Using satellite data to insure camels, cows, sheep and goats: IBLI and the development of the world’s first insurance for African pastoralists

Dror, I., Maheshwari, S. and Mude, A.G. 2015. Using satellite data to insure camels, cows, sheep and goats: IBLI and the development of the world’s first insurance for African pastoralists. Nairobi, Kenya: ILRI.

On a hot morning in Nairobi in 2014, Andrew Mude, team leader for the Index-Based Livestock Insurance program ('IBLI' hereafter), looked out of his office window at cows grazing on Ngong Hills' green pastures, but his mind was elsewhere.

In a few hours, he had to attend an executive management meeting where he was expected to recommend IBLI's next steps. But Mude was still undecided; should he recommend that the IBLI team focus exclusively on its current sites in northern Kenya and southern Ethiopia, and work to develop IBLI into a large-scale, proven and sustainable program in these regions? Or should he go along with demands to expand quickly to multiple sites worldwide? It was necessary for IBLI to grow, but Mude was not yet sure of the direction and trajectory of its growth.

IBLI, developed by the International Livestock Research Institute (ILRI) in collaboration with Cornell University and the BASIS Research Program at the University of California, Davis, was the first index-based insurance product that protected pastoralists in drought-stricken areas in Africa from losing their primary asset—livestock. Studies1 had shown that IBLI coverage had a significant impact on these pastoralists' assets, investments and consumption capacity. IBLI had received funding and support from some of the largest international donors, including the governments of the UK, the EU, Australia, the US and the World Bank Group (WBG). The Government of Kenya too had acknowledged IBLI's social welfare benefits, and together with the WBG, was exploring avenues to fund and scale-up IBLI rapidly as a public-private type program within Kenya. While IBLI had been hailed by the media, donors, and partners alike as an effective and much-needed product, it had yet to mature into a large-scale, sustainable program with well-developed institutions in Kenya.

Despite residual challenges in outreach and institutional development, IBLI's donors and other key stakeholders were eager to expand it to East and West Africa (including countries like Somalia, Mali and Burkina Faso) that were also home to large pastoralist populations. Some in the IBLI team supported this strategy, as they were concerned that if IBLI did not expand now, its low sales figures in Kenya would be insufficient to demonstrate its impact, and might even raise questions about its sustainability—causing donors to lose interest. Yet, Mude worried that if they expanded too quickly, the current IBLI sites might suffer, damaging IBLI's reputation and demand everywhere and causing the entire program to collapse.

Mude wondered which of these paths was the best way to expand IBLI into a sustainable, well-received product. Should the IBLI team focus on strengthening the program in Kenya, or on expanding it to new territories? Was it possible to do both successfully?