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Africa’s first Islamic insurance for herders

Takaful CEO Hassan Bashir in front of the new Takaful Insurance of Africa branch in Wajir

The son of a camel herder, Takaful CEO Hassan Bashir knows how tough traditional life in Kenya’s arid north is, where pastoralists rely on livestock herds surviving boom and bust cycles of drought (photo credit: ILRI/Riccardo Gangale).

[Hassan] Bashir is also an astute entrepreneur, developing Africa’s first livestock insurance scheme to make payouts compliant with Islamic law, by bringing together Muslim scholars and number-crunching agricultural experts using NASA weather satellites.

‘”I’ve come from the community, and I understand its needs,” said Bashir, a sharp-suited businessman respectfully greeting elders dressed in traditional flowing robes in his hometown of Wajir, where goats and donkeys wander the dusty streets.

‘Bashir, 48, set up Takaful Insurance of Africa three years ago, which unlike ordinary insurance schemes prohibited by Islam, takes only a management fee from clients.

‘”It is a fair and ethical way to protect pastoralist’s livestock assets from natural hazards,” said Bashir, whose 80-year old father was one of the first to receive a payout this week for his herd of 50 cows.

‘Payments are assessed not according to deaths of individual animals as it would be impossible to provide proof, but according to an index drawn up by experts at the Nairobi-based International Livestock Research Institute (ILRI), using satellites to measure vegetation coverage and thus the severity of drought.

The company is named after the Islamic concept of takaful, in which risks are shared among the community, rather than insurance where policy holders effectively gamble risks against the company.

Any surplus money after payments are made is distributed equally to remaining policy holders.

‘”It is a cooperative welfare basket for the community,” Bashir added, who was inspired to switch from regular insurance broking to the Islamic system after “hot discussions” with his family who refused his “unethical” money.

‘”I wanted to do something to develop the people here,” he said.

‘In 2011, fierce drought here in northeastern Kenya decimated herds with a devastating impact, and spiralled into famine in nearby war-torn Somalia.

‘Like elsewhere in the Horn of Africa, vast numbers of livestock are kept as a form of savings account. But these living investments face natural hazards. . . .

Takaful made the first payouts this week in Wajir to 100 policyholders. . . .

‘But the economic potential is also huge: here in Wajir country, a scrubland region where most live in traditional huts, government estimates value livestock at some $550 million (400 million euros).

Across Kenya, the pastoral livestock sector is valued at around $5 billion (3.5 billion euros).

‘Organisers — backed by some $6 million (4.5 million euros) from Australia, Britain and the European Commission — hope it can strengthen the ability of fragile communities across the region to cope during droughts, and reduce reliance on food aid.

‘”It is an innovative product with the possibility to replicate it elsewhere in Kenya and other nations,” Dominique Davoux from the European Commission said.

‘With few of the semi-nomadic people holding bank accounts, insurance premiums are even payable via mobile telephone money transfers using text messages.

‘Across the Horn of Africa, over 70 million people live in pastoralist areas, regional governments estimate, supplying some 90 percent of all meat.

The ILRI-designed system is already being taken up by insurers in other northern Kenyan regions and southern Ethiopia, totalling some 4,000 policyholders, with numbers growing. . . .

Read the whole article in Times Live (SouthAfrica) by the South Africa Press Association (Sapa)/Agence France Presse (AFP): Space tech provides Africa’s first Islamic insurance for herders, 1 Apr 2014

 

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