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January 30, 2010

Insurance scheme in Kenya to protect livestock farmers against drought

by Will Ross

A new insurance scheme has been launched in northern Kenya which offers herdsmen a chance to protect their livestock against drought.The initiative uses satellite technology to check the pasture available for the herders.

Arid northern Kenya suffered a severe drought last year and hundreds of thousands of animals died.

Until now insuring herds of livestock in rural Africa has been all but impossible.
Partly because it has simply been too expensive for insurers to go and count the number of dead animals which might be spread over a vast rural area. But a new initiative launched in Marsabit in northern Kenya offers some hope at a time when frequent droughts are hitting communities hard.

The International Livestock Research Institute (ILRI) says satellite imagery will be used to monitor the landscape - if the images show a lack of pasture then it will be assumed the animals are likely to die and the owners can receive a pay-out.

ILRI's Andrew Mude said that they had spent four years on the project and wanted it to be commercially sustainable. "The percentage premium will depend on the area. Upper Marsabit is more [drought-]prone and the premium will be 5.5% of the value of the livestock whereas in Lower Marsabit people will pay 3.25%," he said.

The scheme will be run by a Kenyan bank together with a local insurance firm.
The initial aim is to get 1,000 families in northern Kenya to insure their cows, goats, sheep and camels.

To insure a herd of 10 cows for example a family would pay the equivalent of around $50 (£31). It sounds a lot but paying out less than a third of the value of a single cow to insure the herd of 10 might be tempting given the potential losses due to drought.

Last year, Kenyan pastoralist communities lost hundreds of thousands of livestock after the rains failed and there are signs that climate change is having a detrimental effect across vast swathes of Africa.

The animals are for many people the equivalent of their bank account, so insuring their herds may be a way of avoiding future economic crises.
If successful the initiative would be rolled out across the region and other arid parts of Africa.

"It would be very popular if they introduced it here," said Michael Ameripus, who works with Vets Without Borders in northern Kenya's Turkana district. "Out of a population of around two million goats and sheep, around 300,000 died in Turkana district during the recent drought," he said. "So insurance would offer people here a great boost."



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