Intro to IBLI
In East Africa, a young investigator has introduced a novel financial technology for livestock herders living in some of Africa’s harshest regions. Andrew Mude, an agricultural economist at the International Livestock Research Institute (ILRI), is leading a team of scientists and a range of partners in an innovative project started in Kenya and Ethiopia that helps herders quickly recover from severe to catastrophic droughts, which account for 75% of livestock deaths in the Horn and routinely leave pastoral communities destitute.
At ILRI, Dr. Mude’s ambition was to find a risk management solution that would be more proactive, faster and more focused on the provision of complementary services that could enhance pastoralist livelihoods as a whole. As livestock are the principal asset owned by pastoralists, he started by seeking ways to help protect this valuable ‘living asset.’ In northern Kenya and southern Ethiopia, the average herding household holds 100% of its productive assets in the form of livestock. Sales for livestock and livestock products constitute over 40% of total household income on average. In comparison, close to 15% of household income is in the form of food or cash aid.
The program Mude has been leading is called ‘index-based livestock insurance’, or ‘IBLI’ for short.
Livestock are critical lifelines for ‘pastoralists’, who depend largely on their animals and regularly move with their stock hundreds of kilometers to track new pastures and water resources across open rangelands. This, one of humankind’s oldest forms of food production, enables communities of the Horn to produce food in an otherwise unyielding environment.
Previously, African herders had no access to livestock insurance. For one thing, it is highly impractical and costly for insurance claim adjusters to travel throughout the sprawling rangelands of East Africa—easily a day’s journey to reach just a few policyholders—to confirm dead animals and pay claims. However, this is not the case anymore.
IBLI obviates the need for such visual confirmation of damages by using satellite data to monitor grazing conditions; when these conditions fall below a certain threshold, this data serves as a proxy for dead animals and insurance payouts are made.