Ethiopia has an estimated 12 million smallholder farmers, who contribute 90% to the total agricultural output. For Ethiopia to reach its GTP II targets, commercialization of smallholder farmers is a top priority, and the GoE aims to increase the amount of crop production by smallholder farmers by 50% from 2015/16 to 2019/20. However, smallholder farmers are predominantly reliant on rained agriculture, making them one of the most vulnerable groups in Ethiopia that are susceptible to various weather-related water risks, such as droughts and floods. To support the productivity of small-holder farmers and realization of the GTP II targets, it is necessary to protect them against such risks and increase the climate resilience of the agriculture sector.

The GoE recognizes the key role that micro-insurance programs play in mitigating weather-related water risks, and a GTP II target is to provide 200,000 smallholder farmers with micro-insurance by 2019/20. To achieve this, it emphasizes the importance of establishing risk insurance and early warning systems that will contribute to building a climate resilient green economy. Additionally, a strategic outcome of the National Financial Inclusion Strategy that the GoE announced in April 2017 is to ensure the supply of an adequate range of suitable insurance products, services and access points in Ethiopia. Also, Parliament has requested the Ethiopian Agricultural Transformation Agency (ATA), to create a national-scale micro-insurance program that can supplement and build upon earlier pilot insurance programs. Due to GGGI’s experience in establishing national scale financing vehicles, ATA has expressed the strong intention to partner with GGGI (role as a policy advisor with representation in the CRGE Facility and role as an adviser to structure funds) and Kifiya Financial Technology (who have been developing a micro-insurance product since 2014 in partnership with EIC- Ethiopian Insurance Company and OIC- Oromia Insurance Company) 4 , to establish an insurance acceleration fund that will eventually operate on a commercial basis. This project is aligned with IO2. Increased green growth investment flows which enable partner governments to implement green growth policies.

The overall objective of the project is:

• To support smallholder farmers in generating higher and more stable incomes that are more resilient to the effects of climate change, the establishment of the Ethiopian Climate Insurance Acceleration Fund (ECIAF) is proposed.

• To achieve this, GGGI will partner with ATA (Ethiopian Agricultural Transformation Agency) with the aim to establish a fund on a commercial basis, that can eventually be sustained without external support after an initial period. Several

Ethiopian insurance companies are interested to participate.

Impact: N/A

Outcome: N/A

Project Outputs completed in 2019: N/A

i. Green Growth Policies: N/A

ii. Green Investments: N/A

iii. Capacity Building and Knowledge Products: Willingness to Pay of Farmers in four regions in Ethiopia Report.

Discussions held with GGGI HQ, IFC and other institutions made GGGI Ethiopia office to suspend this project. Market conditions, conducive policies and required resources were not ready to conclude the project. However, the Willingness to Pay study that was prepared was an important output that will be used in the future for the continuation of the project

Project Manager: Peter Vos

Anya Eilers, Eden Debela, Ida Demmellash, Nardos Desta, Winnie Wong