Innovative weather insurance for farmers in Ethiopia is gaining momentum

Around 85 percent of all Ethiopians depend on farming for their livelihoods. But drought regularly threatens their harvests and incomes. Climate change could make things even worse as rainfall becomes more unpredictable. To protect Ethiopia’s rural poor against rising drought risks, Swiss Re is working with Oxfam America and other partners to provide weather insurance through an innovative labour-for-premiums scheme.

Farmers in Ethiopia are among the poorest in the world. Without insurance, many of those who experience drought run the risk of not only losing this year’s crops but also next year’s seed money. Some fall into debt or are forced to sell their assets. To date, only about 0.4 percent out of a population of 85 million have insurance. Extending cover to the vast majority of those who don’t is at the heart of the Horn of Africa Risk Transfer for Adaptation (HARITA) project, a joint initiative led by Swiss Re, Oxfam America and a dozen other partners.

Together, these partners designed a risk management package that innovates with a new idea about insuring the poor. With the support of aid organisations, it gives people the initial option to pay for their premiums with their labour, engaging them in community-led and locally designed climate adaptation initiatives in return for insurance cover. These include reforestation and crop irrigation projects. This innovative risk management approach has allowed a growing number of rural households, many led by women, to benefit from insurance. Since the launch of the project in 2008, uptakes have increased rapidly, from an initial 200 households in the first year to 13,000 households in 2010.

The HARITA project in Ethiopia is a first step towards educating local farmers about the benefits of insurance and developing the mechanisms of a nascent insurance market. It features as Swiss Re and Oxfam America’s ongoing joint commitment to the Clinton Global Initiative.


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