Livestock farmers in North Eastern Kenya will be compensated against loss of their animals from drought following the launch of an insurance product targeting the sector.

The compensation will ensure that pastoralists do not suffer losses when their livestock die from drought, disease or flooding.

To be known as Drought Insurance, the Index-Based Livestock Insurance (IBLI) scheme is a joint venture between Equity Bank, the International Livestock Research Institute (ILRI) and UAP Insurance company.

Experts will employ satellite images to identify sudden losses of livestock and issue payouts to herders participating in the insurance scheme.

The satellite surveillance will help the insurers by-pass need for veterinary officers to go on the ground and certify that animals have died before payments are made.

In cases of severe drought or flooding that result in death of livestock, farmers will be compensated.

Studies show that more than three million pastoralist households are intermittently hit by severe drought in North Eastern Kenya.

The scheme was launched in Marsabit District on a pilot basis and will then be rolled out to millions of semi-nomadic pastoralists and livestock keepers in other parts of the region.

Livestock owners will benefit from the scheme as they will no longer have to bear the full loss whenever there is drought.

The premium paid will increase as the number of livestock to be covered increases.

"The launch of the livestock insurance cover is a significant milestone for Livestock farmers in arid and semi arid lands (ASAL) areas of Kenya. It will see farmers being compensated for losses to their livestock occasioned by drought risk. Livestock is the key asset for majority in Northern Kenya and insuring this asset is critical to their ability to transform their lives and livelihoods." said Dr James Mwangi, Equity Bank CEO and Managing Director.

Speaking during the launch of the scheme in Marsabit, Dr Mwangi said the livestock industry had the potential to drive economic and social growth at the grassroots level in ASAL areas of the country, especially in the leather industry estimated to bring in about Sh4 billion annually.

ILRI Deputy Director General, John McDermott said 900 households in Marsabit District will be evaluated to determine the impact of the initiative.

He said that a whole system had been put in place to compensate livestock farmers participating in the insurance scheme, as soon as indicators of drought are detected using satellite images.

Mr Andrew Mude, ILRI's Project Leader said; "Compensation for livestock farmers will be faster as it would not require the verification of vertinary experts on the ground as payments kick in when the satellite images, which are available in real time, show us that forage has become so scarce that animals are sure to perish."

He said insuring livestock of pastoral families had long been considered impossible due to the enormous challenges of verifying deaths in herds that constantly wander over vast tracts of land in search of forage.

ILRI and its partners have overcome this impediment by combining satellite images of vegetation in the Marsabit District with monthly surveys of livestock deaths to pinpoint the level of forage reduction that will result in starvation of animals.

"The reason this system can work is that getting compensation does not require verifying that an animal is actually dead," said Mude.

Mr Mude said the ASAL areas of Marsabit District currently support about 86,000 heads of cattle and some two million sheep and goats that depend on naturally growing vegetation for survival.

The livestock in Marsabit alone are worth approximately US $67 million (Ksh5.02 billion), though they are rarely sold or slaughtered.

Instead, families depend on them for milk and routinely drink blood from cattle for their nutrition.

But droughts are frequent in the region.

There have been 28 droughts in the last 100 years and four in the past decade alone.

The losses they inflict on herds can quickly push pastoralist families into poverty.

"We believe this program has potential because it has the elements insurers need to operate, which is a well known risk, drought, and an external indicator that is verifiable and cannot be manipulated, which in this case is satellite images of the vegetation," said Mr Joseph Kamiri of UAP.

Hon. Dr Mohamed Kuti, Minister for Livestock Development said the initiative, the first of its kind, will prompt pastoralists to commercialize livestock farming. He reiterated the government's efforts to ensuring that livestock farmers benefit from their farming.

He said the government will create two disease free zones or corridors that will ensure Kenyan meat products access international markets.

Kuti was accompanied by the area MP and Assistant Minister for Development of Northern Kenya & Other Arid Lands, Hon. Hussein Sasura.