The effects of global warming are now on their worst following the severe drought that is being experienced in parts of Kenya and the horn of Africa. Droughts have consistently destroyed our crops and killed livestock which are the mainstay of our economy. We haven’t quite found a reliable solution to this annual calamity but index insurance may soon be the sustainable way to mitigate its effects.
Index insurance is a brilliant idea which if effected will be a significant risk management tool especially in our agricultural sector. The policy which was recently launched in Geneva will compensate financial loss for properties exposed to climate related risks such as drought.
This is obviously good news to farmers who suffer losses every year due to outcomes beyond their influence. Livestock holders in north eastern Kenya where drought is eminent should brace themselves for this insurance policy which may just be a solution to their perennial problem. Rural smallholder farmers too should not suffer unnecessary losses any more when they can easily be compensated.
More insurance companies need to come out and float this product to Kenyans. This, coupled with large scale farming projects as pronounced by government in Turkana last week will go a long way in eradicating famine in Kenya.