Largest Ever Micro-insurance Payout Made to Ethiopian Pastoralists

Insured Ethiopian pastoralists received an average of ETB 2,255 per person, which will allow the herders to purchase feeds for their surviving animals and to restock their herds.

(The Cattle Site)–More than 2,250 Ethiopian pastoralists received insurance payouts following the extremely poor rains this year in southern Ethiopia.

Low levels of rainfall have led to the loss of approximately 300,000 livestock in 2017 in the Borana zone of the southern Oromia region. The insurance payouts of more than ETB 5.233 million (US$220,000) was the largest-ever micro-insurance indemnity made in Ethiopia. Each insured pastoralist received an average of ETB 2,255 (US$96), which will allow the herders to purchase feeds for their surviving animals and to restock their herds.

Pastoralists in northern Kenya and southern Ethiopia have been insured by an index-based livestock insurance (IBLI) scheme devised in 2008 by the International Livestock Research Institute (ILRI) and its technical partners at Cornell University and the University of California at Davis. The Ethiopian component of this project was underwritten by the Oromia Insurance Company and introduced to eight districts of Borana in August 2012.

“This project is protecting farmers in southern Ethiopia,” said Siboniso Moyo, the ILRI director general’s representative in Ethiopia. “Our evaluation conducted in Kenya and Ethiopia indicated that in times of drought households possessing livestock insurance are less likely than others to reduce their nutritional intake.

“We also found that insured households make fewer distress sales of livestock assets and rely less on food aid than non-insured households. This payment is proof that the index-based livestock insurance system works here in Ethiopia.”

Andrew Mude, ILRI’s IBLI project leader, stated that this year’s payout is the fifth, and largest, since the establishment of the project in Ethiopia in 2012. It took place on 5 September 2017 in Moyale town, the second largest in Borana.

The number of insured farmers has steadily increased since the project’s inception. Since August 2012, more than 6,000 pastoralists from 10 districts throughout Borana have purchased the IBLI product.

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