CLIMARK - Upscaling Index-Based Livestock Insurance in Ethiopia

Updated: Apr 3, 2019

Unavailability of a clear, compelling and cost-effective capacity building and public awareness extension, education, and strategy across the chain of stakeholders – Federal and regional policy makers, public/private insurance companies, extension workers, and other stakeholders are major constraints for index-based livestock insurance (IBLI) up-scaling in the country. The project aims at closing this gap toward IBLI broader implementation in Ethiopia and beyond.

RESEARCH OVERVIEW

The Index-Based Livestock Insurance (IBLI) is an index insurance product that relies on low cost, accessible and reliable satellite indicators of drought (i.e. Normalized Difference Vegetation Index – NDVI) to protect pastoralists from drought-related livestock losses by assessing forage availability during the rainy season. The IBLI product was first sold in Marsabit County (Kenya) in 2010. Since then, it has expanded coverage to eight counties in Kenya and to the Borana zone in Southern Ethiopia. In Ethiopia, the Oromia Insurance SC (OIC) is the commercial partner and underwriter of the IBLI product.

The project aims at creating the necessary enabling conditions to support IBLI expansion in Ethiopia.


PROPOSED SOLUTION & RESEARCH ACTIVITIES

1. Completing the current product design efforts required to support scaling beyond Borana:

With a focus on the Somali Region established following the recommendations of the feasibility work, this will entail:

a. Complete the clustering work needed to design IBLI contracts in Somali region. Deliverable: Unit Area’s for IBLI clusters established along with documentation of process.

b. Develop a training tool for contract design. Deliverable: Tool with suggested contract parameters for Somalia with pricing and a range of analytics for assessing contract.

c. Conduct at least two trainings for at least three private insurance companies, the National Metrological Agency, and related stakeholders. Deliverable: Training reports.


2. Generalized capacity building and R&D support for IBLI-provisioning companies

ILRI has been working closely with OIC and TIA, the currently active underwriters of IBLI in Ethiopia and Kenya, respectively, helping them develop tools and content for building their agents capacity and knowledge base. Along these lines, we collaborate around a range of R&D efforts largely around making the processes of service delivery, extension, and awareness generation, and marketing more cost-efficient and impactful. The knowledge and content generated is made available in the public space for the benefit of the entire industry but TIA and OIC both share the first-mover advantage, branding and operationalizing much of the product we develop. In addition, we provide a lot of training support, public awareness support, and advocacy on their behalf among development partners, government, re-insurance, and the regulator.


3. Supporting the development of PPP compatible policies and institutions for a sustainable large-scale IBLI market in Ethiopia

The experience generated by the IBLI Ethiopia program and the impact it has demonstrated, the proliferation of interest around agricultural insurance, and recent CTA-supported efforts to convene stakeholders around a structured process of scaling IBLI, has generated high-level government commitment. Under this pillar, ILRI will lead efforts to catalyze such a process, support the government of Ethiopia to establish a dedicated taskforce and define a terms of reference around developing the enabling policy and institutional conditions for a widespread and vibrant IBLI market and more generally in support of a national agricultural insurance system.

Among others this will involve; i) supporting the government to identify and coordinate the key stakeholders required to make the effort comprehensive and effective, ii) supporting the government to establish a formal taskforce with a defined terms of reference to look into a national agricultural insurance policy, iii) contributing to advocacy and technical advice around the determination of policy and program parameters, particularly with respect to livestock insurance, iv) contributions to high-level policy discussions and processes aiming to integrate IBLI into national agricultural and/or social protection programs. This will entail.


4. Support a broader regional conversation and convene a regional workshop to exchange knowledge and generate interest for IBLI provision in IGAD countries

As part of ILRI and CTAs mandate to ensure the transfer of knowledge and influence the uptake of promising interventions, this element of work will seek to build awareness, generate interest, and offer direction with regards IBLI provision in the region beyond Ethiopia and Kenya. This will entail developing networks, sharing information and insights, and providing basic analysis to demonstrate potential IBLI impacts across the region.


IMPLEMENTING PARTNERS:

Oromia Insurance Company, Takaful Insurance of Africa


FUNDED BY: The Technical Centre for Agricultural and Rural Cooperation (CTA)


TIMELINE: April 2017 - December 2019


CONTACT:

Francesco Fava

Masresha Taye

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