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Leveraging uptake of index-based livestock insurance with community savings and loan groups in Northern Kenya

14 mars 2016

Up-scaling research innovations in agriculture and livestock especially among vulnerable livelihoods is often a tough call for researchers and innovators. It is against this backdrop that the International Livestock Research Institute (ILRI) is looking into partnering with group saving and loans organizations as a possible effective avenue conducting extension work on index-based livestock insurance (IBLI). However, there is little evidence to suggest that this kind of synergy has increased IBLI uptake above the 6-9% household baseline rate in the area according to findings of the latest research brief by ILRI. The study titled “Integrating index-based livestock insurance with community savings and loan groups in northern Kenya”, revealed that this is due to chronic vulnerability to drought-related shocks and declining coping abilities inhabitant communities. The study was as a result of collaboration between IBLI project and CARE Kenya with an objective of assessing impact of integrating an insurance product for pastoralists’ most productive asset alongside access to informal financial services.

The study found substantive differences between the savings and loans groups profiled, including interest rates, collateral requirements, and savings-to-loan ratios. Nevertheless, members of savings and loans groups accumulated more savings and accessed more loans than their non-members. Despite these findings, increasing understanding of IBLI hinges on improving training of members of the groups and developing a package of more accessible educational tools for use.

In addition the study revealed, most households are reluctant to borrow to purchase insurance, due to high interest rates and negative social and economic effects on default. As such, the study recommended further subsidization of insurance premiums or loans as one way of increasing IBLI uptake.



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