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Insurance – saving lives and livelihoods

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Climate

Erratic and unpredictable weather and changes in the climate threaten the livelihoods and survival of tens of millions of smallholder farmers in Africa. When crops fail, or livestock die of hunger, the repercussions can be devastating. To give just one example, severe drought in 2017 led to cattle herders in northern Kenya losing over 70% of their livestock. In Ethiopia, over 5 million people required emergency food aid and almost 2 million people were displaced from their homes.

Preventing these catastrophes requires a range of solutions, some of which have been highlighted in the last two stories, such as the introduction of drought-tolerant seeds, the creation of more robust value chains and access to expert advice and weather information. Another increasingly important element in terms of improving resilience to climate change is index-based insurance.

Index-based livestock insurance was first piloted in Eastern Africa in northern Kenya in 2010. Two years later, a similar scheme was launched in Ethiopia. This is, briefly, how it works: ILRI analyses satellite imagery provided by NASA to establish when fodder levels have fallen so low that livestock are likely to die. Instead of insurance agents having to go out and verify whether animals have died, the index triggers immediate payments to policyholders.

Since it was launched in 2017, the CLI-MARK project has been encouraging pastoralists in Kenya and Ethiopia to take out livestock insurance. As a result, the number joining the schemes has significantly increased, in the case of Ethiopia from 707 pastoralists in 2016 to 2,942 in 2017. Key players in this story are the village insurance promoters and sales agents, who are benefiting from training sessions funded by CTA. “CLI-MARK has been extremely important for us,” says Getaneh Erena, Oromia Insurance Company’s Senior Livestock Insurance Officer. “The project joined us at a critical time when we were out of sponsors and needed support.”

In Kenya, CLI-MARK has worked closely with Takaful Insurance Company. One of the many people to benefit from insurance is Habiba Jattan, a pastoralist in Isiolo. In 2016, she insured 16 cattle and 20 goats, and received a pay-out of KSh150,000 (€1,500) when fodder levels fell below a predetermined level. Asked what she would do if there were several years of good weather and no pay-outs, she replies: “I would still take out insurance, because I’ve had a very good experience with it.”

CTA’s Southern Africa flagship climate-smart agriculture project is encouraging farmers to take out crop insurance. In Zimbabwe, the project has benefited from existing services provided to farmers by the ZFU and Econet Wireless. These organisations have created a remarkable product, known as the eco-farmer combo, for which farmers pay US$1 dollar per month. Known as the “dollar that does miracles”, it is split three ways to cover funeral insurance, a range of ZFU services and weather-index insurance. In mid-2018, support from CTA enabled ZFU to hold 66 training sessions for its agents in 30 wards, focusing on the promotion of insurance. By July, over 10,725 Zimbabwean farmers had signed up for the eco-farmer combo.

Another CTA project which is encouraging farmers to take out insurance is the Market-led User-owned ICT4Ag-enabled Information Service (MUIIS) in Uganda. MUIIS’s service bundle provides farmers with agronomic tips, weather alerts and index-based insurance, all delivered to their mobile phones. For many subscribers, insurance is a key component of the bundle. “I know that if I lose some of my maize because of drought, like I did last year, I will now get compensation,” says Robinah Nasjamma, a farmer in Zirobwe District. For her, as for a growing number of farmers, index-based insurance is becoming an important safety net in the struggle to cope with a changing climate. 

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