists that they can use a fair and ethical business
model to protect their assets from a natural hazard of
keeping livestock in East Africa,” said Hassan Bashir, the
CEO of Nairobi-based Takaful Insurance, whose father is a
client and will be receiving a payout on Tuesday.
Takaful earns a management
fee from participants who pay contributions to become members of
a fund or risk pool.
The pool receives
contributions and makes payments when the contract pays out. If
a surplus results, it is distributed equitably to those members
who are not recipients of the payout.
ILRI works in
collaboration with the Kenyan government, Cornell University and
the Index Insurance Innovation Initiative (I4), among many
ILRI and partners want to
see livestock insurance available throughout East Africa, where
an estimated 70 million people live in drylands, many of them
making their living by herding animals.
In Kenya alone, the
pastoral livestock sector is estimated to be worth at least 5
Intergovernmental Authority on Development (IGAD) estimates that
over 90 percent of the meat consumed in East Africa comes from
So far, about 4,000
pastoralists in northern Kenya, not all of them Muslim, have
bought IBLI contracts since the project was launched in 2010, an
indication that there is both interest in and demand for
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
“We saw what Wajir was
like in 2011 when the worst drought in decades killed almost
half the livestock in the region and lives were left hanging
in the balance,” said Liesbeth Zonneveld, country director
of Mercy Corps, an organization that is a partner in the
“Today we see a
situation where drought remains a threat, but people have a
way to protect their central source of food and income.”
Initial studies from other
pastoral regions that have access to the IBLT product showed
that droughts were less likely to damage diets in households
that had bought insurance.
The insurance also was
linked to a 50 percent drop in distress sales of livestock and a
33 percent drop in reliance on food aid.
ILRI Director General
Jimmy Smith said the success of the IBLI program is evidence
that pastoralists in Africa are as receptive as livestock
keepers anywhere to options for managing risk.
“These are people who
over the centuries have learned how to nurture herds in some
of the most challenging conditions in the world,” Smith
“They may not have
encountered livestock insurance before, but they have
quickly understood how it can help bring a new level of
stability to the pastoralist way of life.”
ILRI researchers noted
that making livestock insurance commercially viable in East
Africa will require catalyzing a critical mass of informed
They acknowledged this
will be a challenge in a region where many herders occupy vast
remote areas where communication and transport are difficult.
But some experts believe
the potential to protect pastoralists from drought and help them
improve their herds justifies support from governments and
donors, just as agriculture insurance is often subsidized in
many countries across the globe.