17 April 2026, Addis Ababa – The United Nations Development Programme (UNDP) and the Cooperative Bank of Oromia (Coopbank) will formally sign a Memorandum of Understanding (MoU) to strengthen climate risk management in Ethiopia’s agricultural sector. This strategic partnership aims to bridge the agricultural financing gap by embedding climate insurance directly into the bank’s lending operations.

Background:   Agriculture contributes approximately 32 percent of Ethiopia’s GDP, yet remains highly vulnerable to climate-related shocks such as recurrent droughts and floods. These risks continue to be a primary barrier to agricultural credit for smallholder farmers. Positioning insurance as a de-risking tool, this initiative supports the National Agricultural Finance Implementation Roadmap (NAFIR) by creating a scalable operational model for the wider financial industry. To address these challenges, the Cooperative Bank of Oromia and the United Nations Development Programme (UNDP) will sign a Memorandum of Understanding (MoU) to strengthen climate risk management in Ethiopia’s agricultural sector through innovative financial solutions.

The partnership marks a significant step toward integrating insurance into agricultural lending. The initiative is supported by UNDP’s Insurance and Risk Finance Facility (IRFF) under the Financial Resilience in Agriculture (FRA) program.

Through this collaboration, the two institutions aim to address these challenges by embedding climate insurance into the bank’s agricultural loan products.

Under the agreement, UNDP will provide technical assistance to the Cooperative Bank of Oromia, including:

•    Institutional Set-up: Establishing a dedicated Insurance Desk at the bank to lead the integration of insurance into core lending operations.

•    Portfolio Climate Risk Analytics: Applying advanced analytics to the bank’s lending portfolio to assess, quantify, and mitigate concentrated climate-financial exposure.

•    Product Co-design & Piloting: Partnering with the insurance industry to develop and pilot credit-linked insurance products tailored to key agricultural value chains.

•    Capital Mobilization: Positioning insurance as a credit mitigation instrument to strengthen the bank’s risk profile and improve access to capital from international financiers and climate funds.

•    Capacity Building: Delivering specialized training programs to enhance internal expertise in product design and climate risk management

The partnership is supported by UNDP’s Insurance and Risk Finance Facility (IRFF) under the Financial Resilience in Agriculture (FRA) program.