In the Spotlight | Featuring the DRIVE Project in the Horn of Africa - A Team ‘DRIVE’ for Impact

The DRIVE team at a workshop conducted in London in June 2023.

The Horn of Africa (HoA), one of the world's poorest and most fragile regions, faces severe drought. The region is home to about 50 million pastoralists, who are extremely poor. Pastoralism and livestock production are the primary livelihoods in the HoA, accounting for over one-third of agricultural GDP in most countries and around 80% in Djibouti and Somalia. During droughts, livestock either perish or are sold at extremely low prices.

The World Bank’s De-risking, Inclusion and Value Enhancement of Pastoral Economies in the Horn of Africa (DRIVE) project was launched in late August 2022, as a collaborative effort involving the Republic of Djibouti, the Federal Democratic Republic of Ethiopia, the Republic of Kenya, and the Federal Government of Somalia. Its goal is to help the HoA adapt to the impacts of climate change by providing access to financial services, promoting the commercialization of livestock production in pastoralist communities, and ensuring the inclusion of women, marginalized groups, and vulnerable populations. Up to 1.6 million pastoralists stand to benefit from this regional scheme.

At the recently held DRIVE project workshop in London, we spoke to Caroline Cerruti (Lead Financial Sector Specialist in the Finance, Competitiveness, and Innovation Global Practice of the World Bank), Evie Calcutt (Financial Sector Specialist) and Isaku Endo (Senior Financial Sector Specialist), who are among the task team leaders (TTLs) spearheading the DRIVE project.

 

Read more on the DRIVE project here, and watch an explanatory video here.

 

Could you tell us a little about how the DRIVE project came to be?

Caroline

The idea for the project took shape in June 2019. We realized that although drought insurance for pastoralists had existed in the HoA for a long time, the projects were small, on a pilot basis and not sustainable. We knew we would have to think big and, more importantly, to think regional, so we decided to bring countries together to pool their risk in the market. Livestock holds immense significance for pastoral communities in the HoA, serving as a source of prestige, wealth, and livelihoods. Due to their vulnerability to drought, these communities accumulate large herds as a risk management approach against drought. However, during droughts, they hold on to their herds for too long which results in wither their animals dying or being sold at very low prices. The DRIVE project was launched to facilitate prompt payouts to pastoralists before the severity of droughts escalates. This allows them to sustain their core breeding stock and encourages greater sales as there is less benefit to hold larger herds. With this project, we wanted to go beyond just insurance and think about how we can improve financial inclusion in a broader sense so that pastoralists can start to save for risks beyond drought.

 

What about the project are you most excited about?
Isaku

Unlike many projects, the DRIVE project directly reaches pastoralists through digital accounts, ensuring relief is provided to the intended beneficiaries in a timely, cost-effective manner. This aspect has been transformative as we have clarity on the impact we're making, especially in the last mile.

 

What has the project’s biggest achievement been so far?

Evie

In our first sales window, the project surpassed it’s target by selling approximately 170,000 policies, covering around 1 million pastoralists and their relatives. We also prioritized inclusivity by focusing on the participation of women, with 50 to 60% of policyholders being women. These achievements are remarkable but also reflect that the region was coming out of a serious drought so there was a lot of attention on this risk.

 

Could you tell us about some of the challenges you have faced?

Caroline

Our vision is to build a platform through regional institutions that can then go on to handle projects on drought insurance by any other development partner. However, each development partner wants to have their own project, their own acronym. It has been a challenge to get other development partners to come in and put in money, using the platform we have created. A bigger pool can help us better diversify.

 

Evie

It’s going to a bit of a shift for insurance companies to allocate the right capital and get to a point where they accept that we have a long-term, viable commercially sound product. We’re coming off the back of a 3 to 5-year drought in the HoA, so selling an insurance product for drought looks very unattractive for insurers currently. The key challenge is to create an insurance product that is attractive and affordable to pastoralists, whilst also being commercially viable. Finding this sweet-spot is crucial.

 

Could you tell us a little about the larger team working on the project?

Isaku

The DRIVE project involves multiple partners and implementing agencies across different countries and the regional entity. Collaboration within the team is paramount. We have core members, TTLs, and country leads working together seamlessly. Our strong unity recently earned us the Equitable Growth, Finance, and Institutions Vice President Unit Award.

 

What are some factors that drive the success of this project?

Caroline

The success of this project relies on the expertise of our global team, alongside dedication and cohesion among all team members. Additionally, substantial funding is essential, and we are fortunate to have financial support from the Global Shield Financing Facility and the Disaster Protection Program in London.

 

What’s in the pipeline for the project?

Evie

We aim to get an impact evaluation for the project off the ground this year. It’s one thing to monitor results, like the number of people covered, where they were covered, and how many women were covered. However, these numbers don’t tell you if the intervention has actually led to changes in behaviour and outcomes.

 

Isaku

In terms of expansion, we have received requests from South Sudan, Tanzania, and Uganda to join the DRIVE project. Countries from the wider Sahel, where this product is suitable, have shown interest too. Expansion can take place either through World Bank projects or other partners.

 

Caroline

We want the project to outlive us! We want to make people aware of this project’s potential, through the COP, through every climate finance summit. Because, this is about mobilizing private capital for climate adaptation.

Attachments