Saturday, January 23, 2010

Satellite Technology Meets Banking and Insurance

Last year, Kenyan pastoralist communities lost hundreds of thousands of livestock after the rains failed. In Turkana district alone, pastoralists lost about 300,000 goats and sheep during the recent drought.

A new insurance scheme has been launched in northern Kenya which offers herdsmen a chance to protect their livestock against drought. The scheme, billed as a world first by the International Livestock Research Institute (ILRI) will utilize satellite imagery of available grazing resources to determine when payouts are made to herders.

It is estimated that pastoralists in Marsabit keep more than 2 million cows, camels, goats and sheep, worth an estimated $67m, but currently have no way of rebuilding stocks decimated by drought induced starvation.

To build the insurance model, satellite images of plant growth in Marsabit since 1981 from the Normalized Difference Vegetation Index, a global database updated by NASA and the US National Oceanic and Atmospheric Administration. The information was combined with data on livestock deaths in Marsabit since 2000 to produce a programme that can reliably predict when a reduction in grazing will lead to animal deaths.

The insurance scheme will be administered by local firms Equity Bank and UAP insurance, around 1000 pastoral households are expected to pay between 3.25% and 5.5% of the value of their herds to insure them for a year. To insure a herd of 10 cows for example a family would pay the equivalent of around $50.

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