Migrant pastoralists on the arid and semi-arid lands (ASAL) of East Africa are among the poorest and most vulnerable people on earth. Most of their economic activity is based around livestock herding and management.
Uninsured risk exposure and the experience of uninsured shocks in low-income rural communities cause serious welfare losses and distort behaviors, potentially even resulting in poverty traps. However, conventional insurance products are routinely unavailable due to moral hazard and adverse selection problems, as well as high transaction costs in infrastructure-poor areas.
The new study, carried out by the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) and the International Center for Climate and Society (IRI) at Columbia University showcases projects that have overcome many of the challenges that have previously hindered the uptake of index-based insurance.
Through collaboration among the International Livestock Research Institute (ILRI), Cornell University, donor agencies such as the United States Agency for International Development (USAID), insurance companies, local radio stations, and pastoralists themselves, a new insurance system is being tested in Ethiopia
A new insurance scheme in Ethiopia, known as index-based livestock insurance, aims to reduce losses, support pastoral communities, and lower the risk of conflict sparked by pastoralists migrating into agricultural areas in search of forage or water.
This case study explains how IBLI used satellite data to insure camels, cows, sheep and goats to develop the world’s
first insurance for African pastoralists.
As the world of finance continues to evolve the need for insurance also is growing both in Ethiopia and around the world. However rural communities and especially pastoralist communities tended until recently to have been denied access to insurance among other reasons being their remoteness and lack of specialized insurance scheme for their community. But that’s about to change as Oromia Insurance Company Share Company (OIC) one of the newest entrants to the industry has embarked on covering this often neglected community starting with the Borena pastoralist community