Ethiopia

Overview

Ethiopia has the second-largest population in sub-Saharan Africa, and over three-quarters of its people live in rural areas. Climate-related risks like flooding and drought can have serious impacts on much-needed agriculture and food security. As climate change worsens these risks, financial protection is essential to ensuring a safe and secure future for Ethiopia.
UNDP’s Insurance and Risk Finance Facility is working to strengthen safeguards and incentivize growth in Ethiopia, supporting smallholder farmers, building an enabling environment for insurance development and increasing capacity for inclusive insurance and risk finance.

Main Natural Hazards

Flood, Drought, Earthquake

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¹
Source:

https://drmkc.jrc.ec.europa.eu/inform-index/INFORM-Risk/Country-Risk-Profile}

State of multidimensional fragility

Fragile

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¹
Source:

https://www3.compareyourcountry.org/states-of-fragility}

Number of insurance providers

18 insurance companies, 2 domestic reinsurers and 1 regional reinsurer

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¹
Source:

https://irff.undp.org/sites/default/files/2024-03/inclusive-insurance-and-risk-financing-in-ethiopia.pdf}

% Workforce engaged in agriculture

63% (2022)

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¹
Source:

https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS}

Multidimensional poverty

68.8% (2019)

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¹
Source:

https://hdr.undp.org/system/files/documents/hdp-document/2023mpireporten.pdf}

Insurance penetration

0.3% (2022)

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¹
Source:

https://irff.undp.org/sites/default/files/2024-03/inclusive-insurance-and-risk-financing-in-ethiopia.pdf}

Biodiversity ranking

#37 out of 239 countries and territories (2023)

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¹
Source:

https://worldrainforests.com/03highest_biodiversity.htm}

Small business % contribution to workforce

0.2% of total employment (2022)

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¹
Source:
Ethiopia, Ministry of Labour and Skills, Key Indicators of Labour Market (KILM) Country Profile for Ethiopia, 2022}

Our work in numbers

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Insurance solutions in development

Protecting people, jobs, agriculture and public assets.

4

Institutional and policy processes

Strengthening the enabling environment for insurance to scale.

49

Training programme participants

Building country capacity in insurance and risk finance.

Our projects

Building capacity for future protection
The Tripartite Agreement (TPA) is a public-private partnership between UNDP, 20 of the world’s largest insurers under the framework of the Insurance Development Forum and the German Federal Ministry of Economic Cooperation and Development (BMZ). Through TPA, UNDP is working to strengthen Ethiopia’s enabling environment for inclusive insurance, mobilizing resources for risk finance and insurance market development, and helping to bolster private and public sector capacity for insurance and risk finance policy and product development.

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Protecting smallholder farmers with comprehensive agricultural insurance
Working with government and industry, the Financial Resilience in Agriculture (FRA) Initiative, powered by a partnership with the Bill & Melinda Gates Foundation, is bolstering smallholder farmers’ financial resilience and accelerating their adaptation to climate change.
FRA is developing a comprehensive agricultural insurance programme for smallholder farmers in Ethiopia, in partnership with government and private sector partners, to increase vulnerable groups’ financial protection and support food security.
Ethiopia is a founding member of the FRA Community of Practice (CoP) – a long-term peer-to-peer platform focused on ways countries and partners can learn new and best practices for financial resilience for smallholder farmers.

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Increasing actuarial capacity to improve financial risk management
The UNDP Milliman Global Actuarial Initiative (GAIN) aims to help countries predict and prepare for risks by increasing actuarial capacity, enabling better risk modelling and more accurate pricing of insurance and social protection mechanisms. Through GAIN, UNDP is working with government and industry partners to improve actuarial training in Ethiopia, providing training, mentorship opportunities and support for local actuarial professionals.

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Incentivizing the development of new insurance products and services across emerging economies
UNDP’s Insurance Innovation Challenges are powering a new generation of insurance products and services tailored to underserved households and businesses in developing economies.
- Active in 25 countries, with an investment of over US$2.1 million
- Addressing specific barriers and opportunities to scale financial protection, with a particular focus on women, SMEs and other vulnerable groups
- Creating market opportunities for insurance providers and safeguarding development.
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Leveraging cutting-edge climate risk data to bolster countries’ climate resilience and adaptation strategies.

UNDP and Jupiter are working with governments to provide specific climate-risk data based on country development priorities such as agriculture or small businesses resilience. Tailored climate-risk insights will strengthen key development frameworks, inform financial decisions, and help governments select the right risk management solutions, such as insurance, to protect people and infrastructure.

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