Ethiopia

It’s all systems go for the scaling up of index-based livestock insurance in Ethiopia

For close to a decade, the International Livestock Research Institute (ILRI) and its partners in the public, private and non-profit sectors have been engaged in designing and implementing index-based livestock insurance (IBLI) to protect livestock keepers from drought related asset losses. Introduced in Ethiopia in 2012, the conversation on IBLI is gaining momentum with more stakeholders investing in efforts towards its delivery, as well as the provision of other related agricultural index insurance products. 

The value of IBLI has been demonstrated, for instance, by record payouts to insured pastoralists in Borana during the 2017 droughts and by the increased coverage of projects around crop-based index insurance. Based on this, the time was deemed ripe to convene a structured, purposeful conversation around catalysing a sustainable scale of IBLI and agricultural index insurance in Ethiopia.

On 10 July 2018, ILRI’s IBLI team with support from the Technical Centre for Agricultural and Rural Cooperation ACP-EU (CTA) delivered a policy workshop, at the ILRI campus in Addis Ababa, that brought together key government policy and decision makers, researchers, private sector and development partners’ representatives to share experiences on agricultural insurance. More specifically, the purpose of this policy dialogue was to outline a concrete process towards the effective widespread provision of index-based livestock insurance, and more broadly agriculture insurance in Ethiopia.

Participants at the policy dialogue on scaling IBLI in Ethiopia_11th July 2018 Bethlehem Alemu

Participants of the policy dialogue workshop on scaling IBLI in Ethiopia (photo credit: ILRI/Bethlehem Alemu).

Prof. Fekadu Gebre, state minister, Ministry of Agriculture and Livestock Development in Ethiopia was present at the meeting. His presence at the policy dialogue spoke not only to the criticality of the discussion on livestock insurance, but also to the commitment of the Ethiopian government to identify effective strategies for helping livestock herders and farmers manage the risks of drought. In his address to the participants, he highlighted the government’s recognition that IBLI is targeting one of the critical limiting factors faced by pastoralists—drought-related livestock mortality. He also noted that insurance can allow government to proactively and more cost-efficiently respond to severe drought risks and stated that the conversation on micro insurance in Ethiopia is timely. 

Various in-depth presentations from ILRI researchers, CTA, government and the private sector highlighted the extent of drought-related losses and the impact of such losses on pastoralists and their governments. Presentations and discussions also affirmed agricultural insurance and specifically livestock insurance, as an effective and cost-efficient tool for enhancing pastoralists’ resilience to drought. Participants delved into the specific experiences of the Index-based Livestock Insurance Program and strategic lessons related to supporting its sustainable scale. Experiences from the Kenya Livestock Insurance Program were presented as was the IBLI program in Ethiopia. As the policy dialogue was also aimed at capturing perspectives and identifying synergies for scale from a range of crop insurance pilots, representatives from the Oromia Insurance Company, Nyala Insurance, the Agricultural Transformation Agency and the United Nations World Food Programme also presented their lessons and experiences on weather index and micro insurance focusing on motivation, progress, trends and challenges of index-insurance in Ethiopia.

Participants at the livestock insurance policy diaogue in Addis Ababa Prof. Fekadu state minister, Ministry of Livestock and Agriculture, Ethiopia at the livestock insurance policy diaogue in Addis Ababa

Participants (left) and Prof. Fekadu Gebre, state minister, Ministry of Agriculture and Livestock Development in Ethiopia (right), at the policy dialogue workshop (photos credit: ILRI/Sarah Kasyoka).

An expertly facilitated conversation ensured that participants engaged in productive and insightful conversations, uncovering critical issues for consideration around the value and challenges of scaling index-insurance in Ethiopia. Insights from the sessions emphasized the critical role of an enabling policy and regulatory environment in facilitating uptake of index insurance in Ethiopia. There was also agreement across the board that insurance needs to be bundled with other services such as micro-credit to increase uptake. The place of information and communication technology was also recognized as key in making insurance services available for smallholder producers and pastoralists. Leveraging technology was highlighted as a critical factor in minimizing the cost of delivering insurance products through; efficient beneficiary registration, digital sales services, insurance payouts (mobile money transfers), and information dissemination. 

Panel discussions allowed participants to delve deeper into issues pertinent to the scaling up of index-based livestock insurance in Ethiopia and establishing a concrete way forward. Key recommendations to this effect were articulated, among them being the need to establish a process under an empowered authority to define specific needs, outline actions and coordinate efforts to establish a sustainable agricultural index insurance program in Ethiopia. The national government (Ministry of Agriculture and Livestock Development) was unanimously identified as best-placed to host such a process and offer leadership for the development and scaling up of crop and livestock insurance programs in the country. There was also firm commitment expressed by all partners including the government, CTA, ILRI, and private insurance companies to deploy efforts and resources to move the process of scaling up index insurance in Ethiopia forward.

It is envisioned that all stakeholders will now engage in concrete action to begin to implement the key recommendations reached, to continue to achieve impact for smallholder farmers and herders.

The workshop was sponsored by CTA through its Climate and Markets East Africa (C-LI-MARK) Program as part of CTA’s broader support to the sustainable scale of index-based livestock insurance initiatives in partnership with ILRI, the Oromia Insurance Company and Takaful Insurance of Africa.

A Business Evaluation of the Sales and Distribution Model for Index-Based Livestock Insurance

“Developing the insurance product was the easy part. The tweaking, monitoring, and adapting – that has been much more complicated.” This, in essence, was what Cornell development economist Christopher Barrett informed us as we began discussing our upcoming Kenya research trip with him.

He was right. Since the International Livestock Research Institute (ILRI) formulated Index-Based Livestock Insurance (IBLI) ten years ago, the product has been lauded as a strategy to prevent drought-induced livestock losses among Kenyan and Ethiopian pastoralists. By combining satellite observations of forage conditions with longitudinal livestock mortality rates, it calculates clients’ seasonal payouts.

While by and large successful – and already showing evidence of positive impacts on pastoralists’ wellbeings – the rollout of IBLI has faced numerous challenges, as Takaful Insurance of Africa, IBLI’s current private sector partner, can attest.

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Largest-ever micro-insurance payout made to Ethiopian pastoralists

ILRI news

Pastoralist receive an indemnity payment after livestock losses More than 2,250 pastoralists received insurance payouts following the extremely poor rains this year in southern Ethiopia.

More than 2,250 pastoralists received insurance payouts following the extremely poor rains this year in southern Ethiopia. Low levels of rainfall have led to the loss of approximately 300,000 livestock in 2017 in the Borana zone of the southern Oromia region. The insurance payouts of more than ETB 5.233 million (USD 220,000) was the largest-ever micro-insurance indemnity made in Ethiopia. Each insured pastoralist received an average of ETB 2,255 (USD 96), which will allow the herders to purchase feeds for their surviving animals and to restock their herds.

Pastoralists in northern Kenya and southern Ethiopia have been insured by an index-based livestock insurance (IBLI) scheme devised in 2008 by the International Livestock Research Institute (ILRI) and its technical partners at Cornell University and the University of California at Davis. The Ethiopian component of…

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Index Based Livestock Insurance (IBLI), E-learning Course Launch

Elearning launchAre you interested in knowing just how Index Based Livestock Insurance works? Lessons on IBLI and the Asset Protection Contract are now just a click away! You can easily access your IBLI lessons from ILRI’s e-Learning portal http://learning.ilri.org/.  The IBLI e-Learning course was launched on the 22nd of March 2016 at the International Livestock Research Institute’s (ILRI) campus in Nairobi, Kenya. Various stakeholders including Kenya Government officials from the State Department of Livestock (SDL), insurance companies, donor organizations and partner NGOs attended the launch ceremony. In his opening remarks, ILRI’s Director General Dr. Jimmy Smith reiterated the fact that Capacity Development is a critical success factor for ILRI and that stakeholders must focus on enhancing pastoralism as it is a major contributor to the national Gross Domestic Product.

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The drivers of index-based livestock insurance demand in southern Ethiopia

Read the latest post in the Economics That Really Matters blog that details the findings of a paper written by Index-Based Livestock Insurance (IBLI) Project researchers. Recently published in World Development, the paper examines and identifies the constraints that hinder the demand of index insurance in southern Ethiopia—uptake of index insurance has been disappointingly low, rarely above 30% of the intended population, across the several contexts in which it has been introduced, despite claims that index insurance has several advantages over traditional agricultural insurance in reducing moral hazard, adverse selection, and transaction costs associated with verification of individual losses.

Read the full article here

Ethiopia set to launch weather index based crop insurance

The government of Ethiopia is set to introduce weather index based crop insurance aiming to rescue smallholder farmers from unpredictable weather that damages their crops.

When implemented, this new insurance product will enable smallholder farmers to insure their loans and investments to purchase and use agricultural inputs. The insurance service is expected to reach over 200,000 farmers at the initial period and millions of small holder farmers in the coming strategic periods.

Pilot Index-Based Livestock Insurance (IBLI) project in Kenya and Ethiopia demonstrates innovative approaches to insuring poor nomadic pastoralists in challenging circumstances, according to the 2015 global report, ‘Scaling up index insurance for smallholder farmers: Recent evidence and insights’.

Read the full article.

Gamification and mLearning, effective pedagogic tools in livestock insurance

A pastoralist family checks their photo. Borana, Ethiopia (photo credit: ILRI\Zerihun Sewunet).

A pastoralist family checks their photo. Borana, Ethiopia (photo credit: ILRI\Zerihun Sewunet).

Despite numerous training programs delivered by governmental and non-government organizations in the arid and semi-arid land areas of Kenya and Ethiopia, little research has focused what forms of training are most effective and with which audiences. It is generally believed that mobile learning will be an effective pedagogic tool, given the high levels of mobile phone penetration in Kenya and the need to reinforce knowledge classroom-acquired knowledge through repetition over time.

For more information, see ILRI capacity development brief 4, Gamification and mLearning in the Index-Based Livestock Insurance project

The Index-Based Livestock Insurance (IBLI) project of the International Livestock Research Institute (ILRI) is addressing this need by conducting a randomized control trial (RCT) of an mLearning program for private sector sales agents of the IBLI product. This approach was taken after it was discovered that misinformation spread by agents selling the IBLI product—through private sector insurance agencies—risked damaging the reputation of a new product new before it reached critical mass.

One of the solutions currently being tested involves the use of mLearning combined with ‘gamification’ and financial incentives. mLearning involves the use of mobile devices as a learning platform—set to take off in Kenya where mobile phone penetration was 83.9 percent. The trials seek to establish the comparative utility of financial and gamification incentives to motivate the targeted learners to follow a sequence of micro-lessons reinforcing previous learning.

IBLI worked academics from the University of California, San Diego (UCSD), to develop a simple mLearning training program consisting of micro-lessons that could be conveniently read by ILRI agents. Prior to the August-September 2015 sales window, the mLearning app—the Pocket IBLT—was installed on the agents’ phone to trial the utility of the approach. To assess agent comprehension and motivate participation, each mLearning micro-lesson includes a simple quiz connected to a central server. Various alternative incentive structures are being trialled, including financial incentives and gamification.

For more information, see ILRI capacity development brief 4, Gamification and mLearning in the Index-Based Livestock Insurance project

This brief was published as part of an internal ‘capacity development’ week at ILRI in December 2015.

See all the ILRI capacity development briefs

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