Kenya is set to benefit from a World Bank-funded project for drought risk mitigation in the region.
The country will receive Sh125 million in funding as part of the project being rolled out locally in partnership with the State Department of Livestock (SDL), ZEP-RE (PTA Reinsurance Company), and Kenya Development Corporation (KDC).
Dubbed, De-risking Inclusion and Value Enhancement of Pastoral Economies (DRIVE), the initiative aims at enhancing pastoralists’ access to financial services for drought risk mitigation in the Horn of Africa region.
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Other countries that will benefit from the funding include Ethiopia, Somalia, and Djibouti. The project’s priorities include drought insurance, enhanced trade linkages, and economic integration within the Horn of Africa and surrounding areas.
The project leverages the learnings of the Kenya Livestock Insurance Programme (KLIP) and Satellite Index Insurance for Pastoralists (SIIPE) in Ethiopia. The implementing stakeholders met in Mombasa to sensitise 21 governors from Arid and Semi-arid lands (ASAL) counties on the implementation modalities of the project.
Speaking at the meeting, State Department for Livestock Development Principal Secretary Harry Kimtai said on average 3.4 million people are affected in each drought cycle in the country.
“The DRIVE project will focus on building the resilience of the pastoral economies by protecting against drought risk and increasing financial inclusions of pastoralists through better connections to the markets, thus facilitating trade and upgrading value chains by mobilising private investments,” he said.
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 the livestock product value chain.
Agriculture Cabinet Secretary (CS) Mithika Linturi noted that the economic impact of floods and droughts is estimated to create an average fiscal liability of two to 2.4 per cent of GDP annually.
“Managing drought shocks, encouraging herders to offload animals that are ready for the market and supporting private sector investments in livestock product value chain will unlock the potential of the pastoral production system,” said Mr Linturi.
Financial Specialist at the World Bank James Sina said the project will take the public-private partnership financing model.
“By bringing together expertise from these different sectors, the opportunities to leverage 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 Sina.
The DRIVE project is divided into two components. ZEP-RE (PTA Reinsurance Company) is the implementing agent for component one, managing the funds worth $75 million (Sh9.4 billion) to 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.
KDC is the implementing agent of component two, managing funds worth $40 million (Sh5 billion). [Nanjinia Wamuswa]
It will crowd in private sector finances by de-risking livestock value chains and supporting viable investment opportunities that integrate pastoralists to unlock livestock trade potential for the country.
“To solve the pastoral challenges, $40 million is not adequate; this is where KDC comes in to incentivise the private sector by investing along the value chain where we de-risk investments with matching funds arrangement, this way the opportunity to formalize the sector and position it for sustainable trade also improve,” explained KDC Acting Director General Norah Ratemo.
The State Department of Livestock will, on the other hand, 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.
East African Community, the ASALs and Regional Development CS Rebecca Miano said the delayed and depressed October to December 2022 short rains affected crop production and availability of pasture and water.
She said the government is intervening by distributing relief food, improving access to water and provision of livestock feed supplements.
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