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As drought bites, livestock insurance aids pastoralists in Ethiopia

by Elias Gebreselassie | Thomson Reuters Foundation
Monday, 26 June 2017 14:29 GMT

Pastoralist Jilo Datecha receives a cash payment from her index-based livestock insurance policy in Ethiopia's Borena region. Photo: Oromia International Bank

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Insurance is only part of the answer, but it is easing losses from drought for herders in southern Ethiopia

ADDIS ABABA, 26 June 2017 (Thomson Reuters Foundation) – For pastoralists like Jilo Datecha, the persistent drought afflicting southern Ethiopia’s Borena zone has made the prospects for earning a living grim.

The semi-arid landscape of bushes and acacia trees, with no running rivers for hundreds of kilometres, makes for a precarious life for the pastoralist and semi-pastoralist communities who make their living rearing livestock.

Dependent on seasonal rains and boreholes to sustain themselves and their animals, around 7.8 million Ethiopians in mainly pastoralist areas of the country now rely on food aid, according to Ethiopia’s government.

The lack of grass for pasture forced Datecha, a middle-aged mother of six and a resident of Dembela Daden  in Yabelo woreda (district) to sell six of her 25 cattle in 2016 to buy forage. Five of her cows became dangerously emaciated.

But earlier this year she received compensation of 7,500 birr ($325) from the Oromia Insurance Company (OIC), which offers coverage to pastoralists through an index-based livestock insurance scheme in effect since 2012.

It aims to cut pastoralists’ losses from drought by helping them buy forage or replace dead livestock.

The insurance company paid out a total of 1.6 million birr ($69,000) to nearly 1,500 pastoralists from West Guji and Borena zones in Oromia region in February, it said.

For Datecha, who has held insurance for about three years, the payment was a much-needed financial and mental boost.

“I used to sell cattle for up to 6,000 birr ($260), but since the drought entered ... making everybody poor in the area, I can’t even find a customer for 1,000 birr,” she said in a telephone interview with the Thomson Reuters Foundation.

Initially intended only as insurance against the death of livestock, the insurance scheme has evolved into a product to help pastoralists keep their animals alive, according to Masresha Taye, who coordinates the programme in Ethiopia for the International Livestock Research Institute (ILRI).

Payments are made according to an index of the state of forage in each area and an assessment of likely drought conditions in future months. Policyholders receive money to purchase forage, water or veterinary services to keep their animals fed and healthy.

The premium ranges from 7.5 percent to 11 percent of the maximum sum insured, depending on the drought history of the area where the pastoralist insures their livestock.

ILRI provides technical support for the design and monitoring of the index, helping the insurer use satellite data to assess the state of forage on the ground.

A local IT firm, Kifiya Financial Technology, in turn supplies a system for collecting premiums and paying claims digitally using tablets and biometric devices.

According to Melkachew Temesgen, head of the Oromia Insurance Company’s micro-insurance department, last February’s payout was intended to anticipate financial needs for the coming season of short rains which lasts from October 2017 to February 2018.

While the money supports pastoralists financially against the effects of drought, Temesgen admits that the sums may be too small to protect them fully if they suffer big losses of cattle in a severe drought.

He said the number of people buying insurance was relatively low because of a lack of premium subsidies from the government, inadequate efforts to raise awareness about its availability and low levels of confidence by pastoralists in how much insurance might help them.

NEXT NEED? INFORMATION

Taye agrees that while the insurance programme can help pastoralists, it is not a panacea for all their woes.

For instance, he hopes to get farmers better access to real-time information on where cattle feed is available, or where outbreaks of disease have happened, so they can be avoided.

Taye and Temesgen said that the insurance programme could become more sustainable if allied with a range of other forms of help, such as efforts to provide feed and water, the formation of pastoralist cooperatives and greater availability of information. 

Taye said pastoralism should be seen as an eco-friendly livelihood, particularly if supported by a few modern gadgets to provide needed information, and that trying to settle pastoralists and keep them from migrating can hurt their chances of making a living.

What is needed are “effective and efficient policies... that can make pastoralism a sustainable way of leading life”, he said.

Although 60 percent of Ethiopia’s land is dominated by pastoralists, index-based insurance efforts have been largely been limited to the Borena zone.

ILRI says it hopes to find ways to scale up contracts so that the insurance can be expanded to other pastoralist areas within Ethiopia, and eventually to other countries in the Horn of Africa. 

Taye said that, working with the World Food Programme, ILRI plans to start a similar scheme by September of this year in the Somali region, in the country’s east, another pastoralist area hit-hard by drought.

He added that as well as OIC, three insurance companies – Ethiopian insurance Corporation, African Insurance Company and Nyala Insurance Company – had expressed interest in the scheme.

Even though Datecha’s payout is unlikely to help her buy back the cattle she had to sell because of drought, she said it will give her some protection from the lack of rainfall.

 “We didn’t think the insurance scheme was genuine at first, but now we’re grateful for it,” she said.

(Reporting by Elias Gebreselassie, editing by James Baer and Laurie Goering. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women's rights, trafficking and property rights. Visit http://news.trust.org/climate)

Our Standards: The Thomson Reuters Trust Principles.

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