Innovative Insurance Program Supports Traditional Livelihoods in Kenya



insurance3In east Africa, nomadic farmers have been herding cattle and other livestock as a way of life for centuries, but drought has kept many in poverty. In northeastern Kenya, farmers have grown resigned to the unpredictable cycle of rains and persistent drought, along with the resulting losses to their herds and their livelihoods. Herders in this predominantly Muslim region often have no other means of making a living; there is little arable land to farm and few other jobs available. Unlike in developed countries, herders in Kenya do not have access to livestock insurance to help them weather difficult periods, and many reject conventional insurance as violating the tenets of their religion. However, the International Livestock Research Institute (ILRI) has come up with an idea that helps herders in a culturally acceptable way.

The ILRI partnered with company called Takaful Insurance of Africa to create an insurance policy for East African cattle herders that conforms to Islamic values. Based on a system practiced in Asia and the Arab world for centuries, it charges a set fee instead of interest, where participants make contributions to a shared fund and receive a payment if their herds are affected by drought. In addition to providing insurance in a manner that respects local cultural and religious norms, the ILRI and Takaful have come up with an innovative way to estimate herd losses due to drought. Kenya includes some the harshest and most remote terrain in the world, making it impossible to monitor herd populations. Instead of attempting to measure the herd, ILRI uses satellite imagery to measure the impact of drought on the vegetation herds graze on. If satellite images show that drought has caused grazing lands to disappear by a certain percent, Takaful will pay out to herders. Herders receive compensation not just for deaths in a herd, but also for weakened condition as a result of drought.


Raising Success


Shamsa Kosar, a beneficiary of Takaful insurance in WajirSince 2010, 4,000 herders in Northern Kenya and 400 in Ethiopia have purchased livestock insurance. The ILRI has focused on developing trust and attracting early adopters. As a result of efforts to conform to religion and local traditions, the insurance program is gaining acceptance. The growing success of their program has also attracted donors from the UK and Australia who have committed funds to educate herders about the benefits of insurance. The goal is to build resilience before a drought strikes to avoid spending more money on humanitarian assistance later. The results show that this goal is fast becoming a reality; ILRI reports show that droughts were less likely to affect diets in households that had purchased insurance. These households were also 50% less likely to sell their livestock in a drought to recover money before the herd perished, and also 33% less likely to receive food aid.

The initiative created by ILRI and Takaful has become successful in a region where many thought insurance programs were impossible. In addition to providing locally appropriate insurance in challenging conditions, it has also lowered conflict sparked by herders moving into agricultural areas in search of grazing lands and water, and has increased the confidence of herders in the face of natural disasters. Takaful Insurance is not yet making a profit and the program still relies on external donations, but both Takaful and the ILRI are hopeful that it will continue to grow, and possibly receive government support in the future. As the program continues to expand and to spread to neighbouring countries as hoped, it could become a self-sustaining program for herders across East Africa.

For more information, see an article and video from The Economist here.


Valerie Busch

Valerie Busch

Valerie is a development professional based in Toronto, Ontario.

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