Scaling Up Insurance to Withstand Adversity in Kenya

Feed the Future expands livestock insurance to help pastoralists in northern Kenya manage risk and improve community resilience.

For communities in northern Kenya, livestock is the foundation of food security. Approximately 5.8 million people make a living as pastoralists, herding camels, cows, goats and sheep in search of water and food. These animals are valuable sources of nutrition and income for these families and communities. However, finding water and pasture has become increasingly difficult and many pastoralists are being forced to move their herds hundreds of miles to keep them alive and maintain a sustainable income. An ongoing drought from 2008 to 2011 led to an estimated $10.2 billion loss in livestock and crops in Kenya. Environmental and financial stresses in this area will only continue.

With this in mind, the Government of Kenya is scaling a novel livestock insurance program for pastoralists, which was piloted by Feed the Future. During the 2017 drought, the program paid out millions of dollars to more than 18,000 pastoralist households, enabling them to better manage through drought and speed up their recovery after.

To help even more pastoralists manage adversity and to build on the success of livestock insurance in the region, Feed the Future recently started a partnership with Takaful Insurance of Africa. Takaful sells livestock insurance through a mobile money platform, which automatically sends funds to pastoralists in the event of extreme drought based on their location and the value of their livestock. In the future, Takaful plans to bundle this insurance with a mobile application called AfriScout, which identifies sources of water and pasture through satellite imagery. AfriScout currently has 6,000 registered users crowdsourcing information in Kenya, Tanzania and Ethiopia.

With livestock insurance and access to information about plentiful pasture areas, pastoralists can save time and money they would otherwise spend scouting for water and food. Thanks to the information available through AfriScout, pastoralists can decide whether to move their herds to new locations or purchase water and feed from alternative sources nearby. Providing herders with options like these empowers them to better respond to the stressors and shocks they face today, and those in the future related to rising temperatures, erratic rainfall and dry spells.

Takaful offers insurance to pastoralists at roughly $12 a cow per year, keeping overhead costs low by using mobile money, which helps avoid time-consuming and costly paper claims. Takaful also sells policies through sales agents based in pastoralist communities, such as shop owners and motorcycle taxi drivers, who earn a commission based on what they sell. This helps further boost jobs and income in the communities. Takaful aims to sell at least 6,000 insurance policies bundled with AfriScout over the next two years, increasing resilience among vulnerable populations.

Feed the Future is working to improve the resilience of pastoralist communities in northern Kenya by scaling an innovative insurance product that will increase preparedness and lessen risk by expanding access to financial services. Feed the Future Partnering for Innovation helps the private sector scale and market agricultural innovations for smallholder farmers. Takaful Insurance of Africa Limited is one of five new partnerships launched in 2019 aimed to help companies grow their businesses while simultaneously building resilience among smallholder farmers.