Publications

The De-risking, Inclusion and Value Enhancement of Pastoral Economies in the Horn of Africa (DRIVE) project is being implemented across HoA countries with support from the World Bank and in partnership with the private sector. DRIVE aims to enhance the financial resilience of pastoralists to drought through supporting the scale up of a financial services package including index-based livestock insurance (IBLI), and index-based livestock takaful (IBLT) to meet the needs of the majority Muslim population in Somalia and the Somali region of Ethiopia. The takaful market in HoA is small but growing, with Somalia being the most nascent. Somalia is home to six takaful operators, each with varying durations of operation, spanning from two to nine years. In Ethiopia there are two insurers with registered takaful windows, while Kenya has just one takaful operator. There are no retakaful operators in Somalia or Ethiopia, while in Kenya there are three reinsurance companies that operate retakaful windows. Between 2019 and 2022 total contributions in Somalia increased by 50 percent from US$6.5 million to US$9.2 million. However, the bulk is for expatriate medical cover. In Kenya, takaful contributions are estimated to have reached US$21 million in 2020. This Frequently Asked Questions (FAQ) note was prepared to improve understanding on takaful and the process of sharia compliance by pastoralists and other stakeholders. The FAQ also clarifies the nature of the DRIVE IBLT product and its status of sharia compliance as of December 2023. The indexbased livestock takaful (IBLT) product under DRIVE is the first parametric takaful solution globally.