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Pastoralists across the Horn of Africa have waited for rains to come during the short rains season, from October to December 2025, however they did not come. The season was characterized as uneven with below average rainfall leading to drought conditions in parts of Ethiopia, Kenya, and Somalia. This affects the livelihoods of many of the pastoralists in the area who account for over one-third of agricultural GDP in Ethiopia and Somalia, and 21 percent in Kenya. When drought impacts become too severe, pastoralists sell their animals below market prices, lose animals to starvation, pull their children out of school, and are forced to rely on other negative coping mechanisms that exacerbate an already vulnerable population. But this season was different. 

Since 2022, the World Bank through the Horn of Africa De-Risking, Inclusion, and Value Enhancement of Pastoral Economies (DRIVE) project is supporting the delivery of a sustainable package of (i) savings for resilience, (ii) drought index-insurance, (iii) digital accounts, and (iv) financial education and awareness creation. The approach is being implemented regionally by the PTA Reinsurance Company (ZEP-RE), the regional reinsurance entity of the Common Market for Eastern and Southern Africa (COMESA).  ZEP-RE has developed the digital infrastructure, with support from the local insurance markets, to offer pastoralists an index-based livestock insurance (IBLI) product. This product is currently partially subsidized by the government.

IBLI uses satellite data to monitor pasture conditions in the area. When the remote data shows pasture falling below a predefined threshold, the index triggers automatic payouts. This is what happened in the last season, and for those who had signed up, they received automatic payouts based on the pasture degradation in their area, directly to their mobile money accounts on their phones or bank accounts. The index approach means that no time is lost filing claims and waiting to receive a decision. This is a public private partnership supported by the World Bank project. 

Regional support through payouts

The recent short rains season was one of the dryest seasons on record.  In total, this below average short rain season triggered a drought financing package of over US$12.3 million (which included US$9.0 million in insurance payouts, alongside other financial products). These funds went directly to pastoralists in areas hit by the drought throughout Ethiopia, Kenya, and Somalia, within three weeks of the index calculation. Pastoralists report using the funds to buy fodder, medication, and safeguard their livelihoods.

Figure 1: Summary of the level of insurance payouts due following the short rains 2025, in areas  where the policy was offered (no product was offered under the program in white / grey areas) Source: World Bank Group, using data from ZEP-RE 

In Ethiopia, this drought led to the largest IBLI payout in the country’s history. The country saw payouts across Afar, Oromia, Somali, and Southwest regions. This led to 81 percent of those registered receiving a payout. This was a total of US$3 million, reaching 27,000 pastoralist households (an average payout of US$111 per policyholder, although the amounts varied). 

"In Ethiopia, livestock is more than how a family earns, it is who they are. Protecting that is the duty of a government that takes its people seriously." Dr. Fikru Regassa, State Minister, Ministry of Agriculture, Federal Democratic Republic of Ethiopia. 

Kenya’s short rains season saw the drought index triggered across a number of counties, and US$2.1 million was distributed among over 27,000 pastoralists households in timely payouts (an average payout of US$80 per policyholder). 
Somalia hosted one of the most impressive payouts of the season. Not only did it distribute US$3.9 million among over 18,000 pastoralists. It was the largest ever disbursement under a Sharia-compliant Takaful index product. It was also confirmed that the payments reached households through digital accounts, the majority of which were owned by women.

"This payout shows that the Takaful product works. When drought hits, support reaches pastoral families immediately." Suleiman Sheikh Umar, Director General, Ministry of Finance, Federal Government of Somalia.

"This is a fund that came from a Takaful system, contributions paid, risk transferred, data triggered, payout delivered. That pipeline exists because African reinsurance capacity made it possible." — Hope Murera, Group Managing Director & CEO, ZEP-RE.

Moving forward

Drought risk is not evenly distributed across the region. This is where the model’s technical accuracy comes into play, with pastoralists automatically receiving the payout if their precise area is suffering from severely low pasture levels. However, as good as the data is, if there is no insurance coverage, not all pastoralists are protected. Following several consecutive good rainfall seasons, perceived drought risk was low among pastoralists. Meaning that not all who were at risk renewed the policy and so a significant protection gap still exists.

To support learning and improve implementation that can be sustainable, the project has an impact evaluation and research component which is helping to answer questions like; what is the impact of DRIVE on poverty among pastoralists, which distribution channels most increase uptake and sustained adoption, and which sales agent incentive structures lead to the highest uptake and product understanding. We’ve already seen the importance of consumer education on uptake and perceptions of performance and will share more learnings as we analyze the results.

The system works 

The recent payouts are an indicator that DRIVE and the digital and operational infrastructure and partnerships it has created works. It is simple, a drought hit the Horn of Africa, real time data was collected and used to assess the index value, and pastoralists with an insurance policy were paid. And as a result, pastoralists are not forced to sell their livestock. 

"Climate finance works when it is built around the people it is meant to serve. That is the standard the world should be setting." Bisrat Teshome, Senior Private Sector Development Specialist, World Bank Group.

DRIVE is made possible through the collaboration of the Governments of Ethiopia, Kenya, Somalia and Djibouti with the World Bank Group and ZEP-RE, a PTA reinsurance company who works as the regional implementing agency for Component 1 of DRIVE.  The delivery of the financial packages under DRIVE is funded by IDA, with additional support from the Global Shield Financing Facility, and the Risk Finance Umbrella Trust Fund.

We are grateful to our WB colleagues: Sonia Plaza, James Sinah, Bisrat Teshome Mekonnen, Mahaman Sani, Qhelile Ndlovu, Shiny Jaison, Clare Juma, Christine Wesakania, Markus Enenkel, Rabia Houssein Aden, James Wass, Samah Salman Mohamed Ahmed Salman, and Elena de Artacho Sancho-Arroyo.