The Government has declared the drought affecting many parts of Northern Kenya, Coast and Eastern regions a national disaster. The prevailing dry spell is wreaking havoc across the country.
This has come at a huge cost, particularly to pastoralists. In Marsabit County, for instance, it is estimated that over half the livestock has already died. In fact, the Kenya Red Cross Society has classified 13 counties in ‘Alarm’ stage and 10 others on ‘Alert’. Sad stories out of these counties paint a grim and hopeless picture.
With no pasture and water for their animals, many poor livestock farmers have watched their livestock die. In most cases, the lost animals are their only source of livelihoods.
This has disrupted the lives of these vulnerable families. So far, a number of initiatives have been put in motion to secure these communities, including setting up water points and destocking.
However, one of the transformative ways that has potential to sustainably secure the livelihoods of these families is social impact insurance. Properly executed, this could enhance the communities’ resilience.
READ MORE
Pastoralist communities want state to formalise Duksi, Madrasa education
Turkana pastoralists struggle for survival as climate change bites
16 more bodies of Shakahola massacre victims identified
How Red Cross cash grant is transforming lives in northern region
With insurance, farmers only need to take a cover and pay their premiums. Then they can rest, secure in their knowledge that they will be compensated, in the unfortunate event that bad weather (or whatever other calamity that they may be covered against happens).
The major stumbling block towards providing insurance for the agriculture sector has been distribution and affordability. This has made many players shy away from offering this kind of insurance cover. Pastoralists are considered a risky group.
However, this is also the space with huge opportunity to increase insurance penetration and contribute towards inclusive growth of society. From experience, close collaboration between the private sector, Government and NGOs is key to delivering insurance to such groups.
Besides perception about the risk component, penetration of index-based insurance covers to the arid and semi-arid areas has been slowed down by challenges such as poor infrastructure, illiteracy and the constant migration of livestock owners.
However, insurance still holds huge promise. This conviction is based on the experience of APA Insurance which with 6 other insurers have created an agriculture pool that has partnered with the Government to provide social impact Insurance.
This partnership between the insurers (APA, CIC, Heritage, Kenya Orient, Jubilee, UAP, Amaco) and the Government through the Ministry of Agriculture, Fisheries and Livestock provide covers to pastoralists and small holder farmers. Index Based Livestock Insurance covers are an innovative way of safeguarding livelihoods of pastoralist communities.
Through this partnership, the Government has purchased Index-Based Livestock Insurance Cover for pastoralists. This goes a long way towards encouraging inclusive development in the country. There is a similar initiative for crop farmers that was launched last year.
It brings together the Government of Kenya and the consortium of insurance firms, dubbed the Area Yield Index Insurance. In this multi-peril micro-insurance product, the Government offers a 50 per cent subsidy on insurance premiums for up to five acres per farmer. It covers smallholder maize and wheat farmers against poor yields as a result of vagaries of the weather and natural catastrophes such as earthquakes, volcanic eruptions, disease and pests. APA Insurance pioneered the Index-based Weather Insurance.
Through this product, farmers are compensated for crop damage as a result of deficit or excesses in weather conditions such as temperature, sunlight, wind speed or rainfall resulting in losses during the length of the crop growth cycle up to physiological maturity.
Livestock owners such as dairy farmers are provided with appropriate covers that compensate them upon accidental death of their domesticated animals of economic value through illness, or calving complications. Farmers are also compensated for the theft of their animals.
Growth in the insurance industry, whose penetration is less than 3 per cent, will come from areas such as index-based covers. The industry needs to fashion innovative products and reach out to the unreached.
