BWIRE: Why Africa must face climate change head on

By Victor Bwire

Accelerated effects of climate change including prolonged droughts are taking a toll on the economies of people in the Great Horn of Africa, which calls for urgent measures to address disasters and mitigation of risks.

Indeed, countries in the region must come up with cross country measures to deal with the situation, not only to save their people but more importantly reduce conflicts over resources in the region.

The economic base in the Horn of Africa is largely driven by Agriculture, more so, livestock, which has been hit hard by drought, thus not only frustrating interventions towards food security, reducing inter country tensions and resource-based conflicts.

Stability has been observed for some time between countries like Kenya and Ethiopia, and Uganda, which previously had frequent incidents of cross -country rustling or conflicts over watering fields for livestock.

This needs to be maintained through interventions that seek to address the effects of climate change that particularly relate to dwindling livestock that is the main source of income for communities in the region. Livestock keeping is a mainstay of the economies in the region, contributing about 57% of the IGAD countries’ agricultural gross domestic product (GDP).

For livestock, drought represents the single greatest cause of livestock mortality in the greater Horn of Africa which is predominantly arid and semi-arid.

Hopefully, the regional policy meeting happening in Addis Ababa on June 24-26, 2019 drawing experts from the eight Intergovernmental Authority on Development (IGAD) countries will be on Scaling Index-Based Insurance for Livestock will come up with solutions to tackle climate shocks facing the region’s agricultural producers.

The conference organized by the World Bank in partnership with the International Livestock Research Institute (ILRI), the Technical Centre for Agricultural and Rural Cooperation (CTA), the Food and Agriculture Organization of the United Nations – Sub-regional Office for Eastern Africa (FAO SFE), and IGAD need to focus on how to enhance public-private partnerships on disaster risk management and index-based insurance programs for livestock.

Experts have previously cautioned that traditional strategies adopted by pastoral and farming households to cope with the shocks of climate change have proved ineffective over time as the threats posed drought increased both in terms of the rate of recurrence and the stretch of locations affected.

Interventions such as a food and cash transfers are expensive and mainly unreliable because of the IGAD region’s high reliance on support from the already stretched international relief community.

One of the proposed interventions that the experts will extensively discuss will be the Index-based livestock insurance, which is a proven mechanism to help farmers build that resilience, and finding ways to extend such mechanisms throughout the IGAD region will be the central focus of the conference.

Unlike traditional insurance policies, which pay out against established losses, index-based livestock insurance relies on satellite-based indicators. It is designed to trigger timely indemnity payouts to insured pastoralists and agro-pastoralists before droughts become very severe—enabling them to purchase fodder, food, feed supplements, water and vaccines to keep their herds alive until grazing conditions get better.

The Index-Based Livestock Insurance (IBLI) relies on satellite-based indicators and is designed to trigger timely indemnity payouts to insured pastoralists before droughts become severe—enabling them to purchase fodder, feed supplements, water and vaccines to keep their herds alive until grazing conditions return to normal.

IBLI and Takaful (IBLT) products have been commercially sold in Kenya since 2010 by various insurance firms with support by the International Livestock and Research Institute (ILRI) and its academic and development partners. The insurance scheme was scaled-up in Kenya in 2015 through a Stated-led Public-Private-Partnership (PPP) with support from ILRI and the World Bank.

The scheme– Kenya Livestock Insurance Programme (KLIP) — currently covers eight counties and about 20,000 households. During the 2016 – 2017 drought in Kenya, KLIP successfully distributed indemnity payouts of more than USD8 million.

In Ethiopia a similar insurance product has been sold among pastoralists in Borana since 2012. Buoyed by the success of the scheme’s pilot phase, Ethiopian government is mulling to scale it up with the technical support of ILRI and CTA.

The most recent figures according to CTA show that some 15,000 livestock owners in Kenya and Ethiopia have now purchased the product, 45 percent of them being women.

The great promise already shown by IBLI in Kenya and Ethiopia has expectedly caused interest in the region.
Several other IGAD member states such as Uganda, Somalia and Sudan are either already carrying out or planning for feasibility studies to adopt similar index-based insurance schemes for their pastoralist populations in collaboration with ILRI and the World Bank.

Given the success story in Kenya and Ethiopia, the index-based insurance scheme has the potential to transform the economies of drought-stressed nations in the region and beyond because it offers rapid asset protection, financial sustainability, access to finance to support livelihoods and stabilization of economic activity:

For the private sector, if the livestock insurance and related mechanisms are to worm effectively, they need to invest in technical assistance to develop an appropriate insurance product, subsidy to the insurance product, capacity development of pastoralists for uptake, infrastructure for the distribution of the product and delivery of payout, regional data repository and livestock credit facilitation/enhancement and value chain capacity development:

Already, the World Bank Group has existing programs that fit a regional intervention in the region through, research in insurance indices, premium subsidy support, disaster Risk Strategies and infrastructure improvement.

The writer works at the Media Council of Kenya

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