Ethiopia: As drought bites, livestock insurance aids pastoralists (Trust)

| August 14, 2017

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The semi-arid landscape of bushes and acacia trees in southern Ethiopia makes life difficult for the pastoralist and semi-pastoralist communities that make their living by rearing livestock here.

For hundreds of kilometres, rivers are either dry or have little or no running water.

Pastoralists depend on seasonal rains and boreholes to sustain themselves and their animals.

But the persistent drought afflicting southern Ethiopia’s Borena zone has made the prospects of earning a living grim for pastoralists like Jilo Datecha.

Mrs. Datecha lives in Dembela Daden, in southern Ethiopia’s Yabelo woreda, or district, which is just 200 kilometres from Kenya’s northern border. In 2016, five of her cows became abnormally thin due to the lack of pasture grass. This forced the middle-aged mother of six to sell half a dozen of her 25 cattle in order to buy forage for the remaining animals.

Mrs. Datecha explains, “I used to sell cattle for up to 6,000 birr [$260 US each], but since the
drought entered … making everybody poor in the area, I can’t even find a customer for 1,000 birr [$43 US].”

But Mrs. Datecha had prepared for this difficult time. About three years ago, she joined an insurance scheme that helps herders deal with losses from drought.

Earlier this year, she received compensation of 7,500 birr ($325 US) from the Oromia Insurance Company. The firm has offered coverage to pastoralists through an index-based livestock insurance scheme since 2012.

Insurance can cut pastoralists’ losses from drought, as the payment can be used to buy forage or to replace dead livestock.

Masresha Taye coordinates the insurance program in Ethiopia for the International Livestock Research Institute, or ILRI. He says the scheme was initially intended only as insurance against livestock deaths, but has evolved into a product to help pastoralists keep their animals alive.

Mr. Taye explains that insurance companies make payments according to an index which monitors the state of forage in each area and assesses the likelihood of drought in future months.

He says policyholders receive money to purchase forage, water, or veterinary services to keep their animals fed and healthy.

The premiums range from 7.5% to 11% of the maximum sum insured, depending
on the history of drought in the area.

ILRI provides technical support to design and monitor the index, which helps pastoralists use satellite data to assess the state of forage on the ground.

A local IT firm, Kifiya Financial Technology, supplies an electronic system for collecting premiums and paying claims.

Mr. Temesgen is the head of the Oromia Insurance Company’s micro-insurance department. He says the number of people buying insurance is relatively low for several reasons. First, there is a lack of subsidies from the government. Also, efforts to raise awareness about the program have been inadequate, and pastoralists are not sure how insurance might help them.

Mr. Taye says that ILRI plans to help pastoralists get better access to real-time information on where cattle feed is available and where disease outbreaks have happened, in order to avoid animal deaths.

Both Mr. Taye and Mr. Temesgen say the program would be more sustainable if it were combined with a range of other forms of help, such as efforts to provide feed and water, the formation of pastoralist co-operatives, and greater availability of information.

Mr. Taye says ILRI hopes to find ways to scale-up the program to cover other pastoralist areas in Ethiopia, and eventually other countries in the Horn of Africa.

While the insurance money supports pastoralists financially against the effects of drought, Mr. Temesgen says the funds may be too small to fully protect them if they suffer major losses of cattle in a severe drought.

Even though Mrs. Datecha’s payout is unlikely to help her buy back the cattle she had to sell because of drought, she says it will give her some protection from the lack of rainfall. She explains, “We didn’t think the insurance scheme was genuine at first, but now we’re grateful for It.”

This story is based on an article from Thomson Reuters Foundation, titled, “As drought bites, livestock insurance aids pastoralists in Ethiopia.” To read the full article, go to:

Photo: Pastoralist Jilo Datecha (right) receives a cash payment from her index-based livestock insurance policy.
Photo credit: Oromia International Bank