“If it’s successful we will look further afield, in western Africa around the Sahel and southern Asia.”
Herders of cows or camels in arid northern Kenya can obtain a new type of insurance against drought – the first of its kind in Africa using satellites to gauge rainfall.
Project organizers hope to get about 1,000 households in the Marsabit district to sign up for insurance in coming weeks after a formal launch on Jan. 22 by microfinance group Equity Bank and African insurance provider UAP Insurance Ltd.
“If it’s successful we will look further afield, in western Africa around the Sahel and southern Asia,” project leader Andrew Mude of the International Livestock Research Institute (ILRI) told Reuters.
Under the pilot project, pastoralists in Marsabit will be able to insure herds – of cows, goats, sheep or camels – against starvation during drought. Drought and lack of pasture are the main causes of livestock death in the arid region.
Pastoralists would get automatic payments for losses if satellite images of the region show vegetation fades from green – shades of brown will gauge the severity of drought.
The use of satellites bypasses the traditional, more costly system under which insurers check reported livestock deaths before making payouts. That is almost impossible to judge in herds that wander over huge areas.
Still, risks include that some herders suffer bigger-than-predicted losses during droughts. In other cases, some herders might get payments when their animals have all survived.
Northern Kenya has suffered 28 major droughts in the past century, with four of them in the past decade.
Mude said it was too early to say if the number of droughts was increasing, perhaps because of climate change stoked by human emissions of greenhouse gases.
Under the scheme, a family in Lower Marsabit would have to pay 3,900 shillings (US$50) a year to insure a herd of 10 cows worth a total 120,000 shillings ($1,580).
The insurance pays nothing for herd losses up to 15 per cent. So if drought strikes and is estimated as severe enough
– Andrew Mude
to kill 25 per cent of all livestock, the family gets a payout of 12,000 shillings, covering 10 per cent of the value of the herd.
In Mongolia, a different form of insurance brings payouts for all pastoralists if severe snowstorms kill animals in benchmark herds. But such data risks manipulation, ILRI said.
Herders signing up for the Kenyan insurance might also be more able to get other forms of credits – banks would be more willing to lend to those with more predictable incomes.
STARVATION INSURANCE: A Maasai herdsman walks near the carcass of a dead cow in the Mount Kenya forest, near Nanyuki town, central Kenya August 18, 2009. In addition to the Kenyan government’s interventions, which include buying up livestock and borehole drilling, private insurers have moved in with a satellite-based insurance plan.