Taking Risk-Informed Finance to Pastoralists

A lesson from the drylands

When I first began working with pastoralist communities in the drylands of the Horn of Africa, the challenge before us was not only how to improve production. It was how to protect the animals, assets, and dignity on which families depended when drought came. Answering it, I came to see, would depend on taking risk-informed finance to the people who need it most.

For pastoralists, livestock are not simply an economic asset. They are food, income, savings, identity, and the foundation of social life. When drought decimates herds, the loss is not only financial. It can push households into distress, force children out of school, erode dignity, and close pathways out of poverty.

That experience shaped much of my professional journey. Together with colleagues and partners across research institutions, governments, insurance companies, donors, and communities, I had the privilege of contributing to the development and scaling of index-based livestock insurance. The idea was simple in principle, though complex in practice: use satellite data to identify drought-related forage loss and trigger timely insurance payouts before herders were forced into irreversible coping strategies.

Receiving the Norman Borlaug Award for Field Research and Application in 2016 was a profound honor. But what has stayed with me most is the lesson behind the work: innovation matters most when it reaches people in time, in ways they can use, and through systems that can endure beyond a project.

Why agriculture’s risk cycle persists

Since then, I have come to see risk as one of the most pervasive constraints to development. Risk shapes whether a farmer invests in better seed, whether a pastoralist keeps animals through a dry season, whether an agri-SME expands, whether a bank lends, whether an insurer enters a new market, and whether public resources are used before a shock or only after suffering has occurred.

Too often, we describe agriculture as risky in a way that becomes self-fulfilling. And because the sector is seen as risky, finance remains scarce, expensive, and short-term. Finance is limited, so farmers and rural enterprises underinvest. Because they underinvest, productivity remains low, innovation is dampened, and vulnerability remains high. The result is a cycle in which risk is not properly understood, shared, priced, or managed.

Breaking this cycle requires placing risk management at the center of agricultural transformation.

Connecting insurance and finance

The insurance industry has tools to identify, pool, transfer, and manage risk. The financial industry allocates capital based on judgments about risk and return. Yet these two worlds still do not connect in ways that serve smallholder farmers, pastoralists, agri-SMEs, and climate-vulnerable value chains at scale.

The next generation of agricultural development must bring them together more intentionally. Insurance, guarantees, blended finance, digital tools, concessional resources, and public policy should not sit in separate boxes. They should be combined into practical systems that make agricultural finance more accessible, reduce uncertainty for lenders and investors, and protect vulnerable producers before shocks destroy livelihoods.

This also requires more catalytic use of public resources. In a context of growing climate stress and constrained budgets, scarce public and concessional capital must do more than fund isolated activities. It should help unlock larger pools of private and institutional finance, especially where development impact is high but perceived risk remains a barrier.

Taking risk-informed finance to the farmer

At the African Development Bank Group, this is the frontier I now work on: helping advance approaches that de-risk agricultural finance and climate resilience, so more capital can reach agri-SMEs, smallholder value chains, and underserved rural economies. The ambition is not simply to finance agriculture, but to change the conditions under which agriculture is financed.

For me, this continues the journey that began with pastoralist communities in the drylands. Then, the question was how to take an innovation to the livestock herder. Today, the question is how to take risk-informed finance to the farmer, the cooperative, and the rural entrepreneur, by better equipping and incentivizing insurers, lenders, and policymakers to build the systems that can reach and serve them. That is how resilience becomes embedded in the way African agriculture is financed, protected, and allowed to grow.

Africa’s agricultural future will depend not only on producing more, but on protecting better, financing smarter, and ensuring that those who feed the continent are not left to carry climate and financial risks alone.

If we can turn risk into something that is understood, shared, financed, and managed, we can help build African food systems that are not only more productive, but more inclusive, resilient, and prepared for the future.

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Learn more about risk management in agriculture from Farming First experts here.