Ethiopia’s Ministry of Agriculture (MoA) has entered a strategic partnership with the United Nations Development Programme (UNDP) and the Association of Ethiopian Insurers (AEI) to strengthen the country’s agricultural insurance system and bolster the resilience of smallholder farmers against climate and market risks. This collaboration aims to establish a sustainable, scalable, and farmer-focused insurance framework that offers financial protection, helping farmers recover more quickly from losses and maintain stable livelihoods. The partnership will focus on enhancing risk data infrastructure, co-designing inclusive insurance products, building national technical capacity through standardized training programs, and operationalizing the Ethiopia Multi-Purpose Risk Sharing Platform for Agricultural Insurance.
During the signing ceremony, H.E. Dr. Sofia Kassa, State Minister of Agriculture, highlighted the critical role of agriculture in Ethiopia’s economy, contributing 32% of GDP and employing 64% of the workforce, while noting the sector’s vulnerability to climate risks and the currently low insurance coverage of under 0.4%. She emphasized that the MoU represents a pivotal step toward transforming the agricultural insurance landscape through collaboration, expanding climate-resilient insurance solutions, and closing the protection gap for smallholder farmers.
The agreement seeks to consolidate previously fragmented pilot projects into a robust national framework, establishing consistent standards, clearly defined roles, and effective stakeholder coordination. Three strategic areas are prioritized: a Multipurpose Risk-Sharing Pool where insurance companies jointly underwrite risks with regional and global reinsurance support coordinated by the MoA; a National Curriculum and Technical Training program offering standardized courses, mentoring, and digital learning platforms to train government staff, insurers, and banks on insurance product design, pricing, enrollment, and claims; and a National Agricultural Insurance Product co-created with standardized criteria and bundled with credit, inputs, and extension services.
Ms. Charu Bist, UNDP Ethiopia’s Resident Representative, stressed that the tripartite agreement will transition Ethiopia from fragmented pilot programs to a coordinated, responsive, and sustainable agricultural insurance ecosystem. She noted that this initiative aligns with UNDP’s broader global Insurance and Risk Finance Facility, which promotes inclusive insurance coverage in multiple countries, including Ethiopia. Mrs. Emebet Alemayehu, CEO of the Association of Ethiopian Insurers, also highlighted the importance of cross-sectoral collaboration in driving innovation, building farmer trust, and institutionalizing agricultural insurance as a key component of Ethiopia’s climate adaptation strategy.
The initiative is part of UNDP’s Financial Resilience in Agriculture program under the Insurance and Risk Finance Facility, funded by the Gates Foundation. It operates in Ethiopia, Bangladesh, India, Tanzania, and Uganda, aiming to enhance the financial resilience of smallholder farmers through inclusive, data-driven, and sustainable agricultural insurance ecosystems. The Ministry of Agriculture’s Rural Finance Service Unit (RFSU) will lead implementation, coordinating partners, overseeing the rollout of the risk-sharing pool, guiding the adoption of the national curriculum and insurance product standards, and managing data and knowledge to ensure that climate-smart insurance solutions reach farmers effectively and sustainably.
