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Record payouts being made by Kenya Government and insurers to protect herders facing historic drought


From left to right: Jimmy Smith, director general of the International Livestock Research Institute (ILRI); Andrew Tuimur, principal secretary in Kenya’s State Department of Livestock; and Willy Bett, cabinet secretary for the Kenya Ministry of Agriculture, Livestock and Fisheries during a press conference held on 20 Feb 2017 announcing payments to more than 12,000 pastoral households under the Kenya Livestock Insurance Program (KLIP) (photo credit: ILRI/Dorine Odongo).

More than Ksh214 million is on tap for 12,000 pastoral households in six counties of northern Kenya through innovative policies that use satellite imagery to trigger payments for feed, veterinary supplies and water.

As an epic drought desiccates fields and forages in the Horn of Africa, Government of Kenya officials, in partnership with Kenyan insurers, today announced payments to over 12,000 pastoral households under a breakthrough livestock insurance plan—one that uses satellites to monitor vegetation available to livestock and triggers assistance for feed, veterinary medicines and even water trucks when animal deaths are imminent.

To avert future losses, nearly Ksh215 million  (nearly USD2.1 million) in insurance payouts across six counties will be made by the end of Feb 2017 through the Kenya Livestock Insurance Program (KLIP). Payments are pegged to measurements of forage conditions made via satellite for each area, and will range from Ksh1,450 (USD14) per pastoral household in areas that have suffered modest losses to Ksh29,400 (USD284) in areas where drought is particularly severe. The average payment is around Ksh17,800 (USD172) per pastoral household, directly reaching about 100,000 people. Pilot projects that preceded the program established payment levels linked to the state of grazing lands, with the goal of providing enough money to help pastoralists keep their animals alive until rains returns.

‘This is the biggest livestock insurance payout ever made under Kenya’s agricultural risk management program and the most important as well, because without their livestock, pastoralist communities would be devastated’, said Willy Bett, Cabinet Secretary for Kenya’s Ministry of Agriculture, Livestock and Fisheries. ‘This insurance program is not just an effective component of our national drought relief effort. It’s also a way to ensure that pastoralists can continue to thrive and contribute to our collective future as a nation.’


Jimmy Smith, ILRI director general, and Andrew Tuimur, principal secretary in Kenya’s State Department of Livestock, confer during the KLIP press conference yesterday (photo credit: ILRI/Dorine Odongo).

Livestock are a major component of the Kenyan economy. Between 2008 and 2011, livestock losses in Kenya accounted for 70 per cent of the USD12.1 billion in damages caused by drought.

In response to these major droughts, Kenya’s Ministry of Agriculture, Livestock and Fisheries has developed KLIP with technical assistance from the International Livestock Research Institute (ILRI), the World Bank Group, and Financial Sector Development (FSD) Kenya, as part of their national strategy to end drought emergencies. KLIP is administered as a public-private partnership with APA Insurance, which leads a consortium of seven Kenyan insurers—UAP, CIC, Jubilee, Heritage, Amaco and Kenya Orient, with backing from Swiss Re, a widely respected international reinsurer for agriculture.

KLIP is intended to provide a safety net for Kenyan herders, who for centuries have grazed their animals across vast stretches of arid and semi-arid lands. KLIP began with two counties in the short-rains season of 2015, Turkana and Wajir, and now covers pastoralists in an additional four counties: Mandera, Marsabit, Isiolo and Tana River.

KLIP is based on the internationally recognized ‘Index-Based Livestock Insurance’ model, which was developed several years ago by a team of agricultural economists from ILRI, Cornell University, the University of California at Davis and the World Bank Group, working in close cooperation with pastoralist communities. The signature feature of this novel insurance scheme is the use of satellite data to generate an index for grazing conditions, so that payments are triggered when conditions degrade below a certain critical level. The index eliminates the need for insurance agents to be out in the field monitoring forage and animals, which, given the remote regions involved, would make livestock insurance logistically and financially impossible to provide.

In Feb 2017, APA Insurance, on behalf of the insurance consortium, will disburse most payments directly to pastoralists’ bank accounts or to accounts accessed via mobile phones—an increasingly popular and convenient way to conduct financial transactions in Kenya, especially in the country’s most remote areas. For those without accounts, cheques
will be issued.

‘It’s important to make payments quickly and efficiently and before conditions deteriorate further, because we want these livestock-dependent communities to see index insurance as something they can trust to sustain their way of life’, said Ashok Shah, Group CEO of APA Insurance. ‘Now, it’s critical that others in the market also move quickly to supply pastoralists with livestock feed, water and veterinary medicines they can now afford.’

Lovemore Forichi, Head of Agriculture Reinsurance Africa said, ‘This program is a role model for the rest of Africa and beyond. The government and its partners have brought together the latest technological and financial tools from a group of committed and innovative private sector players. The payouts prove that this program is delivering a financial safety net where it is needed. Having worked in this field across the globe, KLIP highlights Kenya’s pioneering role in providing drought protection for its people.’


Kenya Agriculture Cabinet Secretary Willy Bett addresses a press conference announcing payments to more than 12,000 pastoral households under the Kenya Livestock Insurance Program (KLIP) (photo credit: ILRI/Dorine Odongo).

Currently, the Government of Kenya purchases cover on behalf of approximately 2,500 of the most vulnerable pastoral households in each of the six counties.

Kenyan officials are now working with colleagues in county governments to scale up the program and make KLIP coverage available to a wider range of pastoralists across all income levels.

‘These payouts demonstrate that KLIP works, and we now urge all pastoralists to make use of livestock insurance to cover themselves against drought. The government will look at ways to make this insurance accessible to all pastoralists’, said Dr Andrew Tuimur, principal secretary in the State Department of Livestock in the Kenyan Ministry of Agriculture, Livestock
and Fisheries.

The counties in Kenya targeted for KLIP payments are enduring one of the worst droughts to hit the Horn of Africa in a quarter century. The payments being dispatched this month are intended to help herders recover from the lack of precipitation during the so-called ‘short-rains’ period that ran from October to December 2016. If the drought continues during the ‘long-rains’ season, which usually runs from March to June, additional large payouts are likely.

In addition to the government-led consortium, other organizations have also been involved in delivering index-based livestock insurance for pastoralists. For example, Takaful Insurance of Africa, which launched the provision of a similar product in 2013, will this season be making payouts to over 2,000 households across six counties to the tune of close to Ksh10.5 million.

‘We are hopeful that we are writing a new chapter in the long and challenging history of one of the oldest forms of agriculture still practiced in the world today’, said Andrew Mude, a principal research scientist at ILRI whose contribution to the development of index-based livestock insurance earned him the 2016 Norman Borlaug Award for Field Research and Application.

‘It’s been a team effort’, Mude added.

‘This day would never have arrived without the partnership between the Government of Kenya, the KLIP Implementation Unit led by Richard Kyuma, private-sector players and a range of technical and development partners.


ILRI Director General Jimmy Smith (left) gives an interview to a journalist from The People Daily Newspaper at the KLIP press conference (photo credit: ILRI/Dorine Odongo).

Read more
The Standard (Kenya): Sh215m insurance payout offers relief to drought-hit pastoralists, 21 Feb 2017
Capital FM (Kenya): Pastoralists to receive Sh215mn in drought insurance payout, 20 Feb 2017
BBC News: In pictures: Kenyans share their dinner to save livestock, 19 Feb 2017
New York Times: On selling insurance (not lottery tickets) to Africa’s struggling (stargazing) livestock herders, 11 Nov 2016
Daily Nation (Kenya): Kenya to extend livestock insurance to 14 counties, 30 Aug 2016

More information
To request interviews with specific organizations or spokespeople, please reach out to the appropriate media contact below:

Ministry of Agriculture, Livestock and Fisheries
John Mwangi
Mobile: +254 722 582 248

APA Insurance
Jackie Tonui
Head of Corporate Communications
Mobile: +254 722 415 619
Tel : +254 020 286 2000

World Bank
Keziah Muthembwa

International Livestock Research Institute (ILRI)
Nancy Moss
Mobile: +254 729 991 028
Email :

Takaful Insurance of Africa
Amina Farah
Mobile: +254 723 131 405

More about KLIP
KLIP, the Kenya Livestock Insurance Program, is a Government of Kenya-funded drought insurance program for vulnerable pastoralists located in the arid and semi-arid (ASAL) counties of Kenya. KLIP is insured by a pool of seven leading Kenyan insurance companies. It is a world leading insurance scheme that utilizes technology and innovative insurance technical to bring livestock insurance to those who need it the most.

Pastoralism in Kenya
Most people in the drylands of Eastern Africa (often referred to as the ‘Horn of Africa[) live in pastoral communities where life revolves around herding livestock such as goats, cattle and sheep across vast and remote grazing areas (or ‘rangelands’) in search of forage and water. Pastoralists regularly move hundreds of kilometers with their stock, and this model of food production enables communities in the Horn of Africa to produce food in an otherwise unyielding environment. Over 50 million pastoralists live across sub-Saharan Africa, and an estimated 20 million of these live in the Horn of Africa. Pastoralism is important also to national economies. About 90 per cent of the meat consumed and 40 per cent of the entire livestock economy in Kenya and Ethiopia is generated by pastoral communities. The value of exports of livestock and livestock products from the Horn of Africa now exceeds US$1 billion annually, with most of these exports sourced from pastoralists. But every three to five years, severe droughts in northern Kenya result in huge numbers of livestock dying, mainly because of starvation and lack of water. Between 2008 and 2011, Kenya’s economy suffered USD12.1 billion in damages due to drought, over 70 per cent of which was due to livestock losses. About 10 per cent of Kenya’s national livestock herd died over this period, leading to a loss of livelihoods for thousands of pastoralists who had to rely on government and donor relief programs. With the impacts of climate change, droughts in the Arid and Semi-Arid Lands (ASAL) of Kenya have in recent decades become more frequent, prolonged and severe, and pastoralists can no longer keep their animals alive by using traditional management practices centred around migration.

The case for livestock insurance
In northern Kenya, the average herding household holds 100 per cent of its productive assets in the form of livestock. On average, sales from livestock and livestock products constitute over 40 per cent of total household income. In comparison, close to 15 per cent of household income comes from food or cash aid. Drought-related livestock losses—caused by animals either starving to death or being sold-off for fear that they would otherwise perish—are the primary threat to pastoralists’ existence. Severe to catastrophic droughts, which account for 75 per cent of livestock deaths in the region, routinely leave pastoral communities destitute. During severe droughts in northern Kenya, starvation is the major cause of death of animals because of depletion of forage/grazing resources followed by lack of drinking water and diseases. During the 2011 drought, for example, herders in East Africa experienced livestock losses as high as 40 to 60 per cent. Livestock insurance can provide an incredibly valuable safety net by limiting drought-related livestock losses through early compensation that allows pastoralists to protect their assets before they start to die in large numbers. For livestock and agriculture in general, insurance is recognized across the globe as an essential hedge against the risks inherent to all forms of farming. Livestock keepers and farmers in the US, Europe, Latin America and India have access to various forms of insurance as a way to manage weather-related losses.

KLIP: Social protection through livestock insurance
In 2013 the incoming Jubilee government made a commitment to fund a drought insurance program for vulnerable pastoralists in the ASALs. The Government of Kenya (GoK) charged the State Department of Livestock, Ministry of Agriculture, Livestock and Fisheries (SDL-MALF) with developing the program and requested technical assistance from the World Bank Group (WBG) and its technical partners, the International Livestock Research Institute (ILRI) and Financial Sector Deepening (FSD).

KLIP is a public-private partnership between the GoK (through SDL-MALF) and a pool of seven Kenyan insurance companies, backed by expertise and financial support for a reinsurance partner and technical partners. KLIP builds on the experience of the ILRI designed Index-based Livestock Insurance (IBLI) program which is a voluntary retail forage availability drought index insurance policy underwritten by several insurers in the ASALs since 2010. KLIP is designed as a drought ‘Asset Protection’ cover which aims to make early payouts when natural grazing/forage resources are severely depleted to enable vulnerable pastoralists to purchase fodder and animal feed supplements to keep their core breeding animals alive until the drought has passed and grazing conditions return to normal. KLIP has two components:
1. Macro-level social protection cover for the most vulnerable pastoralist who are provided free insurance protection funded by government for five Tropical Livestock Units (TLUs) per pastoralist (termed a beneficiary), and
2. Voluntary retail sales to any pastoralist wishing to purchase KLIP drought cover. In order to make cover more affordable to pastoralists, the GoK is considering providing partial premium subsidies.

KLIP Component 1 is intended to complement the government’s other social protection programs such as the Hunger Safety Net Program in four counties (Mandera, Marsabit, Turkana and Wajir) and to contribute to the National Drought Management Agency’s drought risk management programs in the northern counties of Kenya.

KLIP: Progress to Date
KLIP’s first component was launched during the 2015 short rainy season (October–December) in Turkana and Wajir, covering a total of 5,013 pastoralists divided equally between both counties. During the 2016 short rainy season 2016, four additional counties (Mandera, Marsabit, Isiolo and Tana River) were added to the program with an average of between 2,000 and 2,500 pastoralists per county. KLIP has insured a total of 14,010 pastoralists across these six counties.

In 2015/16, KLIP incurred very small drought claims in two Insured Units in Wajir County. In the 2016/17 short rainy season, a very severe drought has affected much of northern Kenya and the KLIP policy has triggered drought payouts in 62 (88%) of the 70 Insured Units across the six counties, with total payouts valued at nearly KSh. 215 million being due to 12,064 pastoralists (86% of all insured pastoralists).

Frequently Asked Questions
Is livestock insurance a new concept?
Pasture drought satellite index insurance has been implemented for commercial cattle ranching in Spain, the USA, and Canada since the turn of the century. Based on these principles, ILRI designed the first satellite forage-drought index insurance cover for semi-nomadic pastoralists in northern Kenya in 2009 and then in Ethiopia starting in 2012. Both programs are voluntary retail sales to individual pastoralists. KLIP has built on the IBLI experience.

KLIP Component 1, however, represents a new approach to providing drought livelihood protection and drought resilience building to large numbers of vulnerable pastoralists who are too poor to buy insurance. It is a macro-level insurance cover purchased by the GoK which is the Insured policy holder and which has agreed to fund 100% of the component 1 premiums. Component 1 protects large numbers of vulnerable pastoralists (termed beneficiaries) in each county who are targeted and selected by the County Administrations and departments of livestock in collaboration with community leaders.

What does KLIP cover?
The sum insured is calculated on the basis of the costs of supplementary feed requirements to maintain one TLU for 12 months and is currently valued at KSh. 14,000 per TLU. Therefore, for each pastoralist who has protection for five TLU, the maximum value they will receive in the event that the policy triggers a 100% payout in an insurance year is 5 x KSh. 14,000 or KSh. 70,000 per beneficiary.

KLIP provides drought protection over two cover periods, the long rainy season from March to June, with 58% of the sum insured or Ksh. 40,600 per pastoralist allocated to this season, and the short rainy season from October to December, with 42% of the sum insured or KSh. 29,400 allocated to this second season. KLIP does not insure against the death of livestock. However, by making timely payouts during droughts it can help pastoralists to reduce mortality levels in their herds.

How are the KLIP Component 1 beneficiaries chosen?
Selection criteria include: 1) the pastoralist must own a minimum of 5 TLUs and depend upon livestock for their primary source of income; 2) they must not be a beneficiary of the HSNP cash transfer program; and 3) they should be chosen because they are identified in their communities as being vulnerable pastoralists.

Targeting and selection of pastoralists is a task which is carried out by the County Governments, their departments of livestock extension, and the local community leaders. SDL does not have the staff or resources to be able to monitor the quality of the selection process. Every attempt is made to ensure that pastoralists are selected from communities throughout the county and that equal weighting is given to the numbers of pastoralists selected in each ward and village.

What ‘index’ does KLIP measure and why?
KLIP uses satellite data of vegetation cover to assemble an index of seasonal forage availability/scarcity, called the Normalized Differenced Vegetative Index (NDVI). NDVI was a natural choice for the KLIP product given that livestock in pastoral production systems depend almost entirely on available forage for their nutrition, and given that NDVI serves as a strong indicator of the vegetation available in the area for the livestock to consume.

NDVI also fits a number of the prerequisites required for a data source to serve as an insurable index: it is cheap (in this case free) to procure; neither the insurer nor the insured can feasibly manipulate it; it is an objective measure; and it is auditable. NDVI readings over an insurance unit and across a season are averaged, aggregated and standardized across time to derive the index.

How does KLIP know when to payout?
When the index signals that forage conditions have deteriorated to the point where animals are becoming malnourished, KLIP triggers payouts to enable the pastoralists to purchase supplementary feeds to protect their livestock assets against starvation. The ‘trigger level’ for the index—the threshold at which payouts must be made—is determined according to the degree of risk exposure coverage provided. At the GoK’s request, they are purchasing cover with the KLIP Trigger which opens the policy for a payout set at the 20th percentile of seasonal total forage availability; essentially this means that the contract pays out on average once every five seasons or once every two and a half years.

What payouts have been made by KLIP since launch in 2015/16
In 2015/16 KLIP precipitation levels in Turkana and Wajir were average in the short rains and there were no forage scarcity drought related payouts in that season. In the subsequent 2016 long rains, a small number of drought payouts were triggered in two Insured Units in Wajir, valued at KSh. 4.1 million.

In 2016/17, the short rainy season has experienced the worst droughts in the past 16 years as measured by the NDVI index. Claims payouts will be due to 12,064 pastoralists or 86% of the total of 14, 010 pastoralists who are protected under the Component 1 cover purchased by government. The total calculated payouts amount to KSh. 214,700.00 or an average of Ksh. 17,800 per beneficiary. The range in payouts is from a low of KSh. 1,400 per pastoralist to the maximum payout of KSh. 29,400 per beneficiary.

The APA-led pool of coinsurers will be settling these payouts in February 2017 to the 12,064 pastoralists, about two thirds of whom have individual bank accounts, or M-Pesa accounts thereby facilitating direct electronic transfer to their accounts. For the remaining one third, payments will be made by cheque in the name of the beneficiary. For these pastoralists, SDL is seeking the help of the county administrations in delivering the cheques to the pastoralists as quickly as possible.

Who are the key partners?
State Department of Livestock, Ministry of Agriculture, Livestock and Fisheries
Insurance companies:
APA Insurance Ltd.
UAP Insurance
CIC Insurance
Jubilee Insurance
Amaco Insurance
Heritage Insurance
Kenya Orient
Reinsurance partner:
Swiss Re
Technical Assistance partners:
World Bank Group
International Livestock Research Institute
Financial Sector Deepening

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