20100122

OSLO (Reuters) - Herders of cows or camels in arid northern Kenya can obtain a new type of insurance against drought from Friday, the first of its kind in Africa using satellites to gauge rainfall.

Project organisers hope to get about 1,000 households in the Marsabit district to sign up for insurance in coming weeks after a formal launch on Friday by microfinance group Equity Bank and African insurance provider UAP Insurance Ltd.

"If it's successful we will look further afield, in western Africa around the Sahel and southern Asia," project leader Andrew Mude of the International Livestock Research Institute (ILRI) told Reuters.

Under the pilot project, pastoralists in Marsabit will be able to insure herds -- of cows, goats, sheep or camels -- against starvation during drought. Drought and lack of pasture are the main causes of livestock death in the arid region.

Pastoralists would get automatic payments for losses if satellite images of the region show vegetation fades from green -- shades of brown will gauge the severity of drought.

The use of satellites bypasses the traditional, more costly system under which insurers check reported livestock deaths before making payouts. That is almost impossible to judge in herds that wander over huge areas.

Still, risks include that some herders suffer bigger than predicted losses during droughts. In other cases, some herders might get payments when their animals have all survived.