Case study: Anticipatory cash transfers for pastoralists in Kenya
A pilot launched in Q4 2023 in collaboration with Mercy Corps Ventures
Last updated
A pilot launched in Q4 2023 in collaboration with Mercy Corps Ventures
Last updated
DIVA Donate in collaboration with Mercy Corps Ventures launched a pilot using ecological data to determine donation-based anticipatory cash transfers to eligible participants, allowing them to benefit from use of funds before the impacts of the dry season were felt.
Pastoralists, representing about 50 million people across sub-Saharan Africa, rely on livestock for income and subsistence. These communities are nomadic, grazing their livestock in open-access pastures and moving with them seasonally, making them heavily dependent on rainfall. Insufficient rainfall leads to poor vegetation, causing livestock to emaciate and starve.
However, the livelihoods of pastoralist communities in the eastern Horn of Africa are increasingly under threat due to changing weather patterns attributed to climate change. The region is currently facing one of its most severe droughts, which has already resulted in the loss of over 7 million livestock and placed millions at risk of starvation in Ethiopia, Kenya, and Somalia.
The goal of the pilot campaign was to provide cash assistance in the event of insufficient rainfall during the rain period, as a measure to enhance the resilience of affected pastoralists during the subsequent dry period. The target cover amount of $75 per pastoralist intended to subsidize the provision of food for one livestock animal over a period of six months.
The pilot participants were located in Kajiado and Laikipia counties in Kenya, areas selected due to established local relationships by one of the participating parties (Fortune Credit). Both counties are primarily semi-arid and have experienced increasing frequencies and severities of droughts, impacting the livelihoods of the communities.
The graphic below illustrates the process flow for this specific campaign, with detailed explanations provided in the subsequent sections.
Note: DIVA Protocol's flexibility allows customization of the campaign setup to meet the specific requirements of each campaign, including adjustments to the oracle, custodian, payment token, trigger metric, and donation release profiles.
To assess pasture conditions on the ground, an indicator called NDVI (Normalized Difference Vegetation Index) was used as the underlying trigger metric, sourced from satellite data. NDVI is a leading indicator of livestock mortality since vegetation typically tracks rainfall performance.
The donation profiles were calibrated based on historical data from the years 2016, 2017 and 2022, each of which experienced severe droughts in the regions.
The donation amount varied based on county-specific profiles influenced by historical 30th, 50th, & 80th percentiles for Kajiado (1.45, 1.47, & 1.51) and Laikipia (1.54, 1.59, & 1.64). The chosen profiles exhibit a gradual increase from the 80th to the 50th percentile, resulting in a 20% donation, followed by an accelerated increase to 100% donation between the 50th and 30th percentiles, reflecting the increasing severity of drought conditions and the greater demand for financial support.
Shamba Network was chosen as the data provider for the campaign due to its expertise in processing ecological data and providing it to the blockchain.
A total of USDT 20'235 were deposited into the DIVA smart contract through the DIVA Donate app by users during the lifetime of the campaign.
After the expiration of the campaign, Shamba automatically reported the NDVI values for the two counties: 1.4771 for Kajiado and 1.5136 for Laikipia.
According to the defined donation profiles, this resulted in a donation amount of USDT 1’657.05 (16.43% of deposited funds) for Kajiado and USDT 10’087.35 (100% of deposited funds) for Laikipia.
After the outcome was reported, Fortune Credit, acting as the custodian for the beneficiaries, claimed the released funds (USDT), converted them into local fiat (KES) and distributed them through the Kenyan mobile payment system, MPesa, to participating pastoralists.
A total of USDT 8’430.31 from the contributed funds was not released and was made available for participants to reclaim through the DIVA Donate app.
