•Funds to enhance pastoralists access to financial services for drought mitigation, include them in the value chains, and facilitate livestock trade in the Horn of Africa.
•Other countries to benefit are Ethiopia, Somalia, and Djibouti.
Image: STEPHEN ASTARIKO
Kenya and three other countries in the Horn of Africa region will benefit from a $360.5 million (Sh45.5 billion) funding from the World Bank for drought risk mitigation.
Other beneficiaries are Ethiopia, Somalia, and Djibouti.
Kenya will have access to $140 million (Sh17.7 billion), in form of credit.
This is under a project hosted by the State Department of Livestock (SDL) in partnership with ZEP-RE (PTA Reinsurance Company), and Kenya Development Corporation (KDC).
Dubbed DRIVE (De- Risking Inclusion and Value Enhancement of Pastoral Economies), the project aims to enhance pastoralists access to financial services for drought mitigation, include them in the value chains, and facilitate the livestock trade in the Horn of Africa.
Drought insurance, enhanced trade linkages, and economic integration are priorities for the Horn of Africa Initiative (HoAI), where the DRIVE project is anchored on.
The project leverages the learnings of Kenya Livestock Insurance Program (KLIP) and Satellite Index Insurance for Pastoralists (SIIPE) in Ethiopia.
Governors from the 21 Arid and Semi-arid lands (ASAL) counties and representation from the council of governors are meeting in Mombasa to discuss the implementation modalities of the project.
“Whereas severe drought on average affects 3.4 million people in each drought cycle in the country, the most affected regions are Arid and Semi-Arid Lands,” PS State Department for Livestock Development, Harry Kimtai said.
The DRIVE project will focus on building the resilience of the pastoral economies by protecting against drought risk and increasing financial inclusions of pastoralists.
This is through better connections to the markets, thus facilitating trade and upgrading value chains by mobilising private investments, managing drought shocks, encouraging herders to offload animals that are ready for market and supporting private sector investments in livestock product value chain.
The move is expected to unlock the potential of the pastoral production system.
The economic impact of floods and droughts is estimated to create an average fiscal liability of between two and 2.4 per cent of GDP annually, Agriculture CS Mithika Linturi notes.
The project is designed to be a public-private partnership.
‘The opportunities to leverage on knowledge and infrastructure from the stakeholders can bring synergy while implementing, and in the long run providing sustainable solutions in supporting pastoral communities beyond the project funding timelines,” said James Sina, special financial specialist at World Bank.
The DRIVE project is divided into two components with ZEP-RE (PTA Reinsurance Company) as the implementing agent for component 1, managing funds worth $75 million (Sh9.5 billion).
It will deliver a financial package that includes a livestock insurance product, a savings bonus product to promote a savings culture and delivery of these financial products through digital accounts for pastoralists.
According to ZEP-RE (PTA Reinsurance Company) CEO Hope Murera, the program is structured specifically for the drought period, insuring pastoralists before short and long rain.
The pastoralists will contribute 20 per cent and the government supporting by contributing 80 per cent subsidy of the insurance premiums.
Kenya Development Corporation (KDC) is the implementing agent of component 2, managing funds worth $40 million (Sh5.1 billion).
It will crowd in private sector finances by de-risking livestock value chains and supporting viable investment opportunities, which integrate pastoralists to unlock livestock trade potential for the country.
KDC acting director general, Norah Ratemo, however said more private sector support is needed.
“ To solve the pastoral challenges, USD 40 million is not adequate. This is where KDC comes in to incentivize the private sector by investing along the value chain where we de-risk investments with matching funds arrangement, this way the opportunity to formalise the sector and position it for sustainable trade also improve,"Ratemo said.
The State Department of Livestock will oversee the overall project coordination and delivery of public sector responsibilities.
It will ensure linkages between the two components and coordinate implementation with the Counties.
Going forward, the State Department of Livestock and the implementing agents will sign a Memorandum of Understanding with the counties, with clear roles and modalities in the project coordination and implementation.