Insuring against drought in the Horn

Drought is a major concern throughout the Horn of Africa, where a majority of the population relies on rainfall, not irrigation, to grow food. In Ethiopia, farmers like Mrs. Silas Samson Buru have benefited from and contributed to a partnership called HARITA, now known as R4. Run by the Relief Society of Tigray, with support from Oxfam America and others, HARITA and R4 have improved the ability of small-scale farmers to cope with drought.

Mrs. Silas Samson Buru is a 59-year old farmer, mother of six, and resident of Adi Ha, a 4,000-person village in the Tigray region of Ethiopia. Mrs. Buru owns one hectare (around 0.5 acres) of rain-fed land and 0.25 hectares of irrigated land. Mrs. Buru survived the famine of 1984 to 85 and, for most of the 1980s and 1990s, struggled to feed her family and send her children to school. But now she is the head of the women’s association in her village has a daughter who has completed university. She is a member of the microinsurance program’s community design team and has been instrumental in the design of appropriate index insurance products for her community by sharing her wisdom on traditional agricultural practices and coping mechanisms and representing the needs of her community.

She has also played an important role in spreading awareness on drought insurance amongst the community and policymakers in the United States. Mrs. Buru came to the United States last month to share the positive impacts of weather index insurance in her community with experts at the World Food Prize in Des Moines, Iowa. I had the chance to listen to her speak at Oxfam America’s headquarters on her way back to Ethiopia. Please watch the embedded video above to hear what she has to say about HARITA.

HARITA (Horn of Africa Risk Transfer for Adaptation) works like this: farmers buy an insurance policy. If the rainfall during the growing season is above an agreed level, then nothing happens. But, if the rains fail, then farmers get a payout. The extra income ensures that they still have enough money to feed their families, repay loans and pay for other necessities. Because payouts are based on weather indicators and satellite imagery, the costs of claim verification are kept low, thus the program has a better chance of becoming commercially viable. Partial protection from the risks of agriculture enables farmers to take “smart risks” that can help them break the cycle of poverty, such as taking out loans to expand their businesses and buy good seeds. In the face of rising temperatures, they can select more heat tolerant crops, improve their management of water resources, and move planting dates.

One of the biggest barriers for farmers to participating in an insurance program is the cost. But HARITA helps the poorest 25 percent of its participants afford the premiums. Farmers who participate in the government-run food and cash for work initiative, the Productive Safety Net Programme (PSNP), which serves 8 million chronically food-insecure households, can pay for the insurance through labour that improves their community and their land. This isn’t just any type of work. Farmers work on community projects such as composting, water harvesting, irrigation, and tree planting =– activities that make them more resilient to drought and climate change.

All combined, HARITA is an attractive program. By industry take-up-rate standards, HARITA is successful. In the first year of the project, 34 percent of the farmers who attended the project information sessions purchased an insurance policy. Last year, HARITA reached more than 1300 households, and now, through a partnership with the World Food Programme and the Ethiopian government, it has scaled up to more than 13,000 farmers.

Similar program are emerging in other places in East Africa. This livestock insurance program in northern Kenya has managed to reach more than 1,000 herders, and show that satellite imagery used to determine the extent of land deterioration can accurately predict actual rates of livestock mortality -– a big step toward designing a cost-effective and commercially sustainable insurance product for pastoralists. Feed the Future is also exploring how it can be a part of microinsurance ventures that mitigate and transfer drought risk faced by small-scale farmers such as Mrs. Buru.