Although it has not received much attention in the US media, millions of people in East Africa are currently facing hunger, acute malnutrition, and perhaps even famine. The situation is especially dire in eastern Ethiopia and Somalia, home to many of the region’s pastoralist communities.

Pastoralists rely on livestock to survive, often moving from one location to another to feed and water their stock. But a combination of drought, political instability and poor policies is wreaking havoc.

Fortunately, for some herders, insurance products are helping to make a desperate situation a little bit better.

The Drought That Has Led to Crisis in East Africa

Over the past two years, rains in Somalia and Ethiopia have been slow to come and have been significantly below normal levels. In many parts of eastern Ethiopia, rainfall is the lowest (or second lowest) it has been in 36 years.

For pastoralists, this means that pastures are growing less grass and are therefore often overgrazed. Water sources, whether in wells, springs or rivers, are depleted or dry. The cattle, camel, sheep, and goats that communities rely on for food and income lose weight, grow sick, and often die. To “cash in” before the worst happens, families often sell their animals. But in a drought, everyone faces the same problem, so the market is flooded. As the supply of livestock rises, prices drop. Families are left with fewer or no animals and little income. At the same time, costs of food increase because harvests have failed, and what little water is available is often dirty.

The results are devastating: a recent report from Médicins sans Frontières (aka Doctors without Borders) says that rates of malnutrition in Ethiopia are now at “alarming levels.” Last month, 67 children died as a result of severe malnourishment.

Public Policy That Limits Rights and Freedoms

Lost rights and limits on their freedom mean pastoralists have a much more difficult time responding to drought.

These weather-related problems are compounded by policies that take lands out of the traditional governance and production systems that pastoralist communities have developed over centuries. The government repurposes the land for large-scale commercial agriculture, conservation areas, or expanding cities. Pastoralists lose their customary rights to land and water, their freedom of movement is limited, and their ability to trade with others is constrained.

Lost rights and limits on their freedom mean pastoralists have a much more difficult time responding to drought.

The Devastation of Instability and Conflict

Conflict also plays an important role in the problems faced by pastoralists. In Somalia, long-standing fighting between insurgent groups such as Al-Shabab and government forces make it difficult to grow the economy, invest to increase agricultural productivity, and even to provide basic services. In Somalia’s last famine, in 2011, Al-Shabab reportedly stopped food aid deliveries, contributing to a huge loss of life.

Fighting in northern Kenya between insurgents and government forces and among pastoralist groups has been going on for decades, creating instability and making it similarly difficult to create sustained economic and social improvements.

And in Ethiopia, the government has often been at odds with pastoralist groups from the eastern region, a persistently underdeveloped area. Drought coupled with long-standing conflict and policies that dispossess pastoralists make for a deadly combination.

In Somalia, the situation is especially critical. Rains have not come for several years, and people are struggling to survive. According to some reports, more than 500,000 Somalis have left their homes in search of relief. Many desperate people move into informal camps near cities or to humanitarian camps seeking food and medical care. Once there, they can face other serious problems, including cholera and measles.

The Washington Post reports that in the past few months, nearly 160,000 have moved to camps in Baidoa in central Somalia. Cholera, a swift and deadly disease if left untreated, is striking tens of thousands of these displaced people. FewsNet, the US government-sponsored famine early warning system, reports that “a severe cholera outbreak is ongoing throughout the region, including 50,000 cases in Somalia alone since January 2017.”

In the face of these enormous challenges, is there anything that can be done to help break, or at least reduce, this cycle of despair?

A Promising Solution That’s a Small Piece to a Complicated Puzzle

What if pastoralists could look to the market to help manage some of their risks? What if they could insure against animal loss?

What if pastoralists could look to the market to help manage some of their risks? What if they could insure against animal loss? Until recently, this hasn’t been possible, but in 2010, index-based livestock insurance, a kind of “micro-insurance,” became available to pastoralists in Kenya, expanding to Ethiopia in 2012.

Index-based livestock insurance uses remote sensing technologies to identify how much vegetation — some of it fodder — exists in a location. These data are combined with information from a public index of vegetation coverage to identify the level of risk of harm to animals in the future. This risk assessment, in turn, can be used to create a policy premium rate. Agents do not need to find or visit the mobile pastoralists — they use satellite imagery to identify areas where losses are likely to be taking place and they pay for average losses, not for specific losses.

Pastoralists collect payouts (via tablets and using biometrics) when the amount of grass or other vegetation falls below a threshold. With their payouts, policyholders can buy fodder, pay for vet care, or purchase new animals. Research shows these payouts reduced “distress” sales and dependence on food aid.

Aid agencies have played a role in supporting the development of this product, but the hope is that it is now on its way to becoming an important part of the commercial insurance market.



If government regulations allow it, this index-based insurance could spread across the Sahel in Africa and beyond, helping thousands of at-risk communities manage an uncertain future.

Kenyan company Takaful Insurance of Africa (TIA) recently won the African 2017 Insurance Innovation Award along with partner organization the International Livestock Research Institute (ILRI). TIA and ILRI introduced their index-based livestock policies, which are Islamic-law compliant, in 2013. In 2014, they made their first payout to pastoralists in the northeastern part of Kenya. The product is now available in six Kenyan counties and has paid benefits to nearly 2,000 families out of a pool of over 12,000 insureds, and TIA has expanded to Somalia. If government regulations allow it, this index-based insurance could spread across the Sahel in Africa and beyond, helping thousands of at-risk communities manage an uncertain future.

Insurance obviously cannot solve all of the complex problems of hunger, malnutrition, and famine in drought-stricken East Africa, but this market-based innovation is a welcome strategy to help protect families that have lost so much.