Piloting Weather Insurance for Ethiopian Farmers to build Resilience

Oct 23, 2015

“I thought insurance was only for vehicles and not crops,” mother of nine Aysha Feyso, a smallholder farmer in Adami Tullu said at a special ceremony organized for the farmers to receive their claims payment. In the past Aysha used to sell livestock and other assets to make ends meet when her farm was hit by drought. “The PAA has taught us lessons in saving and planning,” said Aysha who was a subsistent farmer but now with support from the project has bought chickens and goats with her sideline poultry business earning over 4,000 ET birr a year from sell of eggs.

In late October 2015, a total of 12,000 smallholder farmers in four regions started to benefit from Ethiopia’s first weather index insurance claims payment to cover the loss for this year’s crop failure due to El Nino.

The weather index insurance claims paid out 2.6 million ET birr covering a total of around the selected smallholder farmers in Oromia, Gambella, Benishangul Gumuz and Tigray regions.

The pilot insurance initiative is supported by UNDP/GEF and the Ministry of Environment, Forest and Climate Change in collaboration with two local firms, the Oromia and Nyala insurance companies.

The agreement with the insurance companies is based on weather index that looks a threshold value for rainfall. If the rainfall is below the threshold then the insurance company shall settle the payment.  

Through GEF financing, UNDP provided 800,000ET birr to cover the insurance premium for the farmers, who will recieve 500 to 3,000 ETB each.

In the face of climate change, piloting diversified adaptation techniques, including crop insurance, is one of the coping strategy that UNDP is helping to introduce in order to reduce the vulnerability of smallholder farmers in Ethiopia who are totally dependent on erratic rainfall and crop failure.

Smallholder farmers from two districts in Adami Tullu town located in Oromia region were the first to receive around 500 as part of a total 525,000 birr claims payment settled by the Oromia Insurance Share Company.

A further 300 farmers from two kebele’s in Tigray Enderta Woreda around the town of Mekele are scheduled to receive claims payment from Nyala insurance for a total 1,700,000 ET birr.

Around 300 farmers from two kebele’s in Gambella   are covered by Nyala insurance, which is settling insurance claims payment of around 700,000 in total  while another 300 farmers from two kebeles in Benishangul Gumuz  have received coverage by Oromia insurance.

Farmers who benefited from this pilot insurance scheme were able to keep their children in school, grow their cash saviings, avoid selling off their assets, and purchase improved seeds for the next planting season.

The farmers taking part in this pilot insurance are part of 5,000 small holder farms supported by the Promoting Autonomous Adaptation (PAA) project implemented by UNDP with financial support from the GEF and Ministry of Environment, Forest and Climate Change.

Promoting Autonomous Adaptation project (end of 2012 – 2016) is implemented with a total budget of USD 5,603,761 to build farmers’ resilience, improve food security and reduce impacts of disasters in four regions with the introduction of technology and practices.

Local communities and administrations at the lowest level of government are supported to design and implement adaptation actions aimed at reducing vulnerability and building resilience, especially in those communities that are particularly vulnerable in Ethiopia.

The project has three outcomes:  Strengthening institutional capacities for coordinated climate-resilient planning and investment; improving access to technologies and practices that improve the range and efficiency of adaptation options; and improving the capacity of community-based climate change adaptation.

Programme focal point : Programme Specialist (GEF Portfolio)

Wubua Mekonnen


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