Ethiopia's Ministry of Agriculture (MoA) has signed a Memorandum of Understanding with the United Nations Development Programme (UNDP) and the Association of Ethiopian Insurers (AEI) to strengthen the country’s agricultural insurance ecosystem and enhance the resilience of smallholder farmers against climate and market shocks. 

The partnership marks a significant step in Ethiopia’s journey toward establishing a sustainable, scalable, and farmer-centric agricultural insurance system. The work on agricultural insurance aims to provide small-holder farmers with greater financial protection, helping them recover more quickly from losses and maintain stable livelihoods. Through this collaboration, the partners will strengthen risk data infrastructure, co-design and deliver inclusive insurance products tailored to farmers, build national technical and institutional capacity through standardized training programmes, and operationalize the Ethiopia Multi-Purpose Risk Sharing Platform for Agricultural Insurance. 

During the signing ceremony, H.E. Dr. Sofia Kassa, State Minister of Agriculture, emphasized that the MoU marked “a pivotal step in strengthening the country’s agricultural insurance ecosystem and enhancing farmers' resilience. Agriculture remains a cornerstone of Ethiopia’s economy, contributing a substantial 32% of GDP and employing 64% of the workforce. Yet, despite its importance, the sector faces significant challenges from climate risks and low insurance coverage, currently under 0.4%. Thus, this agreement reaffirms our commitment to transforming this landscape through collaboration and expanding inclusive, climate-resilient insurance solutions that support smallholder farmers and close the protection gap.”

The MoU seeks to unify previous fragmented pilot initiatives into a robust national framework, ensuring consistent standards, clearly defined roles, and effective stakeholder coordination. The partnership prioritizes three strategic areas:

Multipurpose Risk-Sharing Pool: Insurance companies jointly underwrite a pooled fund with regional and global reinsurance support, coordinated by the MoA, ensuring fair and stable risk coverage for farmers. 

National Curriculum & Technical Training: A unified course with training of trainers (ToT), mentoring and a simple learning platform (LMS) to train government, insurers, banks on product design, pricing, enrollment, and claims for consistent nationwide practice. 

National Agricultural Insurance Product: A nationally endorsed co-created insurance product with standardized criteria, bundled with credit, inputs, and extension services.

Ms. Charu Bist, UNDP Ethiopia's Resident Representative (Officer in Charge), highlighted that "UNDP appreciates the Ministry of Agriculture’s leadership in prioritizing smallholder farmer resilience and access to finance. This tripartite agreement brings together policy, regulation, insurers, and reinsurance partners, enabling Ethiopia to transition from fragmented pilots to coordinated efforts that will make the sector more responsive and sustainable. Our engagement is part of UNDP’s broader global initiative to expand insurance coverage through the Insurance and Risk Finance Facility, which is being implemented in several countries, including Ethiopia."

Mrs. Emebet Alemayehu, CEO of the Association of Ethiopian Insurers also commended the partnership, stating, "This MoU demonstrates how unified, cross-sectoral collaboration can drive innovation, build farmer trust, and institutionalize agricultural insurance as a vital part of Ethiopia’s climate adaptation strategy. The Ethiopian insurance industry is committed to supporting implementation and ensuring real, long-term benefits for our nation’s farmers.”