Participatory Research on the effectiveness of Index Based Livestock Insurance as a Pro-poor Climate Risk Management Strategy in Borena Zone: the case of Moyale and Miyo Districts

Report
from Catholic Agency for Overseas Development
Published on 31 Mar 2018 View Original

Executive Summary

Pastoralists’ livelihoods depend heavily on livestock and livestock products. Over the last two decades, there is an increasing climatic variability that has a profound impact on African agriculture. The increase in water scarcity and shortage of forage reduces livestock productivity and, in severe cases, leads to irreversible herd die-offs and widespread livestock losses. The intensity of extreme climate and weather events are expected to be severely worsening the risk of life and livelihood among vulnerable smallholder pastoralists in arid and semi-arid of Sub-Saharan Africa over the coming periods (Stern, 2007). To mitigate the adverse effect of climate related risks on the livelihoods of vulnerable pastoralist community index based insurance has been increasingly championed in rural Africa. IBLI which was Initiated and advanced in Kenya was adopted among Borana pastoralists in including Ethiopia as a way by which the benefits of insurance can be offered to the relatively poor and remote population (World Bank 2007). The Index Based Livestock Insurance (IBLI) has become the most innovative device applied to insure the risk of livestock mortality. Accordingly, over the past 4 years, CAFOD/SCIAF/Trócaire /CST, in collaboration with its partners Community Initiative Facilitation and Assistance (CIFA), Oromia Insurance Company (OIC) and International Livestock Research Institute (ILRI), has been piloting index-ased‐based insurance scheme to protect livestock keepers, ‐ particularly in the drought prone areas of Borana zone (Miyo and Moyaleworedas) – from drought ‐related asset losses.

This participatory research was designed to assess the effectiveness of IBLI as a pro-poor climate risk management strategy in Moyale and Miyo woredas of Borena Zone. The overall aim of this is (1The study specifically focuses on: (1) examine the determinants of uptake of IBLI, (2) analyze impact of IBLI on policyholders, (3) assessing the perception of pastoralist towards the climate change impacts and contribution of IBLI as a strategy of mitigating it, (4) to identifying the strengths and gaps of partners working with IBLI scheme, (5) exploring the strengths and weakness of stakeholders of IBLI scheme, and (6) examining the government policy in supporting the IBLI project implementation, (7) analyze the trend IBLI uptake. For this purpose, the researchers designed and applied qualitative and quantitative research approaches to collect primary data. First, quantitative data was collected from 189 beneficiary pastoralist households and 312 non- beneficiary households of the IBLI. From these, 177 households were female and the remaining 324 were male-headed. Second, focused Group Discussion was conducted with male and female representatives of beneficiary households, non-beneficiary households, Geda leaders and community elders, and VIPs. Third, in-depth key-informant-interview was undertaken with representatives of CIFA Ethiopia (Zonal and field experts), IRLI Zonal representatives, and Micro- insurance insurance department of OIC. Furthermore, secondary data on the trend of IBLI uptake were also collected from OIC, project document from CST and project report from CIFA Ethiopia and other sources. The finding of the study evidenced that there was significant increase in uptake of the IBLI over time both in terms of number of household and livestock insured.

The main driving factors for the tremendous increase in the actual uptake of IBLI as per the qualitative and quantitative findings of this study were the 35% price-subsidy offered by CIFA, peer influence among pastoralists to adopt IBLI which can be the result of social learning from awareness creation or training programs arranged by CIFA. The size of livestock owned by the household measured in standard tropical livestock units (TLU),understanding, trust and liquidity concerns (mental accounting) were also observed to determine the demand for IBLI. IBLI has become an amenable solution on the instant when pastoralists have experienced adverse effect of climate change in the form of recurrent drought that has resulted in rampant livestock mortality. A large number of the respondent households have perceived the pattern of climate change in terms of sharp decline in moisture, long-period dry season without rain, irregularity in rainy season, decrease in rainfall intensity, untimely rain and/flooding, dry wind, severe drought and lack of precipitation. Such patterns were revealed to cause adverse consequences on the livelihoods of the households causing, among many others, scarcity of water, degradation in pasture land and forage unavailability. The majority of the respondent households have perceived weakened carrying capacity of the land biomass to feed livestock, physical deterioration of livestock and overall asset depletion ultimately led to death of livestock, severe poverty and food insecurity. This consequently resulted in pastoralists’ migration to other areas, children school leaving, loss of family and dissolution of social capital and emergency of conflict on range resources. Pastoralists have become acquitted with the benefits of IBLI as mitigating device to reduce the climate related risks.

The pastoralists underlined the important contribution of IBLI in protecting their livelihoods against climate risks. Some of the benefits that they identified include: (1) pastoralists receive payouts as indemnification for their losses of livestock which helped them to cope up with the adverse impact of drought, and to substitute their lost livestock, (2) in the new IBLI, asset protection approach, the pastoralists purchase fodder for their livestock to cope up with anticipated drought, (3) the pastoralists indicated that they pay less premium but receive huge compensation or pay-outs as indemnification. Our finding indicates that the asset protection approach minimized death of livestock and pastoralists prefer it. However, the pastoralists identified major limitations of the IBLI: (1) lack of awareness about concept of IBLI, (2) they felt that the premium is too high, especially for the poor groups, (3) pastoralists are discouraged by termination of subsidy provision by CIFA without any prior notification, (4) many pastoralists do not purchase insurance because they do not receive pay- outs as indemnification if there is a good rain.