State borrowed Sh16bn for livestock insurance, value chain projects

The government borrowed Sh16.08 billion ($140 million) to finance the livestock insurance in the year to April 2022, the State Department for Livestock has told MPs.

The State borrowed the money at an exchange rate of 114.87 against the dollar from the World Bank under the De-Risking, Inclusion, and Value Enhancement of Pastoral Economies (Drive) Project.

Jonathan Mueke, the Principal Secretary for Livestock told the National Assembly’s Debt and Privatisation committee that the project is being implemented in four countries including Kenya, Ethiopia, Somalia, and Djibouti as part of a Horn of Africa initiative targeted at building resilience to climatic shocks, facilitating trade and supporting value chains.

“In Kenya, the projected targets 21 arid and semi-arid lands (ASAL) counties of Turkana, Marsabit, Isiolo, Laikipia, Mandera, Wajir, Garissa, Tana River, Taita Taveta, Kwale, Lamu, Meru, Tharaka Nithi, Samburu, Baringo, West Pokot, Narok, Kajiado, Makueni and Kitui where pastoralism type of farming is done and drought insurance for livestock (Index-based livestock insurance products) are viable,” Mr Mueke said.

“The project objective is to protect pastoral economies against drought risk, increase financial inclusion of pastoralists, and better connect the pastoral markets.”

The Drive project is being implemented through ZEP-RE through a package of financial services with funding of $75 million (Sh8.625 billion).

The first component comprises subsidized livestock insurance premiums, promotion of financial saving through the provision of a financial savings bonus of Sh6,000, continuous financial savings bonus of 15 percent of the savings capped at Sh12,000, and management of digital payments of the financial packages comprising of insurance and savings.

The Kenya Development Corporation (KDC) is the implementer of the Drive Project component 2 Part 1 of promoting livestock value chains through trade facilitation and private sector support with a funding of $40 million (Sh4.595 billion).

The main role of the KDC is to connect pastoralists better to the markets by upgrading quality infrastructure for livestock, trade facilitation, and trade infrastructure, and de-risking facilities to attract the private sector.

“The State Department for Livestock Development is the implementor of Drive 2 component 2 Part 2 which involves supporting management of the project and guiding day-to-day operations of Drive project with a funding of $25 million (Sh2.872 billion),” Mr Mueke told the committee chaired by Balambala MP Abdi Shurie.

“The project development objectives are to enhance pastoralists’ access to financial services for drought risk mitigation, include them in the value chains, and facilitate the livestock trade in the Horn of Africa.”

Mr Mueke said since the project's inception in 2022, the project has conducted livestock insurance sales to pastoral beneficiaries in the 12 project counties of Turkana, Marsabit, Isiolo, Laikipia, Mandera, Tana River, Garissa, Lamu, Samburu, Narok, and Kajiado.

He said under component Two of coordination support, 23 investment project proposals have technically been evaluated for funding under the Kenya Deposit Corporation de-risking through the project technical committee.

Mr Mueke said the Ministry had promoted off-take agreements between the Zuidi International, Kenya Meat Livestock Exporters Council (KEMLEIC), Choice Meat, Kenya Meat Commission (KMC), Kenya Livestock Marketing Council (KLMC), Neema Slaughter House, Juja International, Nagare Narok Slaughter House, and Northern Range Lands Trust as off-takers with 160 livestock producer groups and cooperatives leaders and community mobilisers.

He said under the initiative, 424 groups with a total membership of 20,799 were mobilized and trained in the 12 counties as part of market linkage support.

Mr Mueke said the project has 887,546 pastoralists and their dependents covered by the financial services and capacity building in Kenya.

He said the value of livestock and livestock products traded by pastoralists as a result of the project amounted to $115 million or Sh13.21 billion.

“The amount of private capital mobilized through the facility de-risk private investment in Kenya sustainably managed two years after investment amounted to $40 million (Sh1.018 billion),” Mr Mueke said.

The committee met Mr Mueke to shed light on how many loans the State Department for Livestock had contracted and the expenditure for projects over the past financial years.

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