Pastoralists in Wajir cushioned against drought by Takaful insurance


By S. Hassan and KNA

Pastoralists in Wajir yesterday received a big boost and a cover against biting droughts following payments of beneficiaries by Takaful insurance through an insurance policy dubbed Index-Based Livestock Insurance (IBLI).

The project uses satellite imagery to monitor the levels of drought and cushions the beneficiaries against the effects of the biting drought. “We come to their rescue before the stock is wiped out and they can use the benefits paid to buy water and pasture for their livestock” Said Takaful CEO Mr. Hassan Bashir.

Those who already registered for the program expressed their gratitude and could not hide their joy.

Wajir County’s Governor Mr. Ahmed Abdullahi who officially opened Takaful’s Wajir branch and later presided over the function to pay the beneficiaries said that this was a first in Northern Kenya. He appealed to the residents to take advantage of this program. He added that unlike previous programs employed by NGO’s, this one will help them to stay afloat.

Governor Ahmed and his Deputy Abdihafid with a delegation from the Australian High Commission, ILRI, DFID and Mercy Corps

Previously, NGO’s would buy live animals from the pastoralists and distribute the meat as relief food and this made many to migrate to urban centers and abandon their nomadic lifestyles because the proceeds they get by selling their animals is not re – invested back but is used in other ways.

Challenges of Livestock Insurance

On the same note, International Livestock Research Institute (ILRI) researchers have expressed their reservation about plans to make livestock insurance commercially viable in East Africa region.

They said the concept posed a challenge because many herders occupy vast remote areas where communication and transport non existence.

The experts however believe that 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.

This  sentiments come at a time where an insurance policy Index-Based Livestock Insurance (IBLI) project that combines an Islamic-compliant financial instrument with innovative use of satellite imagery is compensating Muslim pastoralists for drought-induced losses suffered in  Northeastern Wajir County, where livestock are valued at Ksh 46 billion (USD 500 Million).

For the first time, the 30 women and 71 men in arid and semi-arid Wajir will be the first beneficiaries of livestock insurance that conforms to the Islamic concept of Takaful, in which risks are shared among a group of participants.

In a press release today by ILRI, the pilot program will pay approximately Ksh 500,000 (USD 5,800) for losses suffered to their herds of sheep, goat, cattle and camels during the long dry season that typically ends in March.

Andrew Mude from ILRI and who leads the IBLI programme, 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.

“The herds were insured last August by Takaful Insurance of Africa (TIA) with IBLI product, branded as Index-Based Livestock Takaful (IBLT)”, he said adding that the 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.

He noted that its  particularly important to make livestock policies work for places like Wajir and its environs 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.

“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.

Bashir said that 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”, he added.

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 said saying that 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.”

Liesbeth Zonneveld, Country Director of Mercy Corps, an organization that is a partner in the IBLT project said they 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.

“Today we see a situation where drought remains a threat, but people have a way to protect their central source of food and income,” Zonneveld said.

According to ILRI experts, 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.

The IBLI program in Kenya is currently funded by the United Kingdom’s Department for International Development (DFID), the Government of Australia and the European Union and uses satellite imagery measuring the conditions of grazing lands that is fed into an algorithm that predicts livestock loses.

ILRI and partners want to see livestock insurance available throughout East Africa, where an estimated 70 million people live in dry lands, many of them making their living by herding animals.

So far, about 4,000 pastoralists in northern Kenya, not all of them Muslim, have bought IBLI contracts since the project launched in 2010, an indication that there is both interest in and demand for livestock insurance.

Additional reporting by KNA




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