EAST AFRICA – The World bank is funding the transformation of the Kenya Livestock Insurance Program (KLIP) into a bigger project called (DRIVE) De-Risking, Inclusion and Value Enhancement of pastoral economies in the Horn of Africa (HOA).
The region of HOA is exposed to climate shocks due to the recurrent severe droughts that fuel poverty. According to the government of Kenya, livestock losses between 2008 and 2011 accounted for 70% of the $12.1 billion in damages caused by drought.
Kenya, alongside its neighbours Somalia, Ethiopia and Djibouti, therefore, stand to benefit from the project as its farmers will be better cushioned from the impacts of drought.
It has two components; a package for financial services for climate resilience to scale up financial protection, and value chains and trade facilitation enhancement to better include pastoralists in the livestock value chains and facilitate trade in the HOA.
For sustainability and ownership, each beneficiary is required to contribute 20% of the total premium with the remainder coming from participating governments.
In Kenya, the project is currently underway in 10 counties and will cover 21 counties in arid and semi-arid land by end of this year.
It plans to will unlock US$572 million in private capital to help pastoralists access drought insurance and savings, get access to digital accounts and attract more private investment in pastoral areas.
The project aims to impact more than 1.6 million pastoralists spread across 250,000 households in a period of five years.
“This project will present the Horn of Africa member countries with an innovative approach to addressing climate change and pastoral poverty,” said Boutheina Guermazi, World Bank director of Regional Integration for Africa, the Middle East and North Africa.
With the aim of supporting pastoralists in the HOA with access to rapid cash when a drought occurs, the project also incentivizes pastoralists to save more in cash, rather than increasing the size of herds to protect themselves against future shocks.
It will also implement direct linkages between pastoralists and livestock processors through market contacts so that the pastoralists will be able to sell livestock on a regular basis which will strengthen their livestock quality standards.
Caroline Cerruti, World Bank Senior Financial Sector Specialist said, “We will leverage a regional integration approach to facilitate the regional livestock trade in the Horn of Africa which is a significant source of foreign income for countries.”
ZEP-RE, the reinsurance company of the Common Market for Eastern and Southern Africa (COMESA), was appointed by regional governments to implement the first component of the project, to help foster the cooperation of the HOA countries.
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