Building Resilient Agricultural Insurance Systems: Lessons from Rwanda

South-South Cooperation

September 30, 2025

Group of people posing on a dirt road in a rural farmland, with green fields and distant hills.

“What would it take for Ethiopia to establish a successful national agricultural insurance scheme?”

Agriculture is the backbone of Ethiopia’s economy, contributing a third of the GDP and employing nearly two-thirds of the population. Yet, fewer than 0.4% of farmers have agricultural insurance, leaving them highly vulnerable to climate shocks, according to the latest estimates from the UNDP Ethiopia and the International Food Policy Research Institute. In Rwanda, agriculture accounts for 39% of the GDP and supports the majority of livelihoods, but it faces growing threats from climate change (Rwanda Environment Management Authority). Rwanda’s National Agricultural Insurance Scheme (NAIS) shows how insurance can build resilience by protecting farmers against losses, with the government covering 40% of premiums and farmers paying 60%.

Ethiopia: Laying the Foundation for Inclusive Agricultural Insurance

Recognizing the critical role of agriculture in the country’s economy, Ethiopia established the Rural Finance Service Unit in April 2025 with support from the Financial Resilience in Agriculture (FRA) project. It is a global initiative led by UNDP, and with technical and financial backing from JICA. Its mission is to strengthen financial resilience for smallholder farmers by expanding access to inclusive credit and insurance. Together, FRA and JICA are helping Ethiopia lay the groundwork for a modern, nationally coordinated agricultural insurance system that can protect farmers from climate shocks and unlock more inclusive growth.

In line with this nationwide ambition, a delegation from Ethiopia, including representatives from the Ministry of Agriculture, the National Bank, insurers, UNDP Ethiopia, and JICA, visited Rwanda from July 7to July 11. Their goal was to learn from their experience and reflect on the question: “What would it take for Ethiopia to have a successful national agricultural insurance scheme?”

“We feel secure in our farming investments because of the insurance, and we are grateful that the government covers 40% of the premium while we contribute the remaining 60%".

Testimony of a female farmer in Easter Province, Rwamagana District in Rwanda, benefiting from the National Agricultural Insurance Scheme (NAIS).

Why Rwanda?

Such testimonials illustrate why Rwanda was selected for this study mission, reflecting it remarkable progress in financial inclusion and agricultural insurance. Rwanda’s experience shows how Coordinated policies and farmer-focused programs have driven food security, poverty reduction, job creation, and sustained growth. Supported by strong government leadership and innovative partnerships, over 90% of Rwandans now have access to financial services (National Bank of Rwanda, 2023). At the heart of this success is the National Agricultural Insurance Scheme (NAIS), launched in 2019. The scheme now serves more than 160,000 crop farmers and nearly 50,000 livestock keepers annually, with government-subsidized premiums making coverage affordable (Rwanda Ministry of Agriculture and Animal Resources, 2024).

Strong Collaboration

The study visit was made possible through the support of JICA under the Index-based Agricultural Insurance Promotion program, highlighting the vital role of partnership in advancing agricultural development. This collaboration reflects the broader partnership between JICA and UNDP in Ethiopia. Together, they are building bridges for knowledge exchange, enabling Ethiopia to learn from regional experiences and adapt proven models to local realities.

Key Insights from Rwanda for Ethiopia

The study mission to Rwanda highlighted several features of its National Agricultural Insurance Scheme (NAIS) that Ethiopia can adapt. Rwanda’s success is underpinned by strong government leadership, with a 40% premium subsidy making insurance affordable and positioning the scheme as a flagship national initiative. Public-private partnerships ensure efficiency and accountability, with clear roles for government, insurers, cooperatives, and independent assessors. Technology is the other component, such as GPS mapping and drones, that strengthens transparency and accelerates claims. The credibility has further been reinforced by payouts exceeding RWF 4.4 billion since the launch.

For Ethiopia, five lessons stand out:

Institutionalisation is essential – agricultural insurance must be embedded in national policy frameworks with subsidy support.

Partnerships matter – effective collaboration between government, insurers, and technical partners ensures scale and sustainability.

Bundling increases adoption – linking insurance with loans, inputs, or cooperative services makes products more accessible.

Independent loss assessment builds trust – separating assessors from insurers avoids conflicts of interest.

Awareness drives uptake – continuous farmer education is critical to overcoming low knowledge and mistrust.

What’s Next

The Rural Finance Service Unit (RFSU) - housed within the Ministry of Agriculture and set up with the support of UNDP and Japan International Cooperation Agency (JICA) - is already moving to apply for these lessons and has developed a roadmap to institutionalize agricultural insurance within the country’s policy framework, expand farmer awareness campaigns, and pilot bundled products linking insurance with credit and inputs. Importantly, Rwanda’s NAIS programme is keen on a government-to-government partnership with Ethiopia, potentially extending into broader and comprehensive agricultural transformation, advancing financial inclusion, and learning from Ethiopia’s Agricultural Commercialisation Clusters (ACC) program. The road ahead will not be easy, but transformation is possible. With committed leadership, strong partnerships, and innovative solutions, Ethiopia can build a resilient agricultural sector, where farmers plant with confidence, knowing they are protected against future risks.

**This blog was written by Bitseat Debrework Zelleke,National Project Coordinator, bitseat.debrework.zelleke@undp.org