By Sharon Atieno
Kenyan Governors from the 21 arid and semi-arid lands (ASALs) and representation from the Council of Governors gathered in Mombasa to discuss the implementation modalities of a new project to cushion pastoral communities against the negative impacts of climate change.
The World Bank funded project named De- risking Inclusion and Value Enhancement of Pastoral Economies ( DRIVE) aims at enhancing pastoralists’ access to financial services for drought risk mitigation, including them in the value chains, and facilitating the livestock trade in the Horn of Africa.
The project is anchored on the Horn of Africa Initiative whose priorities include drought insurance, enhanced trade linkages, and economic integration.
Harry Kimtai, Principal Secretary, State Department for Livestock Development Ministry of Agriculture and Livestock Development, in a key address said, “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. 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 mobilizing private investments.”
The Cabinet Secretary, Agriculture, Mithika Linturi noted that the economic impact of floods and droughts is estimated to create an average fiscal liability of 2%- 2.4% of GDP annually.
Therefore, he said, managing drought shocks, encouraging herders to offload animals that are ready for market, and supporting private sector investments in the livestock product value chain will unlock the potential of the pastoral production system.
With the project being designed to be a public-private partnership, James Sina, Special Financial Specialist at the World Bank said, “By bringing together expertise from these different sectors, 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.”
The DRIVE project is divided into two components. ZEP-RE (PTA Reinsurance Company) is the implementing agent for the first component, managing the funds worth USD 75 Million 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.
Hope Murera, chief executive officer (CEO) of ZEP-RE, highlighted that the program is structured specifically for the drought period, insuring pastoralists before short and long rain where the pastoralists will contribute 20% and the government supporting by contributing 80% subsidy of the insurance premiums.
The Kenya Development Corporation (KDC) is the implementing agent of the second component, managing funds worth USD 40 million to crowd in private sector finances by derisking livestock value chains and supporting viable investment opportunities that integrate pastoralists to unlock livestock trade potential for the country.
Norah Ratemo, Acting Director General of KDC, noted that ” 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 derisk investments with matching funds arrangement, this way the opportunity to formalize the sector and position it for sustainable trade also improve.”
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 and the implementing agents will sign a Memorandum of Understanding with the counties with clear roles and modalities in the project coordination and implementation.
