Living the Little Dream[25] – Rain or shine

In the past few weeks, due to serious drought and water supply issues our household in Nairobi Kenya survived on minimal water showers and even several days without running water in the apartment. Yet, this situation is nowhere comparable to the drought which is impacting areas of Kenya in the arid lands where the disaster sirens have alerted for a long time.

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During the last month, Kenya has declared the ongoing drought affecting much of the country a national disaster. Furthermore, the Kenyan government has called for aid to counter the disastrous drought situation. Following two consecutive poor rainy seasons, it is estimated that more than 2.5 million people in Kenya are being impacted by severe drought conditions, spanning across 23 out of 47 counties.

Food insecurity is one of the chief effects of drought, with some impacted areas reporting acute malnutrition as high as 26% of the local population. With two-third of its landmass already desert or semi-desert, the Kenyan farming population – forming almost two-third of the Kenyan employments – is vulnerable to low rainfall. As the low and erratic rain fall continues impact Kenya, many farmers suffer devastating loss on both their crops and livestock. Prices for livestock have also plummeted as a result of the desperation.

No doubt, weather risks define the lives of smallholder farmers. Insurance is a mechanism to manage risk for farmers working in an inherently uncertain business. Without insurance, a severe drought or another extreme weather disaster can wipe out small farmers. However, traditional agriculture insurance is either unavailable or very expensive in many developing countries, leaving small farmers particularly vulnerable to weather risk events. To address chronic food insecurity caused by weather risk, index-insurance is an innovative approach to ensuring small farms against weather events. To keep the cost of insurance administration low, benefits are paid out on the basis of a predetermined index, without requiring the services of insurance claims assessors. The indexation parameters may include rainfall, temperature, seismic activity, wind speed, crop yield or livestock mortality rates. Certain agricultural insurance programs in Kenya allow farmers to “try out insurance” through distributing insurance covers in seed packages, payouts are then subsequently paid out via a mobile money platform.

Whilst scaling weather index insurance continues to be a challenge, it is certainly a micro-insurance product which has the potential to save farmers come rain, come shine!