ILRI’s Brenda Wandera and Andrew Mude at the launch of the Kenya Government’s ‘Open Data Web Portal’ on 8 Jul 2011 (photo credit: ILRI/Muthoni Njiru).
Brenda Wandera, who helps manage an Index-Based Livestock Insurance Project conducted by the International Livestock Research Institute (ILRI), and her boss, Andrew Mude, are the focus of an in-depth magazine piece published this week in the American research-based magazine Miller-McCune Magazine.
‘Brenda Wandera’s iPhone buzzes in her lap. A text message has made its way through the blurry heat of Kenya’s Chalbi Desert, and it changes her next move. “As soon as we get to Kalacha, we have to go to Network,” she says.
‘Go to Network, I wonder. That must be a Kenyan turn of phrase for “finding a cell tower.”
‘I’ve been warned that Kalacha is off the grid, which would make it one of the more remote corners of Africa, where mobile-phone and Internet service in even far-flung villages can be stronger and more regular than in parts of the American Southwest or Appalachia. Indeed, Kalacha is isolated. It sits in northern Kenya, about 40 miles from the border with Ethiopia, just at the edge of the Chalbi. Rounded huts of thatched grass zigzag across dry land. The horizon is dark and bulbous and looks very, very far away.
‘Our Land Cruiser drives toward one of those bulbs, a massive mound of volcanic rocks. Wandera hops out of the car, clutching her iPhone, and springs up the uneven hillock, 30 or so feet tall. At the top, a half dozen local women huddle on one edge. Their abayas — lemon-yellow, tomato-red, sequined garments — look especially colorful against the monochrome flatlands stretched out below. They chat on cell phones tucked under their tightly pulled scarves.
Wandera claims the other side of the mound. In black kitten heels, she hops from one irregular rock to the next until she finds a stable perch. Then she lifts her phone above her head and waves it at the sky. It turns out this mound is Network — the only place between here and forever where you can make a phone call, if you catch the wind just right.
‘Wandera reaches her boss, whose caravan from Ethiopia has been delayed. Andrew Mude is bringing 12 elders from across the border to witness the small institutional miracle he and Wandera have pulled off. Thanks to them, in Kalacha, cows have insurance.
‘Wandera manages an innovative insurance program that offers cash-poor pastoralists low-priced insurance for their only assets: livestock. The plan was crafted precisely for places as remote and vulnerable as Kalacha. Here, each morning, men set out with their cattle to look for pasture. Women and girls wait at wells for their turn to pump water into yellow plastic jugs, then haul it on their heads back home, where thirsty goats wait impatiently. The camel herders have it the hardest; the roving Gabra tribesmen move endlessly across the desert.
For these pastoralists in northern Kenya, where most people don’t have bank accounts, cows and camels are cash. If animals die in large numbers, families go bankrupt.
‘That makes drought one of the biggest financial risks that people face here. “In this area, you get a severe drought about once every four years,” says Mude, an economist with the International Livestock Research Institute in Nairobi. Severe drought can kill off as much as a third of a herd, he says. That level of devastation is like losing your home to a fire or totaling your only car. . . .
‘. . . [I]n northern Kenya, traditional insurance is impossible. The vast area is mostly without roads, and villages are difficult to reach. “It would be really quite expensive” to make a conventional system profitable in such a remote area, Mude says. . . .
‘When Mude and his research team, in concert with researchers at Cornell University, decided to build an index for livestock insurance, they needed two sets of substantial data. The first set was easy to come by: statistics on livestock mortality have been available from the Kenyan government since 2000. Finding the second set was more complicated. Rainfall data isn’t easily available here, and micro-regions can experience quite different weather patterns, making rainfall too inexact a measurement. For the index to work, the team had to find something that measured how much food was available for herds.
‘Since the 1980s, NASA has used satellite pictures to measure global drought. Every 10 days or so, a satellite snaps a picture of the northern Kenyan plains and adds the information to a free public database that shows how green or brown the ground there is. The logic seems obvious: without green stuff to eat, cows and goats will probably die. But the economists had to confirm that the two different sets of data had a strong statistical relationship and then use that to predict what portion of a herd might die under various weather conditions.
‘The resulting formula became the basis for Index-Based Livestock Insurance. The index enabled a private insurance company to create policies for northern Kenya’s herders. “The index is a way to ascertain the kind of information we need,” says Anthony Muthiora, a policy manager at UAP, the Nairobi-based private insurance partner for IBLI. “We can’t go up there and confirm, ‘That grass there should [feed] about 15 animals.’”
‘Making the math work was only half the battle. Explaining the product to pastoralists was another matter. Mude and his team use games and theatrical skits to convey the concept of insurance. But to explain how insurers will know what’s happening to the animals — how the satellite figures in the process — they use a different metaphor.
“These are populations who understand the stars very well,” Mude says. “They are aware that there are ‘stars’ that move around at night that are different from permanent stars. We let them know these moving stars are satellites taking pictures.”
‘In the winter of 2010, during one of Kenya’s worst droughts in recent memory, Marsabit District is as brown as Ireland is green. The district, IBLI’s pilot region, which includes Kalacha, is seven hours, by rickety overnight bus, from the end of Kenya’s paved northern road, and the population, estimated at 144,000 in 2008, is spread thinly across the 66,000 square miles. No one really knew if the insurance program would work here. But the costs were low enough, and the institutional infrastructure stable enough, that the policies sold well, even in the first year.
‘Insuring a goat in the driest and most expensive part of Marsabit costs a little more than a dollar. A cow costs about $10, and a camel costs $14. To pay for the policies, bought mostly for their most valuable animals, most herders sell a few goats. . . .
‘At this stage, the insurance products aren’t making enough money to interest private insurers in developing them on their own. In 2009, the pilot year, the IBLI team sold nearly 2,000 insurance policies, totaling almost $47,000 in premiums. And in a purely commercial market, an insurance product with such low premiums couldn’t exist. That’s why nongovernmental organizations are at the forefront of weather-index insurance pilots in Kenya and elsewhere. Insurance companies are willing to join these experiments now, though, because of the possibility that the market for small-scale insurance could explode, as micro-banking did in the last decade. Still, at some point, someone has to make some money. . . .’
Read the whole article in a magazine feature story by Jina Moore published in Miller-McCune Magazine (being rebranded this week as Pacific Standard): Insuring livestock in Kenya, via satellite, 27 Feb 2012 (Mar/Apr issue).
About Miller McCune/Pacific Standard
The online magazine Miller-McCune.com harnesses current academic research with real-time reporting to address pressing social concerns in areas such as education, politics, the environment, economics, urban affairs and health. A bimonthly print magazine, Miller-McCune, draws on academic research and other definitive sources to provide reasoned policy options and solutions in a longer and more complete form. All material in the magazine is posted, after a delay, at Miller-McCune.com.