It was a cheerful event in Wajir as pastoralists from the County were paid out for drought-related losses incurred between August 2013 and March 2014 in a payout that was a first of its kind in Africa. 101 pastoralists (71 men and 30 women) received cheques amounting to a total of Ksh 500,000 through an Insurance policy known as Index-Based Livestock Takaful (IBLT). IBLT is offered by Takaful Insurance of Africa (TIA) who have tailored the product to align to the rules and regulations of Islamic law
In tafakul, risks are shared among group members who all contribute a risk fund (Tabbaru), which is then paid out according to a member’s contribution. The risk covered in the case of livestock insurance is drought related livestock mortalities, and the index that helps measure this risk is the amount of palatable forage available for livestock consumption at any given time of the year.
In his speech, TIA Chief Executive Officer Mr Hassan Bashir said that IBLI should be prioritised by pastoralists because it compensates them after harsh climatic conditions which are out of their control. TIA with the help of International Livestock research institute (ILRI) uses satellite imagery to gather required information on the impact of climatic conditions on livestock. This information is then entered into an algorithm that predicts livestock losses. Accounted loss that is beyond a 15 percent trigger level warrants compensation.
The payout event was graced by county officials including the County Governor; Ahmed Abdulahi, and Senator Hassan Abdirahman. The donor community was represented by the Australian High Commission H.E, Geoff Tooth, the Head of DFID Kenya, Lisa Phillips and the Head of the European Commission Dominique Davoux who all applauded this product calling it the kind of technology that should be embraced in other parts of Africa. Pastoralists who had not taken up the policy were encouraged to embrace that opportunity and follow the example of their friends and relatives.
Wajir, as well as other parts of Northern Kenya, usually experiences acute droughts, leading to the massive losses in livestock which are pastrolists’ main income generating activity as well as source of food. At such times, pastoralists have had no option but to sell their herds to brokers at throwaway prices or watch their cattle die. For a region whose livestock sector contributes 10% of the national GDP, the significance of such losses can be felt throughout the country.
With the support of Kenya Markets Trust (KMT) and its co-facilitator Mercy Corps Kenya (MCK), TIA was able to sell 240 policies in their second sales window in Wajir ,insuring 3728 shoats (goats and sheep), 185 cattle and 48 camels. This was twice the policies they sold in the first window. KMT also extended technical support to the International Livestock Research Institute (ILRI) who are the developers of the IBLI system to encourage commercialization of IBLI to pastoralists. This is part of KMT’s strategy to professionalize herd management not only in Wajir but also among other parts of northern Kenya. Specifically, KMT’s efforts have been geared towards increasing access to and facilitating adoption of weather-based insurance as one tool for risk management in arid and semi-arid lands.
KMT and MCK also supported the development of marketing, enrollment and payment strategies to reduce overhead costs for insurance companies and ultimately the price of the product. They have also facilitated a working relationship between ILRI and Takaful Insurance of Africa (TIA), which is currently the only sharia-compliant insurance provider in Kenya.
Subsequently, KMT is currently working with the Insurance Regulatory Authority (IRA) public education division to complete the development of an appropriate curriculum for northern Kenya. The curriculum will focus on improving general public knowledge about insurance products and existing IRA complaint mechanisms.
These efforts from the team has seen KMT invited by the Ministry of Agriculture, Livestock and Fisheries, State Department of Livestock, Livestock Insurance Task Force to advise on increasing access to livestock insurance in northern Kenya.