Farmers are usually optimistic, which is a key quality when a change in weather can wipe out a year’s work. Public-private partnership (PPP) can be a key ingredient in supporting them through weather shocks, and nurturing their optimism.

Most Africans still depend on farming for their livelihoods. In many countries at least 60% of these are smallholders growing crops or pastoralist herders roaming dry lands.

Drought or floods occur regularly and cause farmers to lose their productive assets. Some take years to recover, others become destitute. For example, Kenya’s 2008-2011 drought is estimated to have killed 9% of all Kenyan livestock (losses of KES699bn/$6.9bn) and crop losses were 23% (KES121bn/ $1.2bn). Food aid and disaster relief costs KSh12.3bn ($21m) a year on average.

Private-public partnership (PPP) in crop and livestock insurance for smallholder farmers has been an ongoing project since 2009. In March 2016 Kenya’s Ministry of Agriculture, Livestock and Fisheries, the World Bank and other partners launched a National Agricultural Insurance Programme for both crops and livestock insurance. It is estimated to cost up to KSh619m ($6.1m) over the first five years and to have potential to offer affordable cover for 160,000 farmers by 2019. Technical support is from the World Bank’s Disaster Risk Financing and Insurance Program (DRFIP).

According to World Bank Country Director for Kenya Diarietou Gaye: “The large majority of the poor in Kenya are farmers, so this programme has the potential to have a significant impact on Kenya’s economic development. This programme aims at improving farmers’ financial resilience to these shocks and will enable them to adopt improved production processes to help break the poverty cycle of low investment and low returns.”

Crop farmers growing maize and wheat initially can insure themselves with Area Yield Index insurance. Small farmers insure themselves against extreme weather, using mobile phones. The programme also uses crop-yield data, statistical sampling and GPSD tracking. Farming areas are divided into insurance units and when average production in one unit is too little, all insured farmers in that unit get a payout. It was piloted in 3 of Kenya’s 47 counties and aims to extend to 33 counties by 2020.

The Kenya Livestock Insurance Program (KLIP) started with 5,000 pastoralists in two counties in October 2015 and is to be extended. Satellite imagery is used to determine whether there is enough forage for grazing. Government purchases drought insurance from private insurance companies on behalf of pastoralist herders, with funding from donors to help poor households. Payouts are triggered when too little rain means grazing is less than a agreed threshold. It could protect livelihoods for 420,000.

The Kenyan Government’s role includes data-collection, quality and availability. There is a recommendation that Government and donors should subsidize 50% of the cost of crop insurance for wheat and maize farmers and 100% of livestock premiums for pastoralist herders, depending on beneficiaries’ income

Research and development for the African PPP project has been done by different agencies, including the International Livestock Research Institute (ILRI), which is based in Kenya. Andrew Mude, principal economist at ILRI, says: “We are now providing asset protection. The idea is to intervene before loss”. Previous disaster relief often arrived too late to save livestock. There is also backing from the Global Index Insurance Facility (GIIF) fund.

According to the World Bank’s Olivier Mahul: ”This partnership between Government and the private sector for the benefit of vulnerable farmers builds on international good practice and is innovative… This programme could pave the way for other large-scale agricultural insurance programmes in Africa.”