Development programs such as Index-Based Livestock Insurance (IBLI), which provides innovative insurance solutions to help livestock keepers cope with drought-related livestock losses in East Africa, can provide evidence-based research and lessons learned for wider policies to support livelihoods in pastoral production systems.
How cross-sector partnerships can be harnessed to foster policy innovation in the pastoral rangelands was a key question of a recent IBLI-hosted workshop.
Held on 9 June 2015 at the International Livestock Research Institute (ILRI) in Nairobi, the workshop, which was organized and hosted by IBLI in conjunction with collaborator Russell Toth of the University of Sydney, brought together 75 participants from more than seven countries. These included Senior Policymakers in the Kenyan Government, Researchers in Rangeland and Governance issues, and Private Sector Actors such as Insurance Agents, Donors and Development Practitioners with interests in pastoral development and index-based insurance.
Since 2010, IBLI, which is implemented in Northern Kenya and in Southern Ethiopia, has been designed, developed and implemented as a market mediated index-based insurance product that can help to protect livestock keepers from drought-related asset losses, particularly those in the drought prone Arid and Semi-Arid Lands (ASALs).
The workshop reviewed the policy value of the evidence gathered by the IBLI project since its inception. Polly Ericksen, leader of the Livestock Systems and Environment program at ILRI, said IBLI is an exemplary example of a research-for-development innovation that is being actively upscaled after successful adoption by end-users, and which has solid evidence of impact. Ericksen said the policy workshop provided an opportunity to review successes and challenges from the project and explore ideas for it’s future expansion.
Why IBLI and how?
Andrew Mude, the IBLI project leader explained the research that led to the design of the IBLI product and the evidence of positive social and economic change that resulted from its implementation. He said the project focused on index-based insurance because a risk management option for vulnerable households in the ASALs was needed, which would provide pastoralists with an intervention they could use to protect themselves against livestock losses. He said the IBLI product has helped reduce risks associated with keeping livestock in the ASALs and pastoralists are increasingly purchasing insurance for their animals. According to Mude, IBLI has the potential to improve fiscal efficiency of other humanitarian interventions in areas with ‘poverty traps’, which can, in turn, increase incentives of entry for other development agencies.
Evidence from IBLI’s research shows that households who have taken up insurance have not only improved their ability to cope with post-drought effects, but are also 25% less likely to reduce meals especially with regard to small children. Further, IBLI is more cost-effective when dealing with hunger and drought-related effects compared to other household safety net programs (HSNP) in Northern Kenya. Some of the successes of the program are attributed to:
- Using evidence-based research to design a precise contract suitable for the ASALs;
- Establishing informed and effective demand (Ensuring that clients are accurately informed and educated on the product);
- Developing delivery mechanisms tailored to reduce costs; and
- Considering policy and institutional requirements for making IBLI sustainable
What is the role of the private and public sectors?
The private sector is playing a key role in ensuring IBLI’s long-term sustainability. Speaking during the workshop, Hassan Bashir, CEO of Takaful Insurance of Africa (TIA), whose company sells IBLI in Northern Kenya, said increasing IBLI’s penetration requires making sure there is community acceptance and ownership of the product for its long-term sustainability.
Michael Carter, Director of the Index-Insurance Innovation Initiative and Professor of Agricultural Economics at the University of California, Davis, called on more government/public sector involvement to support the private sector in creating an integrated social protection system for the ASALs in Kenya. He said the public sector can be involved in certifying and regulating the quality of insurance contracts to make them more precise and better able to meet the needs of pastoralists.
Improving livelihoods, influencing policies
Vincent Githinji from Kenya’s State Department of Livestock in the Ministry of Agriculture, Livestock and Fisheries, said that the Government of Kenya (GoK) is looking to adopt policies that will harness the role of the private sector and use evidence-based research to address the challenges faced by livestock keepers in Northern Kenya. A quarter of Kenya’s population is food insecure and most people in the ASALs depend on food relief, as livestock provides 80% of their livelihoods and income, and drives the economies of these regions.
Noting that the IBLI program has been highly successful in addressing the tremendous challenges posed by drought, Githinji described the GoK’s commitment to building on the lessons of IBLI for the soon to be launched Kenya Livestock Insurance Program (KLIP) which will scale-up the provision of livestock insurance to pastoralists in Northern Kenya.
KLIP, which will bring together public policy, research and private sector innovations, will include a macro-level insurance scheme for asset protection, with support from the World Bank and ILRI. Its objective is to cushion pastoralists from drought-related losses and build their resilience for sustainable food security. It also aims to increase public-private sector partnerships in the context of increasing the availability and adoption of index-based insurance. The program hopes to reach over 5000 households in Wajir and Turkana counties and will borrow heavily from the IBLI model.
‘We need to allow the private sector to thrive where it is already established,’ said Githinji, who added that KLIP will introduce insurance to areas not covered by IBLI and will work with the program in establishing a sustainable livestock insurance industry for the ASALs before eventually scaling down the GoK’s role.
Download the workshop presentations below: